The Dowling Group Wealth Management

November 10, 2010

Dear Client,


The recently enacted 2010 Small Business Jobs Act includes many new tax breaks and incentives, as well as some new rules for small businesses and individuals. Below is a brief overview of some of these new tax laws.


Tax Incentives and Rule Changes: Businesses/Self Employed


Enhanced small business expensing (Section 179 expensing). Small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. In 2010 and 2011, the limit of these expenses increased to $500,000 and the investment ceiling increased to $2,000,000


Extension of 50% bonus first-year depreciation. The new law extends the first-year 50% write-off to apply to capital expenditures for qualifying property placed in service in 2010 (2011 for certain property).


Boosted deduction for start-up expenditures. The new law allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010.


Deductibility of health insurance in calculating self-employment tax. The new law allows business owners to deduct the full cost of health insurance incurred in 2010 for themselves and their family members in calculating their 2010 self-employment tax.


Cell phones removed from listed property category. This means that the cost of cell phones can be deducted or depreciated like other business property, without onerous recordkeeping requirements.


Tax Incentives and Rule Change: Individuals/Landlords


Allow rollovers from elective deferral plans to designated Roth accounts.  401(k),

403(b), and governmental 457(b) participants are now permitted to roll over their pre-tax account balances into a designated Roth account. The amount of the rollover will be includible in taxable income except to the extent it is the return of after-tax contributions. If the rollover is made in 2010, the participant can elect to pay tax in 2011 and 2012.


Information reporting required for rental property expense payments. For payments made after Dec. 31, 2010, the new law requires persons receiving rental income from real property to file information returns with IRS and service providers reporting payments of $600 or more during the tax year for rental property expenses. Exceptions may apply.                  


Please keep in mind that these are just some of the new changes we feel most applicable to the majority of our clients.  If you would like more details about any aspect of the new legislation and how it applies to your unique situation, please call us at 203.967.2231.



Joseph M. Dowling, CPA                                             Sean M. Dowling, CFP, EA

President, The Dowling Group                                      VP, The Dowling Group





Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.