EFTA01221462.pdf

a Wolters Kluwer business HIGHLIGHT,S o 4025 W. Peterson Ave. 2010 TAX LEGISLATIO Chicago, IL 60646-6085 I 800 248 3248 www.CCHGroup.com Tax Relief, Unemploymen Insurance Reauthorizatio and Job Creation Act of 2010 • RIC Modernization Act of 2010 EFTA01221462  HIGHLIGHTS of 2010 TAX LEGISLATION Tax Relief, Unemployment Insurance Reathorization, and Job Creation Act of 2010 • RIC Modernization Act of 2010 CCH Editorial Staff Publication CCH a Wolters Kluwer business EFTA01221463 2 HIGHLIGHTS of 2010 Tax Legislation 3 This publication is designed to provide accurate and au- CONTENTS thoritative information in regard to the subject matter cov- ered. It is sold with the understanding that the publish- Introduction 5 er is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is Lower Tax Rates Extended 7 required, the services of a competent professional person should Individual Tax Rates 7 be sought Marriage Penalty Relief 8 Relief from Deduction Limitation and In the course of preparing this publication, the publisher Exemption Phaseout 9 has randomly selected names for use In providing examples and de- scribing situations:Any similarityto persons kiting or dead, fictional Lower Rates on Capital Gains and or nonfiction,* is purely coincidental and the publisher disclaims Dividend Income Extended 10 any responsibility of liability therefore. Alternative Minimum Tax Relief 12 AMT Exemption Amounts 12 ISBN 978.0.8080.2610-5 AMT Nonrefundable Personal Credits 13 Income, Deductions, and Credits 02010 CCH. All Rights Reserved. for Individuals 14 Incentives for Education Extended 14 Incentives for Families Extended 15 4025 W. Peterson Ave. Chicago, IL 60646-6085 Other Deductions Extended 18 1 800 248 3248 Other Credits Extended 18 swnv.CCHGroup.com Other Exclusions Extended 21 Investment Extensions and Incentives 22 No claim is made to original government works; however, within this Bonus Depreciation 22 Product or Publication, the followingare subject toCCH's copyright: Accelerated AMT Credit in Lieu of (1) thegatheting,compRation, and arrangement of suchgovernment Bonus Depreciation 23 materials; (2) the magnetic translation and digital conversion of Code Section 179 Deduction 24 data, if applicable; (3) the historical, statutory,and other notes and Qualified Leasehold, Retail, Restaurant Property 25 references; and (4) the commentary and other materials. Exclusion of Gain on Certain Small Business Stock 25 Community Assistance Provisions 25 Printed In the United States of America Business Deductions and Credits 26 Deductions 26 Credits 27 Energy Provisions 28 Payroll Tax Cut 29 (0 sustedtatt E Certified Fiber Sourcing FCRES TRY Estate and Gift Taxes 30 NumM www.sliprogram.ore Estate Tax 31 Basis Rules 33 EFTA01221464 4 HIGHLIGHTS of 2010 Tax Legislation . • • Gift Tax 33 INTRODUCTION Generation-Skipping Transfer Tax 34 Optional Rules for 2010 34 On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Income Tax Exclusion for Sale of Principal Residence 35 Insurance Reauthorization, and Job Creation Act Filing Relief 36 of 2010 (P.L. 111-312). This $858-billion pack- 2013 Sunset Provision 36 age impacts a broad cross-section of taxpayers. One ofits more sweeping provisions is the exten- Miscellaneous Provisions 37 sion of all 2001 and 2003 Bush-era tax cuts for Dividends of Regulated Investment Companies...... 37 two more years, through 2012. As enacted, these S Corporation Basis Adjustment for Charitable Donations 37 were to "sunset" after 2010. The new Act delays this sunset for two years. Thus, the tax rates for Regulated investment Companies 37 income earned by individuals, as well as for capi- tal gains and dividend income, will remain at the lower rates that have been in effect in recent years. More than 50 other tax incentives have also been extended by this provision, including the expanded earned income tax credit, the $1,000 child tax credit, and the increased dependent care credit, to name just a few The tax package contains a highly contentious estate tax relief provision that solves (at least temporarily) the much-publicized issues of what form the estate tax should take, and whether there would be a tax on estates at all in 2010. The agreement reached by the White House and Congress solves the first issue by excluding estates below $5 million from taxation and pro- viding a top tax rate of only 35 percent, and the second issue by essentially making the estate tax optional in 2010. The bill also includes other key changes, including ■ an extension of the AMT patch through 2011, ■ a reduction in the Social Security payroll tax from 6.2% to 4.2% for 2011, and EFTA01221465 6 HIGHLIGHTS of 2010 Tax Legislation 7 ■ an allowance for 100 percent business expens- LOWER TAX RATES EXTENDED ing for one year. Individual Tax Rates It also extends several tax benefits that had The current individual income tax