This is the last in a three-part series of articles on the 2010 Tax Relief Act. Previous articles are available in the Member’s Area of or in our blog.

 Gift Tax Relief

For gifts made in 2010, the 2010 Tax Relief Act provides that gift tax is computed using a rate schedule having a top tax rate of 35 percent and an applicable exclusion amount of $1 million. For gifts made after 2010, the gift tax is reunified with the estate tax with a top gift tax rate of 35 percent and an applicable exclusion amount of $5 million, meaning that after 2010 the amount you can give during life or at death is $5 million per person, or $10 million per married couple.

 WARNING:  Estate Tax Planning and Gift Tax Planning are very complex areas of law.  These types of planning should not be handled by anyone who does not practice estate planning as a full-time occupation and who is not a licensed attorney at law.  Anyone working in the estate planning / gifting area should know the intricacy’s of the U.S. Tax Code inside and out!   Kingman Winslow, LLC would be happy to provide excellent estate planning attorney referrals and to assist with tax consulting advice.  Remember we don’t draft legal documents under the ethical rules but we can consult and refer.  As part of your annual fee we are happy to meet with you on a no fee basis to determine whether your estate is taxable and to refer you to a good estate planning attorney.

 Extension of Unemployment Benefits

Extension of unemployment benefits: Those who are unemployed will get a 13-month extension of the deadline to file for additional unemployment benefits.

 Business Incentives

 100 Percent Bonus Depreciation

The 2010 Tax Relief Act boosts 50-percent bonus depreciation to 100-percent for qualified investments made after September 8, 2010 and before January 1, 2012. The 2010 Tax Relief Act also makes 50-percent bonus depreciation available for qualified property placed in service after December 31, 2011 and before January 1, 2013. Certain long-lived property and transportation property is eligible for 100- percent expensing if placed in service before

January 1, 2013.

Capital Asset Deductions For Business – IRC Section 179

The IRC Section 179 Deduction allows businesses and self-employed individuals to deduct the costs of capital assets purchased for business use (i.e., computers, bookshelves, office furniture, off the short software, etc…).  Congress has repeatedly increased the dollar and investment limits under Code Sec. 179 to encourage business spending.

The 2010 Small Business Jobs Act (passed in September 2010) increased the Code Section 179 dollar and investment limits to $500,000 for 2010 and $2 million for the year 2011. 

The 2010 Tax Relief Act provides for a $125,000 dollar limit (indexed for inflation) and a $500,000 investment limit (indexed for inflation) for tax years beginning in 2012 (and scheduled to go away or “sunset” after December 31, 2012). The 2010 Tax Relief Act also extends the treatment of off-the-shelf computer software as qualifying property if placed in service before 2013.

Summary overview 2010 Tax Relief Act.

What are the impacts of the 2010 Tax Relief Act overall? 

The lowering of individual tax rates combined with the payroll tax cut will increase the amount of money U.S. taxpayers get to keep in 2011 over what would have resulted without the 2010 Tax Relief Act.  Moreover, the 2010 Tax Relief Act finally gives taxpayers some certainty in tax planning for the next two years, especially when trying to plan future estate tax issues. 

However, all the provisions of the 2010 Tax Relief Act described above are temporary and the new law merely defers the issue of these tax extensions and Bush-era tax cuts till December 2012.  It is probably not a coincidence that 2012 is a presidential election year.  As with all these tax provisions timing is everything and in this particular case, we can be at least thankful that for 2010 and 2011 we as individuals and the U.S. economy as a whole has a last minute “fix” which may allow for some significant financial recovery. 

***Please note that the aforementioned tax analysis does not include all provisions of the 2010 Tax Relief Act.  As such, contact Kingman Winslow, LLC before filing your 2010 taxes next year.

You don’t want to miss out on any of the benefits of this new legislation.  To find out more about the 2010 Tax Relief Act and how it may impact your personal and business finances, be sure to contact us at Kingman Winslow, LLC with questions and bring notes on this article for your 2010 tax return preparation meetings.  As always, we are here to assist you with your tax preparation, audit and tax planning issues.