Small Business Jobs Act of 2010 - Day Trader Tax Tips News


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Small Business Jobs Act of 2010: Thousands in Tax Savings for Day Traders Who Mean Business!

September 29, 2010 - By Michelle Boyer, CPA

The "Small Business Jobs Act of 2010" being signed into law yesterday has paved a new road of opportunity for day traders who think business. With so much uncertainty surrounding proposed tax laws and the scuffle back and forth between political candidates, we have seen very little certainty until now.

Let’s take a look at some of the more prominent “helps” for traders...

Thinking about starting a business? Now is a great time. Generally, you have been able to deduct up to $5,000 in qualified trade or business start-up expenses. The $5,000 deduction is reduced (but not below zero) by the amount of the taxpayer’s total start-up costs that exceed $50,000. This bill raises the deduction limit to $10,000 and increases the phaseout threshold to $60,000 for one year, 2010.

The bill also extends the 50% first-year bonus depreciation , which had expired at the end of 2009. The extension is retroactive to January 1, 2010. The bill also extends, through 2011, the additional year of bonus depreciation allowed for property with a recovery period of 10 years or longer, and for transportation property.

What about those computers that could stand to be a little faster? Eligible taxpayers may elect to claim a Code Sec 179 expense deduction on the purchase price of qualified Code Sec 179 property. The maximum deduction for tax years beginning in 2010 was $250,000. The dollar limit was reduced by the amount by which the cost of qualifying property placed in service during the tax year exceeded $800,000. For 2011, the expense was supposed to revert back to the $25,000 limit with the expense being reduced once purchased assets reached $200,000. The bill increases the maximum deduction to $500,000 and the investment limit to $2 million for tax years beginning in 2010 and 2011.

Nothing caught your eye yet? Consider the following...

The bill removes cell phones and similar personal communication devices from their current classification as listed property under Code Sec 280F, thereby lifting the strict substantiation requirements of use and the additional limits placed on depreciation deductions.

The General Business Credit carryback period for eligible small business credits is extended to five years. This provision is effective for credits determined in the taxpayer’s first tax year beginning after December 31, 2009.

Code Sec 1202 was temporarily increased by the 2009 Recovery Act. The 2009 Act provides an exclusion for qualified small business stock sold by an individual from 50% to 75% for stock purchased after February 17, 2009 and before January 1, 2011, and held for more than five years. The bill raises the exclusion to 100 percent for gain on stock acquired after the date of enactment of the bill and before January 1, 2011. Under the bill, the excluded gain will not count as an AMT preference item but the five-year holding period continues to apply.