Thursday, January 18, 2007


Yesterday the Senate Finance Committee approved the Small Business and Work Opportunity Bill of 2007, a package of tax incentives for small business that will be offered as an amendment when the full Senate takes up minimum wage legislation.

Highlights of the Bill include:

· Extend the higher Sec. 179 expensing limits ($100,000, indexed for inflation) for one year (through 2010).
· Extend for three months (through March 31, 2008) the 15-year recovery period for qualified restaurant property.
· Provide a 15-year recovery period for qualified retail improvement property placed in service before March 31, 2008. Generally, qualifying property includes improvements to an interior portion of a building open to the public if the improvement is placed in service more than three years after the building was placed in service.
· Eligibility to use the cash method under the gross receipts exception is expanded to taxpayers with receipts under $10 million.
· The work opportunity tax credit would be extended for five years and expanded to included qualified veterans and expands the definition of qualified first-year wages from $6,000 to $12,000 for individuals with a service-connected disability. The bill would also expand the definition of certain groups.
· Provide a certification program for professional employer organizations.
· Make several changes to the rules for S corporations including the expansion of qualifying beneficiaries of an electing small business trust and eliminate gains from sales or exchanges of stock or securities as an item of passive investment income.

The bill also includes an $806 million revenue raiser that would cap at $1 million the amount of executive compensation that can be deferred annually.

The Bill faces an uphill battle in the House, where Ways and Means Committee Chairman Charles B. Rangel of New York said that he has no plans to consider merging small business tax relief with an increase in the minimum wage. Senate Finance Committee Chairman Max Baucus has stated that a minimum wage bill could not pass in the Senate without the small business provisions.

The White House supports legislation that combines an increase in the federal minimum wage with small business tax relief. The administration opposes, in its current form, the stand-alone minimum wage bill, HR 2, which is scheduled for a House floor vote on January 18.

[Thanks, and a tip of the hat to the Small Business and Management website for highlights of the bill – RDF]

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