rates, which expired at the end of 2009, including the de- have been in place for most of the past decade, duction for the classroom expenses of teachers, have been extended for two more years, through the deduction for state and local sales taxes, the 2012. These rates are: 10%, 15%, 25%, 28%, credit for new research expenditures, and credit 33%, and 35%. for building new energy efficient homes. Planning Note. After 2012, the individual income tax Included as part of the compromise to get the rates are set to revert back to 15%, 28%, 31%, 36%, bill passed, unemployment benefits have been and 39.6%. Notice that there is no 10% bracket, and extended for 13 more months, through the be- the other brackets, other than the 15% bracket, are ginning of 2012. slightly higher than the ones currently in place. Comment. Several related reductions in withholding A lesser-known bill, the Regulated Investment rates were also extended, including the backup Company Modernization Act, was also signed withholding rate, which will remain equal to 28% into law. It is intended to simplify the rules that apply to mutual funds and to ensure that small through 2012. investor groups are treated equally with direct The tax rate schedules for 2011 are as follows: individual investors. SINGLE TAXPAYERS If taxable income is: Theta is: But not ofthe Over— over— amount over- 50 $8,500 10% $0 8,500 34,500 $850 + 15% 8,500 34,500 83,600 4,750 + 25% 34,500 83,600 174,400 17,025 + 28% 83,600 174,400 379,150 42,449 + 33% 174,400 379,150 110,016.50 + 35% 379,150 MARRIED INDIVIDUALS f ILING SEPARATE RETURNS If taxableIncome is: The tax Is: butnot of the Over— over— amount over— SO 58,500 10% SO 8,500 34,500 5850+15% 8,500 34,500 69,675 4,750+25% 34,500 69,675 106,150 13,543.75 + 28% 69,675 106,150 189,575 2%756.75 + 33% 106.150 189,575 51,287 + 35% 189,575 EFTA01221466 8 HIGHLIGHTS of 2010 Tax Legislation 9 MARRIED INDIVIDUAL FILING JOIN r 'SPURNS To begin with, the 15% tax bracket for a married AND SURVIVING SPOUSES couple filing a joint return will remain at twice taxable income Is: The taxis: the 15% bracket for unmarried individuals. butnot of the Over— over— amount over— SO $17000 10% SO Similarly, the standard deduction for a mar- 17000 69 000 $1 700 +15% 17000 ried couple filing a joint return will remain at 69000 139 50 9 00+25% 69 000 twice the basic standard deduction for unmar- 139 50 212 00 27087.50 +28% 139 350 ried individuals. 212,300 379,150 47513.50 +33% 212 300 379,150 102 574 + 35% 379150 Comment. The standard deduction is adjusted for inflation each year. In 2011, the amount of the HEADS OF HOUSEHOLDS standard deduction is $5,800 for unmarried individuals if taxable income is: The taxis: and married individuals filings separately, $11,600 for butnot of the Over— over— amount over— married individuals filing jointly, and $8,500 for heads $0 $12,150 10% $0 of households. 12150 46,250 51,215 +15% 12,150 46,250 119 400 6,330 + 25% 46,250 Finally, previous modifications to the earned 119,400 193,350 24,617.50 + 28% 119,400 income credit (EIC) will remain in place, includ- 193,350 379,150 45,323.50 + 33% 193,350 ing an increase in the phaseout amount for married 379,150 106,637.50 + 35% 379,150 taxpayers to $5,000 more than the amount used for other taxpayers (indexed for inflation). ‘' "E .., RJS - ‘ If taxableIncomeIs: The taxis: butnot oftheamount Relief from Deduction Limitation Over— over— over— SO $2,300 15% $0 and Exemption Phaseout 2,300 5,450 5345 + 25% 2,300 The new law extends through 2012 the favorable 5,450 8,300 1,132.50 + 28% 5,450 treatment given to itemized deductions and per- 8,300 11,350 1,930.50+ 33% 8,300 sonal exemptions for high income individuals. 11,350 2,937 + 35% 11,350 Before 2010, the total amount of itemized de- Marriage Penalty Relief ductions was limited for high-income taxpayers. For example, these deductions were restricted in A 'marriage penalty* exists if a couple would pay 2009 for taxpayers making more than $166,800 higher combined taxes if they were married than ($83400 for married individuals filing separate if they were not. The new law extends through returns). However, this restriction was eliminated 2012 certain provisions designed to help mini- for 2010, meaning that high-income taxpay- mize the marriage penalty. These provisions were ers could claim all of their itemized deductions. to sunset for 2011. EFTA01221467 10 HIGHLIGHTS of 2010 Tax Legislation 11 The limitation was to come back into effect in gains and dividend income will generally be 2011. However, the elimination of the overall taxed at 15%. If you arc in the 10% or 15% limitation has now been extended, so there is income tax bracket, however, your capital gains no overall limitation on itemized deductions in and dividend income will not be taxed at all. either 2011 or 2012. Comment. These rates apply for both regular and Caution. Only the