Small Business Jobs Act: A Windfall for Small to Mid-sized Manufacturers

Sept. 24, 2010 - PRLog -- Congress passed the Small Business Jobs Act (SBJA) on September 23, 2010 and has sent it to President Obama to be signed into law.  The President is expected to sign the legislation on Monday, September 27, 2010, at which time some much needed tax relief will be available to numerous small and medium sized businesses for 2010.  Of particular note are two provisions: the modification to a five year credit carryback and the modification of the Alternative Minimum Tax (AMT) in relation to general business credits.

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Five Year Carryback on Unused General Business Credits
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Previously, the carryback and carryforward rules for general business credits stated, generally, that unused credits were to be carried back only one year and, if unused in that year, then carried forward up to twenty years.  The previous rules do not provide the immediate tax relief many taxpayers need.  

With the SBJA, taxpayers will be able to carry back unused credits generated in 2010 a total of five years before having to carry them forward.  This change will allow many taxpayers who have been hit recently by the economy to still receive an immediate tax benefit, even if they are unprofitable in 2010.

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General Business Credits Not Subject to AMT
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Prior to the SBJA, general business credits generated by a taxpayer were subject to the AMT.  This credit subjugation to the AMT drastically limited or completely eliminated the benefit of the general business credit to many taxpayers.  With the passage of the SBJA by Congress, many small to medium sized businesses will not have this AMT limitation applied to general business credits generated in 2010.  

Congress has defined the businesses that can take advantage of this AMT change as being the sole proprietorships, partnerships, and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years.  

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Immediate Tax Relief
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These two provisions will provide the immediate tax relief needed by many small to medium sized businesses to help them succeed in today’s economy.  It is noteworthy that these provisions will apply to the Research and Development Tax Credit when it is passed later this year, thereby allowing many taxpayers to take advantage of this credit that previously were unable to due to a lack of utilization.

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Free Webinar
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In response to this great opportunity, Paradigm Partners is offering a series of Free Webinars to highlight the benefits to small to mid-sized manufacturers.

To view a schedule and register for one of these webinars, click the link below:
http://www.paradigmlp.com/UserFiles/file/WebRegSBJA.html

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Paradigm Partners is a national tax consulting firm specializing in niche tax services: the R&D Tax Credit, Sales and Use Tax, the IC-DISC (US Exporters' Tax Incentive), Federal and State Hiring Tax Incentives, Energy Efficiency (Section 179D) and Cost Segregation Studies.