The Act includes a host of tax changes affecting individuals, corporations, and businesses, such as: ... Financial bailout-related tax changes. Emergency economic stabilization related tax measures consist of a three-year extension for home mortgage debt forgiveness relief under Code Sec. 108 , tax relief for community banks by permitting them to treat losses on Fannie Mae and Freddie Mac preferred stock holdings as ordinary losses, and a tax crackdown on compensation and severance pay for certain financial executives. ... AMT relief for individuals. The Act boosts AMT exemption amounts for individuals for 2008, and also provides that for 2008, personal nonrefundable credits may offset AMT and regular tax. Additionally, the Act also liberalizes the AMT refundable credit amount rules. ... Extended tax breaks. More than 30 tax breaks that either expired at the end of 2007 or are soon to expire have been extended by the Act. For example, all of the following individual tax breaks are retroactively revived to apply for the 2008 tax year and are extended to apply to the 2009 tax year as well: the election to deduct state and local general sales tax, the above the line deduction for higher education expenses, the above the line deduction for educator expenses, and the ability of taxpayers age 70 1/2; or older to make nontaxable IRA transfers to eligible charities. The business tax breaks that are extended by the Act include the research credit (which is also modified), the 15-year writeoff for qualified leasehold improvements and qualified restaurant property (which is also liberalized), and enhanced deductions for certain charitable contributions (which is also liberalized for farmers). ... New tax relief measures. These include relaxed writeoff rules for film and TV productions, quick 5-year depreciation for many types of farm property, modified rules for the penalty on understatement of a taxpayer's liability by a tax return preparer, mental health parity rules, and liberalized rules for the refundable child tax credit. ... Energy incentives. These include extensions for the alternative energy credit, the residential energy efficient property credit, the energy efficient buildings deduction, the credit for energy efficient improvements to new homes, and a new credit for plug in electric vehicles. Many other tax incentives for alternative energy creation are either extended or created. ... Disaster relief. The Act provides a host of tax relief measures for disaster victims (both individuals and businesses) in ten Midwestern states and also creates new national disaster relief for all federally declared disasters occurring after 2007 and before 2010. This relief includes eased loss deduction rules for individuals, fast writeoffs for business cleanup expenses, and a 5-year carryback for NOLs attributable to qualified disaster expenses.
... Revenue raisers. The revenue raisers in the Act include broker reporting of customers' basis in securities transactions, an extension of the 0.2% FUTA surcharge, a limited Code Sec. 199 domestic production activities deduction for the oil and gas industry, and new rules for nonqualified deferred compensation from certain tax-indifferent parties.
Source: RIA Checkpoint