overall limitation is repealed. alternative minimum tax (AMT) purposes. Separate limitations may still apply to individual deductions. Planning Note. After 2012, capital gains will generally be taxed at a 20% rate, although property held for Similarly, before 2010, the deduction for per- more than 5 years will be taxed at 18%. Lower-income sonal exemptions was reduced or eliminated taxpayers (those in the 15% income tax brackets) will for certain high-income taxpayers. For exam- instead be taxed on their capital gains at a 10% rate, ple, in 2009, the exemption was reduced for lowered to 8% for property held for more than 5 years. single individuals with income over $166,800, Qualified dividends are set to be taxed at ordinary married individuals filing a joint return with income rates after 2012. income over $250,200, heads of households with income over $208,500, and married indi- Comment. Several related provisions that apply viduals filing separate returns with income over $125,100. This limitation was eliminated for to corporations were also extended through 2012, 2010, however, and therefore you could claim including: your entire exemption no matter your income e The reduction in the tax rate on corporate level. This same treatment will now apply for accumulated earnings to 15%. 2011 and 2012. ■ The reduction in the tax rate on personal holding companies to 15%. Comment. The exemption amount is adjusted for • The repeal of the collapsible corporation rules. inflation each year. In 2011, the exemption amount is 53,700. The 0-percent capital gains rate that applies to capital gain from the sale of certain assets used LOWER RATES ON CAPITAL in the DC Zone and held for five years is also GAINS AND DIVIDEND extended for two years. Thus, taxpayers can exclude gain attributable to transactions occur- INCOME EXTENDED ring through December 31, 2016. 'the eligible Your capital gains and qualified dividends will property must be purchased or substantially im- continue to be taxed through 2012 as they have proved before January 1, 2012. been for the past few years. Thus, your capital EFTA01221468 12 HIGHLIGHTS of 2010 Tax Legislation 13 Planning Note. Unless Congress takes further action, ALTERNATIVE MINIMUM the exemption amounts will revert for 2012 and later TAX RELIEF years to the amounts in place before 2001: $33,750 for unmarried individuals, $45,000 for married individuals AMT Exemption Amounts filing a joint return and surviving spouses, and $22,500 Individuals who might be subject to the alter- for married individuals filing separate returns. native minimum tax (AMT) will be pleased to know that the exemption amounts have been increased for both 2010 and 2011. This means AMT Nonrefundable Personal Credits that more income will be sheltered from taxation You may continue in 2010 and 2011 to claim all under the AMT. nonrefundable personal tax credits against both your regular tax and your AMY Without this For 2010, the exemption amounts are: extension, certain credits could have been lim- ited or disallowed when calculating your AKE ■ $47,450 for unmarried individuals; ■ $72,450 for married individuals filing a joint The available nonrefundable personal tax credits return and surviving spouses; and in 2010 and 2011 are: the dependent care credit, ■ $36,225 for married individuals filing separate the credit for the elderly and disabled, the child returns. credit, the credit for interest on certain home mortgages, the Hope Scholarship and Lifetime For 2011, the exemption amounts arc: Learning credits (including the American Op- portunity tax credit), the credit for savers, the ■ $48,450 for unmarried individuals; credit for certain non-business energy property, is $74,450 for married individuals filing a joint the credit for residential energy efficient property, return and surviving spouses; and the credit for certain plug-in electric vehicles, the ■ $37,225 for married individuals filing separate credit for alternative motor vehicles, the credit for returns. new qualified plug-in electric drive motor vehi- cles, and the D.C. first-time homebuyer credit. Comment. The $40,000 exemption amount for corporations and the $22,500 exemption amounts for Without further legislative action, only the follow- estates or trusts continue to remain unchanged. ing nonrefundable personal credits will be fully allowed against your AMT liability in 2012 and Comment. While many provisions in the new law are later years (subject to separate special limitations): prospective, looking forward to 2011and 2012, the ANT relief instead applies to the current year, 2010, as well ■ Child tax credit as the next year, 2011. ■ Adoption credit EFTA01221469 14 HIGHLIGHTS of 2010 Tax Legislation 15 ■ American Opportunity tax credit 2012. Thus, the phaseout for upper-income ■ Retirement savings contributions credit (e.g., taxpayers will remain higher than