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Five Ways to Leverage the 2009 Recovery-Reinvestment Act

April 12, 2009

Miller Nash
Oregon and Washington Law Firm

Miller Nash LLP, one of the Pacific Northwest’s larger multispecialty law firms focusing on business and litigation, has highlighted key opportunities for businesses in the American Recovery and Reinvestment Act of 2009. Signed into law on Feb. 17, 2009, the Act includes incentives for individuals and businesses to help jumpstart the economy. While certain individual incentives – such as for car buyers or first-time homebuyers – have been well publicized, the Act’s benefits for businesses may not have the same broad awareness.

“Given the current economic climate, business leaders will want to investigate the significant cost-saving and profit-boosting avenues available,” said William Manne, partner at Miller Nash. “The American Recovery and Reinvestment Act of 2009 provides a host of new opportunities. Working with their legal or tax representatives, business leaders should be able to quickly incorporate elements of the Act that will be advantageous to their financial statements; some incentives require action with respect to filing of 2008 tax returns or pertain only to 2009, so time is of the essence.”

Manne provides five ways for businesses to leverage the American Recovery and Reinvestment Act of 2009:

1. Extended 2008 Business Stimulus Provisions: A Good Time to Purchase Assets

A number of provisions have been extended for expenditures made in 2009. Extended provisions include: the 50 percent bonus depreciation provision, the election to accelerate AMT or R&D credits, and the ability of small businesses to fully deduct up to $250,000 for the purchase of new assets.

2. Net Operating Loss Carryback: Get a Refund of Past Taxes

A new provision allows businesses with less than $15 million in revenue to carryback their 2008 net operating loss for up to five years (previously, the carryback was limited to two years). Carryback elections made in previous years can be changed, but only once and only on a timely basis.

3. Reduced Estimated Tax Payments: Increase Cash Flow

For 2009, an individual will not be subject to penalty or interest for underestimating tax deposits if the payments are equal to at least 90 percent of the liability, so long as the individual’s adjusted gross income is less than $500,000 and at least 50 percent of their income is from small business.

4. Small Business Capital Gains Relief: Start a New Business

If an individual invests in the stock of a small business for at least five years, they may exclude up to 75 percent of the gain if all other qualifications are met. This provision is effective for investments made after the date of enactment and before Jan. 1, 2011.

5. Enhanced Work Opportunity Credit: Get A Subsidy for Hiring Veterans, Youth

Unemployed veterans and disconnected youth are new categories of out-of work individuals who employers can hire to quality for the Work Opportunity Credit. Specific criteria apply to each category, and the credit is available in 2009 and 2010 for any employee starting after Dec. 31, 2008.

Each company’s situation is unique and can change rapidly in the current downturn, so business owners and managers are urged to contact their legal and tax advisors to understand which provisions may be applied for the maximum benefit.

About Miller Nash

Miller Nash LLP is one of the Pacific Northwest’s largest and most respected multiservice law firms, offering comprehensive, creative, and innovative services to its business clients since 1873. Miller Nash has 126 lawyers serving clients throughout our offices in Portland, Bend and Prineville, Ore. and Seattle and Vancouver, Wash. Miller Nash serves a wide range of leading businesses, nonprofit organizations, public entities, and individuals, and does pro bono representation. The firm’s clients work in a variety of significant industries, including banking, biotech, construction, energy, food production, forest products, government, healthcare, higher education, intellectual property, real estate, securities, and software. More information is available at http://www.millernash.com/.

  
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