LOISELLE, GOODWIN & HINDS
CERTIFIED PUBLIC ACCOUNTANTS

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Note:  Any tax advice contained on this website is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

New Law Changes Affecting Businesses

Here's a summary of the most widely applicable business-related tax provisions that have been restored and/or modified and extended by the Tax Relief and Health Care Act of 2006, and for how long:

• The research and development (R&D) credit is restored for 2006 and extended for 2007. In addition, for tax years ending after 2006, the new law enhances the credit by (1) increasing the rates of the alternative incremental credit and (2) creating a new alternative simplified credit that does not use gross receipts as a factor (so that newer businesses can access the credit).
  
  
• The work opportunity tax credit (WOTC), which is a credit for wages paid by employers who hire individuals from certain targeted groups, and the welfare-to-work tax credit, which is a credit for wages paid by employers who hire long-term family assistance recipients, are extended in their current form for workers hired in 2006 and combined and modified for those hired after 2006 and before 2008.
  
  
• The election to expense (currently deduct) environmental remediation costs associated with cleaning up certain hazardous sites is restored for 2006 and extended for 2007, and for post-2005 expenses, the definition of an eligible contaminated site is expanded to include sites contaminated by petroleum products.
  
  
• The accelerated writeoff for certain leasehold improvements and restaurant property (depreciation over 15 years instead of 39 years) is restored for 2006 and extended through 2007.
  
  
• The bonus 50% first-year depreciation break that was included in the Gulf Opportunity Zone Act of 2005 is modified by extending the placed-in-service deadline for certain property used in certain highly damaged areas within the Gulf Opportunity Zone.
  
  
• The tax credit for builders of new energy efficient homes is extended through 2008. The credit applies to manufactured homes meeting a 30% energy reduction standard and other homes meeting a 50% standard.
  
  
• The deduction for energy efficient commercial buildings meeting a 50% energy reduction standard is extended through Dec. 31, 2008.

Please keep in mind that this article described only the highlights of the most important changes in the new law. Please contact us for details on how you are affected by these changes, and whether you are affected by any of the more highly specialized new law changes not covered in this article.

(12/14/06)

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Last modified: July 30, 2009