American Recovery and Reinvestment Act of 2009 Highlights

In 2008 Congress created a temporary credit to recover the costs of capital expenditures by allowing a write off of 50% of the cost of qualifying property purchased and placed into service

The new law extends the credit through 2009 for qualifying property purchased and placed into service in 2009

Small Business Expensing (Section 179) Extension

• In 2008, Congress temporarily increased the amount that small businesses could write off for capital expenditures to $250,000 and increased the phase out threshold to $800,000
• The new law extends these temporary increases for capital expenditures in 2009

Loss Carryback of Net Operating Losses for Small Business is Expanded

• The law extends the maximum Net Operating Loss carryback period from two years to five years for small business with gross receipts of $15 million or less

Delayed Recognition of Certain Cancellation of Debt Income

• Certain businesses will be allowed to recognize the cancellation of debt income over a period of 10 years if:
  • Business taxpayers cancel or repurchase debt for an amount less than its adjusted issue price
  • Specified types of debt are repurchased by the business for the years 2009 and 2010

S Corporation Holding Period Temporary Reduction

• The law temporarily reduces the holding period of assets subject to the built-in gains tax from 10 years to 7 years

Unemployed Veterans and Disconnected Youth Hiring Incentives

• The law expands the work opportunity tax credit to include two new targeted groups: Unemployed Veterans and Disconnected Youth
• Businesses can claim a work opportunity tax credit equal to 40% of the first $6,000 of wages paid to employees

Energy Credit

• The law enhances the business energy credit by eliminating the cap on small wind property and repeals the basis reduction requirement for subsidized energy financing

Advanced Energy Investment Credit

• The law establishes a manufacturing investment tax credit for investment in advanced energy facilities
• Such facilities would manufacture components for the production of renewable energy, advanced battery technology, and other innovative green technologies

Renewable Energy Production Tax Credit – Extension and Modification

• The law extends the placed-in-service date for wind facilities for 3 years, through December 31, 2012
• Also extended is the placed-in-service date through December 31, 2013 for certain other qualifying facilities such as: closed-loop biomass, open-loop biomass, geothermal, waste-to-energy, hydropower, small irrigation and landfill gas

Energy and Conservation Bonds

• The law authorized additional funding for new clean renewable energy bonds (CREBS) to finance facilities that generate electricity from sources such as: wind, trash combustion facilities, landfill gas, hydropower, small irrigation, closed-loop biomass, open-loop biomass and geothermal

The law authorized additional funds for qualified conservation bonds to finance State, municipal and tribal governments programs designed to reduce greenhouse gas emissions.