it would the Savers' credit) have been, and you can otherwise continue to ■ Residential energy efficient property credit deduct all interest paid (and not just interest ■ Small plug-in vehicles credit paid during the first 60 months). ■ New plug-in electric drive motor vehicles ■ The availability of the above-the-line deduc- credit tion for your own, your spouse's, or your ■ Alternative motor vehicles credit qualifying dependents higher education ex- penses paid during the year has been extended Comment. In 2010 and 2011, the adoption credit is through 2011. refundable,whichmeansthatit isnot subject to these!tiles ■ The more favorable rules for Coverdell and is not included in the list of nonrefundable personal education savings accounts, designed to help credits allowed against the AMT in 2010 and 2011. After beneficiaries pay for education expenses, arc 2011, the credit will revert to being nonrefundable and extended through 2012. is therefore included in the above list of nonrefundable ■ The availability of the American Opportunity tax credit to help pay for tuition costs is ex- personal credits that will be allowed against the AMT in tended through 2012. 2012 and later years. Either way, the credit is fully allowed ■ The exclusion from income of up to $5,250 against the AMT for all of these years. of employer-provided educational assistance is extended through 2012. The other nonrefundable personal credits will be ■ The exclusion from income for scholarships allowed after 2011 only to the extent your regu- awarded through the NHSC Scholarship lar tax liability exceeds your tentative minimum Program or the Armed Forces Scholarship tax (determined without regard to the AMT for- Program is extended through 2012. eign tax credit). Incentives for Families Extended INCOME, DEDUCTIONS, AND A number of incentives designed to help families CREDITS FOR INDIVIDUALS have been extended through 2012. As discussed in more depth below, these include the child Incentives for Education Extended tax credit, the adoption credit and exclusion for Several tax incentives designed to help pay for employer-provided adoption assistance, the de- education costs are extended. These include the pendent care credit, and enhancements to the following: earned income credit (ETC). The employer-pro- vided child care tax credit has also been extended, ■ Enhancements made to the deduction for as discussed further on page 17. student loan interest are extended through EFTA01221470 16 HIGHLIGHTS of 2010 Tax Legislation 17 ChildTax Credit Dependent Care Credit You may be able to claim a tax credit for each If you pay someone to look after your child while of your children who are under the age of 17. you work, you might be eligible for the depen- The new law extends the $1,000 per child credit dent care credit. The maximum credit amount for two years, through 2012. It was scheduled is $1,050 if you have one dependent or $2,100 to drop to $500 per child after 2010. Other en- if you have two or more dependents. However, hancements to the credit are also extended for both of these amounts may be reduced (but not two years, including the earned income refund- totally eliminated) if your adjusted gross income able component. is greater than $15,000. Comment. If you have a family with three or more The amount of the credit was set to decrease after children, you may determine the refundable amount 2010, but it has instead been extended in its cur- using an alternative formula. rent form through 2012. Adoption Credit andExclusion EarnedIncome Credit If you adopt a child, you can receive help paying Low and moderate-income taxpayers may be for your adoption expenses by claiming the adop- eligible for the earned income credit (EIC), tion credit and by excluding from your income a depending on their income, filing status, and certain amount of adoption assistance provided immigration and work status. If you are eli- by your employer, if any. The amount that can gible, the amount you receive depends on the be claimed as a credit or excluded from income number of children in your family, how much is $13,170 in 2010 and $13,360 in 2011, al- income you earn, and the amount of your ad- though these amounts are phased out for certain justed gross income. high-income taxpayers. For taxpayers with three or more eligible chil- Both the credit and the exclusion were set to dren, the credit percentage used to calculate the revert after 2011 to less generous rules, but EIC was increased for 2009 and 2010 to 45 both of these benefits have been extended in percent (up from 40 percent). This treatment is their current forms to 2012. The amount of extended through 2012. the credit and exclusion have decreased slight- ly for 2012, to $12,170, adjusted for inflation Comment. Other changes to the EIC were also after 2010, and the credit will no longer be extended through 2012. One such