A PUBLICATION OF RANDOM U.S.GOVERNMENT PRESS RELEASES AND ARTICLES
Showing posts with label U.S. TREASURY GREEN BOOK. Show all posts
Showing posts with label U.S. TREASURY GREEN BOOK. Show all posts
Tuesday, February 14, 2012
OBAMA ADMINISTRATION PROPOSES ONE YEAR EXTENSION OF 100% DEPRECIATION TAX DEDUCTION
The following excerpt is from the Department of Treasury website:
EXTEND 100 PERCENT FIRST-YEAR DEPRECIATION DEDUCTION FOR ONE
ADDITIONAL YEAR
Current Law
An additional first-year depreciation deduction is temporarily allowed for qualified property placed
in service before January 1, 2013. The deduction equals 50 percent of the cost of qualified
property placed in service during the taxable year, and is allowed as a depreciation deduction for
both regular tax and alternative minimum tax purposes. The property’s depreciable basis is
adjusted to reflect this additional deduction. Taxpayers may elect out of this additional
depreciation deduction for any class of property for any taxable year. The additional first-year
deduction equaled 100 percent of the cost of qualified property acquired after September 8, 2010
and before January 1, 2012, and placed in service prior to January 1, 2012.
Qualified property includes tangible property with a recovery period of 20 years or less, water
utility property, certain computer software, and qualified leasehold improvement property. It
excludes property that is required to be depreciated under the alternative depreciation system. The
original use of the property must commence with the taxpayer, and the taxpayer must purchase (or
begin the manufacture or construction of) the property after December 31, 2007 and before January
1, 2013 (but only if no written binding contract for the acquisition was in effect before January 1,
2008). The property must be placed in service before January 1, 2013. An extension by one year
of the placed-in-service date is allowed for certain property having longer production periods, but
only the portion of the basis that is properly attributable to costs incurred prior to January 1, 2013
may be taken into account. Certain aircraft not used in providing transportation services are also
granted a one-year extension of the placed-in-service deadline. Special rules apply to syndications,
sale-leasebacks, and transfers to related parties of qualified property. The dollar limitation on the
first-year depreciation allowance of qualifying passenger automobiles is increased by $8,000.
Corporations otherwise eligible for additional first-year depreciation may elect to claim additional
alternative minimum tax credits in lieu of claiming the additional depreciation for “eligible
qualified property.” Such property includes otherwise qualified property that was acquired after
March 31, 2008, and only adjusted basis attributable to its manufacture, construction, or
production after that date and before January 1, 2010, or after December 31,2010, and before
January 1, 2013 is taken into account. Depreciation for such property must be computed using the
straight-line method if the corporation elects this provision.
Reasons for Change
By accelerating in time the recovery of investment costs, additional first-year deductions for new
investment lower the after-tax costs of capital purchases. This encourages new investment and
promotes economic recovery.
Proposal
The proposal would extend the 100-percent additional first-year depreciation deduction for one
additional year. Thus, qualified property acquired and placed in service through 2012 (2013 for
property eligible for a one-year extension of the placed-in-service date) could be fully expensed.
Taxpayers could elect not to expense any class of their qualified property and instead depreciate
that property without any additional first-year depreciation deduction.
The proposal would be effective for qualified property placed in service after December 31, 2011
Monday, February 13, 2012
OBAMA ADMINISTRATION PROPOSES CHANGING INCENTIVES TO INCREASE DOMESTIC MANUFACTURING
The following excerpt is from the Department of Treasury website:
INCENTIVES FOR EXPANDING MANUFACTURING AND INSOURCING
JOBS IN AMERICA
PROVIDE TAX INCENTIVES FOR LOCATING JOBS AND BUSINESS ACTIVITY IN
THE UNITED STATES AND REMOVE TAX DEDUCTIONS FOR SHIPPING JOBS
OVERSEAS
Current Law
Under current law, there are limited tax incentives for U.S. employers to bring offshore jobs and
investments into the United States. In addition, costs incurred to outsource U.S. jobs generally are
deductible for U.S. income tax purposes.
Reasons for Change
On January 11, the White House released a report that details the emerging trend of "insourcing"
and how companies are increasingly choosing to invest in the United States. For example, real
business fixed investment has grown by about 18 percent since the end of 2009. In the past two
years, over 400,000 manufacturing jobs have been created, while manufacturing production has
increased by about 5.7 percent on an annualized basis since its low in June of 2009, its fastest pace
in a decade. In addition, continued productivity growth has made the United States more
competitive in attracting businesses to invest and create jobs by reducing the relative cost of doing
business compared to other countries. The Administration would like to make the United States
more competitive in attracting businesses by creating a tax incentive to bring offshore jobs and
investments back into the United States. In addition, the Administration would like to reduce the
tax benefits that exist under current law for expenses incurred to move U.S. jobs offshore.
Proposal
The proposal would create a new general business credit against income tax equal to 20 percent of
the eligible expenses paid or incurred in connection with insourcing a U.S. trade or business. For
this purpose, insourcing a U.S. trade or business means reducing or eliminating a trade or business
(or line of business) currently conducted outside the U.S. and starting up, expanding, or otherwise
moving the same trade or business within the United States, to the extent that this action results in
an increase in U.S. jobs. While the creditable costs may be incurred by the foreign subsidiary of
the U.S.-based multinational company, the tax credit would be claimed by the U.S. parent
company. A similar benefit would be extended to non-mirror code possessions (Puerto Rico and
American Samoa) through compensating payments from the U.S. Treasury.
In addition, to reduce tax benefits associated with U.S. companies’ moving jobs offshore, the
proposal would disallow deductions for expenses paid or incurred in connection with outsourcing a
U.S. trade or business. For this purpose, outsourcing a U.S. trade or business means reducing or
eliminating a trade or business or line of business currently conducted inside the United States and
starting up, expanding, or otherwise moving the same trade or business outside the United States,
to the extent that this action results in a loss of U.S. jobs. In determining the subpart F income of a
controlled foreign corporation, no reduction would be allowed for any expenses associated with 28
moving a U.S. trade or business outside the United States.
For purposes of the proposal, expenses paid or incurred in connection with insourcing or
outsourcing a U.S. trade or business are limited solely to expenses associated with the relocation of
the trade or business and do not include capital expenditures or costs for severance pay and other
assistance to displaced workers. The Secretary may prescribe rules to implement the provision,
including rules to determine covered expenses.
The proposal would be effective for expenses paid or incurred after the date of enactment.”
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