House Approves Tax Relief for Small Businesses

WASHINGTON, D.C. – Today the House of Representatives approved H.R. 5486, the Small Business Jobs Tax Relief Act of 2010, by a bipartisan majority of 247-170. The legislation would provide much-needed tax cuts for small businesses to help them grow and create new jobs. H.R. 5486 is companion legislation to H.R. 5297, the Small Business Jobs and Credit Act, which will enhance lending opportunities for small businesses. Both pieces of legislation are fully offset by closing existing tax loopholes and will not add to the deficit.

• Small Business Stock Capital Gains: The bill builds on the work done in the American Recovery and Reinvestment Act, and increases the capital game exclusion on investments in small business stock to 100% (from 75% done in the Recovery Act).

• Small Business Tax Penalty Relief: The bill would alleviate certain onerous, often dramatically disproportionate tax penalties on small businesses. These provisions will help owners of those businesses focus their resources on keeping their workers employed and adding new workers as they grow.

• Increased Deduction for Start-up Costs: The bill would allow small businesses to deduct up to $20,000 in small business start-up expenses (expenses not related to capital or equipment). By increasing the amount that entrepreneurs can recover up front, the bill will provide greater security and cashflow to grow their businesses and hire new workers.

• Treat SBA Non-recourse Loans as At-risk: The bill would allow non-recourse SBA loans to qualify for certain exceptions to the at-risk loan rules, allowing business expenditures made under those loans to be deductible against related business income.