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NFDA Supports Senate Bill to Extend Tax Breaks to Small Businesses

Posted: May 23, 2012

NFDA was one of 26 associations representing small business owners that sent a letter to Senate leaders supporting "The Small Business Tax Extenders Act of 2012" (S.2050).

The bill, introduced by Sens. Olympia Snowe (R-ME) and Mary Landrieu (D-LA) would extend current tax provisions that promote small business growth, stimulate investment, increase cash flow and reduce tax complexity.

Since 2003, Congress has steadily increased the allowable Section 179 expensing amount from $25,000 to $500,000 for tax year 2011. This expensing provision encourages businesses to immediately deduct the full value of investments in equipment in the year the investment is made, rather than claiming the deduction over a longer depreciation period, greatly simplifying tax preparation. The bill expands the definition of qualified property to real property and computer software, thus encouraging business owners to invest in construction and IT-related projects.

The bill also grants much needed relief to subchapter S corporations by increasing their ability to access capital. It does so by reducing the built-in gains holding period for S corporations. When businesses convert from a C corporation to an S corporation, they have been required to hold their appreciated assets for up to a decade or else face a punitive level of double taxation.

Finally, the bill contains several other provisions that benefit a variety of small businesses. These include an extension of the five-year carryback of general business credits for eligible small businesses, an extension of the Alternative Minimum Tax Rules for general business credits and cost recovery benefits for long-term contract accounting.

NFDA will keep you apprised of the status of this bill as it moves through the Senate.