The President signed the Worker, Homeownership, and Business Assistance Act of 2009 on Friday, November 6th, which is expected to boost the housing recovery and help struggling businesses recover.
This key piece of legislation was spurred by the diligent grass roots efforts of the National Association of Home Builders (NAHB). This Act is estimated to generate 180,000 additional sales, create 211,000 jobs, $9.6 billion of wage income, and $5 billion and $1.9 billion of Federal and State and local taxes, respectively.
The new operating loss provision will provide a much needed cash resource for struggling businesses. Congress also made it clear that any further extension of the tax credits would be highly unlikely.
Specifics of this landmark housing bill include:
Home Buyer Tax Credit Provisions
- The $8,000 tax credit would be extended for first-time home buyers who enter into a sales contract by April 20, 2010 and close by June 30, 2010.
- A new $6,500 tax credit would be created for move-up buyers for the same period and have lived in their primary residence for five consecutive years out of the last eight years.
- Homes being built on a lot already owned by the home buyer would qualify if the occupancy dates are met.
- Both categories of buyers would have new, higher income limits of $125,000 for individuals and $225,000 for couples with additional phase out at $145,000 and $245,000, respectively.
- Depending on income limitations, the credit can be claimed on the taxpayer's 2008 (amended), 2009, or 2010 Federal tax returns. Specifically, taxpayers could elect to treat the purchase as made on December 31st of the calendar year preceding the purchase for purposes of claiming the credit on the prior year's tax return.
- Second homes and homes over the purchase price of $800,000 would not qualify. For more information on the credits, please visit the National Association of Home Builders website.
- There would be a five-year carryback for NOLs generated in either 2008 or 2009, not both. Losses incurred and reported in 2008 could be carried back to additional years from previously filed returns. Further guidance is expected from the IRS, which will help builders make a better determination of what year's losses to potentially carryback.
- Businesses may offset 50 percent of taxable income in the fifth preceding year and 100 percent of taxable income in the remaining four carryback years.
- It should be noted that several states, including Missouri, have decoupled from the 5 year carryback position.
- There would be no size limitation for the company or other cap on revenues.
- Unused NOLs from the carryback would still be eligible for the 20-year carryforward.
- Small businesses (with less than $15 million in gross receipts) would still be able to claim a five-year carryback for 2008 losses (under the American Recovery and Reinvestment Act) and for 2009 losses according to the law.
- There would be no limitation for NOLs claimed against Alternative Minimum Tax liability in carryback years.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.
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