New tax acts offer benefits individuals and businesses

Recently, Congress passed a new tax act called, “The Worker, Homeownership and Business Assistance Act of 2009.”  According to Brent Hall, partner with HintonBurdick CPAs & Advisors, “Two of the most significant provisions within the tax act provide benefit for homeowners and persons or businesses incurring net operating losses”.  These provisions are as follows:

Homebuyer Tax Credit: This bill extends the $8,000 tax credit for first-time homebuyers for an additional five months, from November 30, 2009 to May 1, 2010.  In addition, the bill also provides a $6,500 tax credit for homebuyers that are not first time buyers but who have owned a primary residence for at least five consecutive years in the last eight years.

According to Hall, “The bill would cap the eligibility for the credit on homes that cost $800,000 or more. The bill also raises the current qualifying income limit from $75,000 for a single filer, or $150,000, in the case of a joint return, to $125,000 or $225,000 respectively”.  This bill also waives provisions to recapture the credit for military, intelligence, and Foreign Service personnel who are on qualified official duty and extends the tax credit for an additional year for those on qualified extended duty overseas for 90 days or more since 2008.

Five-Year Carryback of Net Operating Losses:  The bill also extends the net operating loss (NOL) carry back period from two years to five years for 2008 or 2009 for all companies.  An NOL is defined as the amount by which a company or taxpayer's business deductions are greater than its gross income in a given year.  Under the legislation, NOLs that are carried back by businesses to the fifth taxable year would be limited to 50 percent of the taxpayer's taxable income. Troubled Asset Relief Program recipients would also be excluded from the 50% limit provision. The former stimulus bill provided a five-year NOL carry back provision only for businesses with receipts of less than $15 million.  Hall stated, “This current bill however, provides a carry back for all firms, including those above the threshold”.

Please contact the offices of HintonBurdick CPAs & Advisors at 435-628-3663 if you have any questions or check us out online for current tax tips at www.hintonburdick.com.