Tax considerations for Individuals
Mortgage forgiveness income can be excluded up to $2,000,000.
10% tax credit (up to $7,500) for purchase of a home between January and June 2009. Credit must be repaid over a period of 15 years starting two years after purchase. Credit is phased out for single taxpayers with AGI over $75,000 and married taxpayers with AGI over $150,000.
If equity positions sold during 2008 are repurchased within 30 days of the sale, losses from those sales are disallowed.
Incentive Stock Options (ISOs): the spread is not included in compensation at the time the option is granted. Although not taxable at the time granted, the spread is an AMT preference item. The liability for any taxes paid or owed (as well as interest and penalties) due to this AMT preference are creditable and the tax liability is abated going forward.
AMT exemption amounts have increased for 2008 to $69,950 for married taxpayers filing jointly and $46,200 for single taxpayers.
Higher education tuition deduction has been extended to 2009 with an AGI phase out above $130,000 for single taxpayers and $160,000 for married taxpayers.
Kiddie tax consideration has now been extended to include full-time students up to 24 years of age.
Tax considerations for Businesses
Section 179 expense has been increased for 2008 to $250,000 with a phase-out starting above $800,000.
Extension of New Markets Tax Credit has been extended for distressed areas to spur development.
Bonus depreciation is back for 2008 for assets with MACRS recovery periods of less than 20 years and will expire at the end of 2008.
15 year life for leasehold improvements has been extended.
R&D tax credits have been extended through December 31, 2009 and the Alternative Simplified Credit rate has been increased to 14% for 2009.
Commercial Energy Efficient Property Tax Incentives – added deductions for making the property more energy efficient than a certain standard in the area. Entire project must undergo rigorous oversight to ensure adherence to these additional standards.
LIFO inventory valuation during highly inflationary periods may result in higher deductions.