Main Provisions of the “Approved Tax Relief Act of 2010”

1) Tax rates will remain at the levels set in the Bush tax cuts of 2001 and 2003 through Tax Years 2011 and 2012. Additionally, the Child Tax Credit and other credits authorized by the Bush Tax Cuts of 2001 and 2003 will remain the same.

2) Capital Gains and Qualified Dividends rates will remain at the 2003 rates of 15% for 2011 and 2012.

3) For Tax Year 2010 AMT exemption will be $47,450 ($72,450 for MFJ). For Tax Year 2012, AMT exemption will be $48,450 ($74,450 for MFJ).

4) For tax year starting 1/1/2011, Estates will be allowed a “step-up basis” based upon FMV of assets on Date of Death, or Alternative Valuation Date. For Estates in 2010, an election may be made to take up step up basis, by filing applicable Estate Tax Return.

5) The Estate Tax rate will be 35% of taxable estate that exceeds $5 Million.

6) Gift Tax Lifetime Exclusion is based upon Unified Credit, reflecting $5 Million exemption.

7) Bonus Depreciation on qualified (new) property will be extended to 2011 and 2012. Additionally, the Bonus Depreciation for 2011 will be at 100% instead of 50%.

8) For 2010 and 2011, Section 179 deduction is $500K ($2 Million max placed in service). Section 179 deduction is reduced to $125K in 2012 ($500K max placed in service) and $25K in 2013 ($200K max placed in service).

9) Additional Unemployment Insurance Benefits extended to December 31, 2011.

10) Employee FICA rate reduced to 4.2% of wages for 2011, but the employer rate will remain at 6.2%.

11) Several Fuel and Energy Credits extended to 2010 and 2011.

12) Energy Efficient Home Credit extended to 2010 and 2011.

13) Ethanol Fuel Credit extended to 2011.

14) Nonbusiness Energy Credit extended to 2011.

15) Teachers Credit extended to 2010 and 2011.

16) Sales Tax Deduction extended to 2010 and 2011.

17) Qualified Tuition Deduction extended to 2010 and 2011.

18) Charitable Distributions from IRAs extended for 2010 and 2011.

19) Employer Commuting Deduction extended to 2011.

20) Research Credit extended to 2010 and 2011.

21) Mortgage Insurance Premiums Deduction extended to 2011.

22) Exclusion of 100% of Gain on Certain Small Business Stock extended to 2011.

This information is provided as a courtesy to readers of the Michael Edlen Blog. They are encouraged to verify the accuracy of these provisions and their applicability by consulting with the appropriate professionals.