The 2007 Small Business Tax Act (“SBTA”) targets a number of situations, namely, small businesses by providing tax incentives such as extending and enhancing the Code Sec. 179 expensing, extending the Work Opportunity Tax Credit, etc. To make the new bill revenue neutral, revenue raising provisions were inserted, namely expansion of Code Sec. 1(g)’s Kiddie Tax.
This article covers, in full detail, the following topics that are outlined below.
The Kiddie Tax
FICA Tip Credit - §45B
Work Opportunity Tax Credit
Present Law
Qualified wages
Calculation of the credit
Minimum employment period
Certification and rules for operation
Qualified veterans targeted group
Qualified first-year wages
High-risk youth targeted group
Vocational rehabilitation referral targeted group
Alternative Minimum Tax
Code Sec. 761(f) - Spouses can elect out of partnership reporting
Qualified joint venture
Tax Pointers
S corporate provisions
Code Secs. 1375 and 1362(d) - Gains from sale or exchange of securities not passive investment income
Elimination of all earnings and profits attributable to pre-1983 years for certain corporations.
Code Sec. 1361(b)(3)(C) - Treatment of the sale of interest in a qualified Subchapter S subsidiary.
Code Sec. 1361(g) - Special rule for bank required to change from the reserve method of accounting on becoming S corporation
Code Sec. 1361(f); Code Sec. 1368(f) - Treatment of bank director shares
Code Sec. 6404 - Suspension of certain penalties and interest
Code Sec. 6330 - Levies to collected federal employment tax liabilities excepted from the pre-levy CDP hearing requirement
Code Sec. 6657 - Increase in penalty for bad checks and money orders
Code Secs. 6694(a) and (b); 7701 - Understatement of taxpayer liability by return preparers
Code Sec. Sec. 7701(a)(36)(A)
Code Sec. 6694
Tax Pointer
Code Sec. 6676 - Penalty for filing erroneous refund claims
Tax Pointer
Gulf Opportunity Zone changes
Michael Schlesinger is a member of the New York bar and a partner in Schlesinger & Sussman of New York, N.Y. and Clifton, N.J. He is the author of the Practical Guide To S Corporations (4th Edition), a former Adjunct Professor of Law at Pace University Law School, White Plains, N.Y. and is a frequent lecturer and writer on tax matters.
©2007 Michael Schlesinger. All Rights Reserved
