HIGHLIGHTS OF SMALL BUSINESS JOBS ACT 2010 (CONT’D)

EXTENDED CARRYBACK OF GENERAL BUSINESS CREDIT
The new law extends the carryback period of for
eligible small business credits to five years.
Eligible small business credits are the sum of the
general business credits determined for the tax
year with respect to an eligible small business.
The extended carryback provision is effective for
credits determined in the taxpayer’s first tax year
beginning after December 31, 2009.

QUALIFIED SMALL BUSINESS STOCK
The act amends IRC § 1202 to increase the
exclusion from gross income of gain from the
sale or exchange of qualified small business
stock from 50% to 100%, and the minimum tax
preference does not apply.
This provision applies to eligible stock acquired
after Sept. 27, 2010, and before Jan. 1, 2011.

START-UP EXPENSE DEDUCTION
The act increases the IRC § 195 deduction for
trade or business startup expenses from
$5,000 to $10,000 for tax years beginning in
2010. The start of the limitation on the
deduction is increased from $50,000 to
$60,000.
So for 2010 the amount of the deduction is the
lesser of (1) the amount of the startup
expenses or (2) $10,000, reduced (but not
below zero) by the amount by which the startup
expenditures exceed $60,000.

401(K) ROLLOVERS TO ROTH ACCOUNTS
The act also allows rollovers from elective deferral
plans to Roth-designated accounts. If a section
401(k) plan, section 403(b) plan or governmental
section 457(b) plan has a qualified designated
Roth contribution program, a distribution to an
employee (or a surviving spouse) from an account
under the plan that is not a designated Roth
account is permitted to be rolled over into a
designated Roth account under the plan for the
individual. This provision is effective for
distributions made after Sept. 27, 2010.
If the amount is rolled over in 2010, the amount is
uncluded ratably in income in equal amounts over
2011 and 2012, unless the taxpayer elects
otherwise.

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