provision is refundable. the Increase in the phase-out amount for married taxpayers. See page 9. EFTA01221471 18 HIGHLIGHTS of 2010 Tax Legislation 19 Other Deductions Extended continue to claim a credit for purchasing and Several other deductions that were set to expire installing in your home certain qualified energy have been extended: efficient improvements, such as energy-efficient insulation, windows, doors, and roofs, or certain ■ If you are a teacher, the above-the-line deduc- residential energy property, such as efficient heat tion for your classroom expenses, such as sup- pumps, circulating fans, and air conditioners. plies, has been extended for 2010 and 2011. ■ The election to deduct your state and local However, although the credit has been extended, general sales taxes instead of your state and it has also been modified for 2011 to reinstate local income taxes has been extended to years the less favorable credit structure, credit rates, 2010 and 2011. This election is especially and higher efficiency standards that were in valuable if you live in a state that does not place before February of 2009 (and enactment impose income taxes. of the American Recovery and Reinvestment ■ If you entered into a mortgage contract after Act (P.L. 111-5)). Thus, you can claim only 10 2006, the deduction for private mortgage in- percent of the cost of qualified energy efficient surance (PM!) premiums has been extended improvements, and only a certain dollar amount one more year, through 2011. for residential energy property expenditures, de- ■ If you would like to contribute capital gain pending on the type of property. These dollar property to a charity for conservation purposes amounts are $50 for advanced main air circulat- in 2011, or if you contributed such property in ing fans, $150 for qualified boilers, and $300 for 2010, you can deduct the fair market value of qualified energy efficient building property such the property up to 50 percent of your adjusted as certain heaters and air conditioners. There is gross income (100 percent if you're a farmer also a $500 lifetime limitation, meaning that the or rancher). amount of the credit you can claim in 2011 is limited to $500 reduced by all of the credits for Comment. The deduction limit for capital gain non-business energy property you claimed from property contributed to a charity for reasons other 2006 through 2010. Also, a lifetime limitation than conservation is 30 percent of your adjusted applies to skylights and window, so only $200 of gross income. the credit may be allocated to exterior windows and skylights in any year, and that $200 amount must be reduced by the aggregate amount of the Other Credits Extended credit you previously received for windows and skylights from 2006 through 2010. Non-Business EnergyProperty Credit The credit for the purchase and installation of Comment. The lifetime limitations look back at the non-business energy property has been extend- credits claimed in 2006, 2007, 2009, and 2010 — the ed for one more year. Thus, in 2011, you may credit was not available in 2008. EFTA01221472 20 HIGHLIGIITS of 2010 Tax Legislation 21 Example. In 2011, Lisa and Tom purchase new first-time homebuyer for purposes of the separate windows for $500 and an electric heat pump for homebuyer credits that have been, until recently, $1,500. The windows qualify as energy efficient available nationally. improvements and the heat pump qualifies as energy efficient building property. Therefore, they can claim Other Exclusions Extended a non-business energy property credit in 2011 of $50 for the windows ($500 times 10%) and $300 for the IRA Distributions for Charitable Purposes heat pump, for a combined credit of $350. If you have an IRA, you can distribute up to $100,000 from the IRA to a qualified charity The amount of the credit would be limited, however, and not pay tax on the distribution. Taxpayers if Lisa and Tom had claimed more than $150 as a can continue to make such tax-free distribu- credit in a previous year ($500 minus $350), or had tions in 2010 and 2011, and can elect to treat claimed more than $150 as a credit with respect to any such distributions made in January of 2011 windows or skylights in a previous year ($200 minus as if they were made in 2010. This election $50). For example, if, in 2007 and 2010, they had allows the distribution to count towards the claimed an aggregate credit of $300 (stemming from 2010 $100,000 limitation, as well as the 2010 property other than windows and skylights), then, in required minimum distribution, which is help- 2011, Lisa and Tom can only claim a maximum credit ful because the extension was not enacted into law until the end of 2010, giving little time to of $200 ($500 minus $300). plan your 2010 charitable giving. Comment. In 2009 and 2010, you could claim up to 30 percent of the costs of all non-business