President Signs American Recovery And Reinvestment Act

President Signs American Recovery And Reinvestment Act
Feb. 17, 2009
FEI Summary

On  Feb. 17, 2009 President Barack Obama signed the American Recovery and Reinvestment Act (ARRA or the Act). The Act provides $787 billion in funding for economic stimulus. In his remarks at the bill signing, the President noted a new website, www.recovery.gov has been established to provide infomation on how the money is being spent.

During the course of debate over ARRA, FEI’s Committee on Private Companies, Committee on Taxation and Committee on Government Business provided guidance to congressional leadership. Each committee sent letters to congressional leadership, providing short-term economic stimulus ideas, and FEI staff followed-up with congressional staff, advising on the base bill and amendments. 

Ultimately, FEI’s efforts on the economic stimulus were successful as several FEI ideas made it into the final version of the bill along with several other important business tax relief provisions.  The final compromised $787 billion stimulus plan  includes approximately $280 billion in tax relief for individuals and businesses. Following are the major tax provisions in the bill, according to the final compromised bill released on February 12:

·         Alternative Minimum Tax (AMT) Patch for 2009. 

·         Extension of the 50 percent bonus depreciation through 2009.

·         Extension of monetization of accumulated AMT and research credits in lieu of bonus depreciation through 2009.

·         Extension of Section 179 increased small business expensing through 2009.

·         Five-year carryback of net operating losses in 2008 and 2009, applicable to small businesses with gross receipts of $15 million or less.

·         Small business capital gains relief allowing a 75 percent exclusion for individuals on the gain from the sale of certain small business stock held for more than five years.

·         Temporarily reduction of the holding period of S Corporation assets subject to the built-in gains tax from 10 years to seven years. 

·         Delays implementation of the 3 percent withholding on government contractors by one year (date moved to 2012).

·         Cancellation of debt income: The cancellation of debt recognized in income (CODI) is deferred in 2009 and 2010 until 2014, and allows CODI to be spread over a five-year period of income beginning in 2014.

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