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Tax Law Change 2002
In early March, President Bush signed the Job Creation and Worker
Assistance Act of 2002. Although somewhat scaled back from stimulus
proposals introduced shortly after September 11, 2001, the law is a
significant tax bill. The law provides for several tax breaks,
some of which are retroactive to 2001.
The following is a brief highlight of some of the tax related
provisions:
- Bonus Depreciation — The act provides for "Bonus"
depreciation for qualified property acquired after September 10, 2001
and before September 11, 2004.
- Net Operating Loss — Prior to the Act, taxpayers are
generally entitled to a two-year carryback of net operating losses.
The new law temporarily extends the carryback.
- Extension of Expiring Business Tax Credits and Deductions
— There were a number of credits and deductions that expired on
December 31, 2001 that have now been extended for two years.
- Electronic Filing of Form 1099 — Provided the
recipient agrees, Forms 1099 can be disseminated
electronically.
- Method of Accounting — For accrual basis taxpayers,
the non-accrual experience method of accounting is only available for
the performance of qualified services (ie. Health, law,
consulting).
- Discharge of Indebtedness for S Corporation Shareholder
— The Supreme Court had previously permitted an increase to a
shareholder's basis for income from the discharge of indebtedness,
even when that income was not taxable to the corporation. This had
the potential to create significant tax benefits at the shareholder
level. This opportunity has been legislated away for discharges of
indebtedness income after October 11, 2001.
There were a number of other provisions, including technical
corrections to prior legislation. Many of those changes will benefit
taxpayers. If you would like to find out more about how these changes
affect your organization's taxes, please contact a tax professional at
Alpern Rosenthal at (412) 281-2501.
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