Van-Pool and Mass Transit Benefits energy property. The only dollar limitation was a If your employer helps you get to work by giving $1,500 lifetime limitation that applied only to 2009 you mass transportation benefits or access to a and 2010. vanpool, the value of such benefits may be ex- cludable from your income. Since early in 2009, the excludable amount has been equal to the D.C. Homebuyer Credit exemption amount available to employees who The $5,000 tax credit for certain individuals who receive employer-provided parking benefits. This purchase a home in Washington, D.C., has been equal treatment has been extended through the extended to include homes purchased before end of 2011. January I, 2012. Comment. The exempt amount is adjusted each year Comment. While this credit applies only to first-time for inflation, and was $230 per month in 2010. homebuyers, its definition of a first-time homebuyer is much more forgiving than the definition of a EFTA01221473 22 HIGHLIGHTS of 2010 Tax legislation 23 Comment. As under existing law, taxpayers can elect INVESTMENT EXTENSIONS not to claim bonus depreciation. However, the new law AND INCENTIVES does not contain a provision allowing taxpayers to elect 50-percent bonus depreciation for property qualifying Bonus Depreciation for 100-percent bonus depreciation. The 50 percent first-year bonus depreciation al- lowance is extended for two more years, and has The $8,000 increase in the first-year de- also been enhanced for part of that time period. preciation cap for vehicles on which bonus depreciation is claimed remains unchanged and The extension applies so that the bonus applies continues to apply to vehicles placed in service to qualified property acquired after December in 2011 and 2012 for which bonus deprecia- 31, 2007, and placed in service before January tion is claimed, including property for which 1, 2013 (January 1, 2014, for property with a 100 percent bonus depreciation is claimed. longer production period and certain non-com- mercial aircraft). Accelerated AMT Credit in Lieu The enhancement allows a larger bonus to be of Bonus Depreciation claimed for certain property. The first-year bonus A corporation may elect to accelerate its AMT depreciation allowance rate is increased from 50 credit (attributable to an unused pre-2006 percent to 100 percent for qualified property minimum tax credit) by forgoing bonus depre- acquired after September 8, 2010, and before ciation on "round 2 extension property," which January 1, 2012, and placed in service before is property eligible for bonus depreciation January 1, 2012 (or before January 1, 2013, for solely by reason of the new extension of the longer period production property and certain bonus depreciation. Under the prior accelera- noncommercial aircraft). tion provision, which applied to a corporation's Thus, the allowance rate for additional first-year first tax year ending after March 31, 2008, a depreciation is generally equal to: corporation could also claim unused pre-2006 research credits by forgoing bonus deprecia- ■ 50 percent of the cost of qualified property tion. The new law only allows a corporation placed in service after December 31, 2007, to increase the minimum tax credit limitation and on or before September 8, 2010. by the bonus depreciation amount computed ■ 100 percent of the cost of qualified property with respect to round 2 extension property and placed in service after September 8, 2010, and claim pre-2006 AMT credits that may remain before January 1, 2012. after reduction by accelerated AMT credits that ■ 50 percent of the cost of qualified property were claimed by reason of a prior election to placed in service after December 31, 2011, forgo bonus depreciation. and before January I, 2013. EFTA01221474 24 HIGHLIGHTS of 2010 Tax Legislation 25 Code Section 179 Deduction Qualified Leasehold, Retail, For tax years beginning in 2012, the maximum Restaurant Property amount of the 179 deduction is increased to Fifteen-year straight line depreciation for quali- $125,000, and the deduction is limited if the cost fied leasehold, retail, and restaurant property has of 179 property placed in service during the year been extended for qualified property placed in exceeds $500,000. Both the $125,000 and the service before January 1, 2012. $500,000 amounts are adjusted for inflation. Comment: For tax years 2010 and 2011, qualified Comment. For 2010 and 2011, the dollar limit is leasehold, retail, and restaurant property are also $500,000 and the investment limit is $2 million. These eligible for the Code Section 179 deduction. The limits were set to decrease to $25,000 and $200,000 in amount that can be expensed under this provision is 2012, but this decrease is now delayed until 2013. limited to $250,000. The provisions allowing expensing of off-the- Exclusion of Gain on Certain shelf computer software and r