|
Business/ Industry |
Tax
Change |
Details |
|
All qualifying businesses |
The
Research Credit is extended and modified. |
The valuable credit for businesses that
invest in the development of new products and
technologies had expired at the end of 2007. The
new law extends the credit to amounts paid or
incurred through 12/31/09.
Modifications: The election
to claim the alternative incremental research
credit is repealed for tax years beginning after
2008. And the alternative simplified research
credit rate is increased to 14 percent (from 12
percent) for tax years ending after 2008.
Conforming changes are also made to the orphan
drug credit. |
|
Restaurants and businesses that lease property
|
The 15-Year depreciation tax break for
restaurants and leasehold improvements is
extended.
|
The new law extends favorable 15-year
straight-line depreciation for qualified
leasehold improvements and qualified restaurant
building improvements for two years, to cover
property placed in service in 2008 and 2009. In
addition, eligibility for 15-year depreciation
is expanded to cover qualified restaurant
buildings themselves (as well as building
improvements). This change applies to buildings
place in service in 2009.
Without the 15-year rule,
leasehold improvements, restaurant building
improvements, and restaurant buildings generally
must be depreciated over 39 years using the
straight-line method. |
|
Retailers
|
A new 15-year depreciation tax break for retail
space improvements. |
A provision in the law allows 15-year
straight-line depreciation for qualified retail
improvement property placed in service in 2009.
It covers real property improvements to the
interior of a nonresidential building if:
1. The portion is open to
the public and used in a retail business selling
tangible personal property to the public and
2. The improvement is
placed in service more than three years after
the building was put in use. However, 15-year
depreciation is not available for improvements
related to:
-
A building enlargement,
-
Elevators or escalators,
-
Structural components that benefit common
areas, or
-
The internal structural framework of the
building.
Note: Without the favorable 15-year
rule, these improvements generally must be
depreciated over 39 years using the
straight-line method. |
|
Non-C corporation
businesses |
The enhanced deduction for charitable food
donations is extended. |
The enhanced charitable contribution
deduction for non-C-corporation businesses that
donate wholesome food now covers donations in
2008 and 2009.
Normally, deductions for donated food are
limited to the lesser of: the taxpayer's cost
basis in the food or the food's fair market
value. However, the enhanced deduction amount
equals the lesser of:
-
Basis plus one-half the value in excess of
basis or
-
Two times the basis.
|
|
C corporations |
The liberalized deduction for book donations is
extended. |
The law extends a liberalized deduction for C
corporation donations of books to schools to
2008 and 2009. The liberalized deduction amount
equals the lesser of:
-
Basis plus one-half the value in excess of
basis or
-
Two times the basis.
To qualify, book donations must be made to a
public school that provides elementary or
secondary education. |
|
C corporations
|
The enhanced deduction for donations of computer
equipment is extended. |
The law extends the enhanced deduction for C
corporation donations of computer equipment and
related technology to qualifying educational
organizations and public libraries. Donations in
2008 and 2009 are now covered. The enhanced
deduction amount equals the lesser of:
-
Basis plus one-half the value in excess of
basis or
-
Two times the basis.
To qualify, items must be donated within
three years after the C corporation donor
acquired them new or constructed them.
|
|
S corporations
|
A special rule to encourage donations of
appreciated property is extended. |
A special rule for charitable donations by S
corporations is extended to cover taxable years
beginning in 2008 and 2009. Under the rule, a
shareholder's tax basis in S corporation shares
is only reduced by the shareholder's
proportionate share of the corporation's tax
basis in donated non-cash property. This
benefits shareholders because they are left with
a higher tax basis in their shares after the
corporation donates certain appreciated assets,
which have been held for more than one year. |
|
All qualifying
businesses |
First-year expensing of environmental clean-up
costs is extended. |
As a general rule, environmental clean-up
costs are treated as expenses that must be
capitalized. However, under an exception that
expired at the end of 2007, a company can elect
to currently deduct clean-up expenses in areas
designated as contaminated sites by state
authorities.
The new law extends the provision allowing
taxpayers to immediately deduct qualified
environmental remediation expenses through
12/31/09. |
|
Oil, gas, and refining
companies |
Various favorable and unfavorable provisions. |
Four changes
affecting oil, gas and refining businesses are
included in the new law. They involve the
domestic production deduction, foreign tax
credit, enhanced depreciation rules and
depletion deductions. Click
here for details. |
|
Farming businesses |
New
depreciation tax break and enhanced deduction
for charitable contributions. |
The law contains two provisions for farmers: One
allows equipment to be depreciated over a
shorter period of time and the other provides an
enhanced deduction for charitable donations of
wholesome food. There are deadlines for both tax
breaks. Click
here for details. |
|
Financial institutions
including community banks, savings and loans,
business development corporations, banks and
savings and loan holding companies and others
|
Institutions can treat Fannie Mae and Freddie
Mac losses as ordinary losses. |
A new rule
mandates ordinary gain/loss treatment for gains
or losses recognized when applicable financial
institutions sell or exchange applicable
preferred stock in Fannie Mae or Freddie Mac
that:
- Was held
on 9/6/08 or
- Was sold
or exchanged between 1/1/08 and 9/6/08.
Without
this favorable provision, financial institution
losses from selling Fannie Mae and Freddie Mac
preferred shares would generally be classified
as capital losses and subject to strict
limitations on deductibility.
The law also gives the IRS
authority to extend ordinary gain/loss treatment
to other instruments held by financial
institutions that don't precisely meet the
definition of applicable preferred stock (for
example, pass-through trust certificates based
on Fannie Mae and Freddie Mac preferred stock). |
|
Film makers |
Changes that may make the domestic production
deduction easier to qualify for. |
For purposes
of claiming the domestic production deduction
(also called the Section 199 deduction), gross
receipts include those from making qualified
films.
The law liberalizes the definition of
qualified films to encompass copyrights,
trademarks, and other film-related intangibles.
It also liberalizes the definition of "W-2
wages" used to determine the 50
percent-of-W-2-wages limitation for filmmakers.
The expanded definition covers compensation for
services in the U.S. by actors, production
personnel, directors, and producers -- whether
the compensation is in the form of W-2 wages or
not. Also, it is now easier to claim domestic
production deductions for filmmaking ventures
involving partnerships and S corporations. The
changes are effective for tax years beginning
after 2007. |
|
Television and film
production businesses |
The first-year
expensing tax break is extended. |
The law
extends the provision allowing immediate
deductions of up to $15 million to $20 million
(depending on the circumstances) of qualified
film and television production costs through
12/31/09. Another change allows the same
favorable treatment for productions that cost
more than the applicable threshold ($15 to $20
million) beginning in 2008 and 2009. Previously,
the first-year expensing break was lost for
productions exceeding the threshold. |
|
Race track facilities |
Depreciation tax break is extended. |
The law extends favorable seven-year
depreciation for qualifying property used for
land improvements and support facilities at
motorsports complexes. The tax break expired on
December 31, 2007, but now covers property
placed in service in 2008 and 2009. |