Press Release:

Montano & Associates CPA's Receives 2009 Best of Business Award

For Immediate Release: Notification of Award, March 16, 2010

Small Business Commerce Association's Award Honors the Achievement

SAN FRANCISCO, November 7, 2009, Montano & Associates CPA's has been selected for the 2009 Best of Business Award in the Tax return preparation services category by the Small Business Commerce Association (SBCA).

The Small Business Commerce Association (SBCA) is pleased to announce that Montano & Associates CPA's has been selected for the 2009 Best of Business Award in the Tax return preparation services category.

The SBCA 2009 Award Program recognizes the top 5% of small businesses throughout the country. Using statistical research and consumer feedback, the SBCA identifies companies that we believe have demonstrated what makes small businesses a vital part of the American economy. The selection committee chooses the award winners from nominees based off statistical research and also information taken from monthly surveys administered by the SBCA, a review of consumer rankings, and other consumer reports. Award winners are a valuable asset to their community and exemplify what makes small businesses great.

About Small Business Commerce Association (SBCA)

Small Business Commerce Association (SBCA) is a San Francisco based organization. The SBCA is a private sector entity that aims to provide tactical guidance with many day to day issues that small business owners face. In addition to our main goal of providing a central repository of small business operational advice; we use consumer feedback to identify companies that exemplify what makes small business a vital part of the American economy.

SOURCE: Small Business Commerce Association

CONTACT:

Small Business Commerce Association

Email: Press@SBCAAwards.org

URL: http://www.SBCAAwards.org

2010 Year-End Tax Information

For 2010, in addition to the normal (and numerous indexing changes), many important tax changes go into effect for both individuals and businesses.

Personal Changes

Alternative minimum tax (AMT) will affect many more taxpayers. Under Internal Revenue Code ("IRC") Sec. 55(d), the AMT exemption amount for 2010 decreased to $33,750 ($45,000 if married filing jointly or a qualifying widow(er); $22,500 if married filing separately). The AMT exemption amount for 2009 was $46,700 ($70,950 if married filing jointly or a qualifying widow(er), $35,475 if married filing separately).

The only personal tax credits that offset the AMT are:

the adoption credit
the child tax credit
the low-income saver's credit
the residential energy efficient property
the American Opportunity (education) tax credit
the qualified plug-in electric drive motor vehicle credit
the foreign tax credit
the alternate motor vehicle credit (the nondepreciable property portion only)
the qualified plug-in electric vehicle credit

Other personal credits will not reduce AMT.

The above rules are as the law currently is in effect. It is anticipated that Congress will deal with the AMT problem either through another one-year patch, as it has several times before, or by revising the AMT in the context of an overall tax reform bill.

Required minimum distributions (RMDs) under IRC Sec. 401(a)(9) must be made for calendar year 2010 from IRAs and employer-provided qualified retirement plans that are defined contribution plans (RMDs for calendar year 2009 were waived).

Conversions to Roth IRAs OK regardless of income. For tax years beginning after 2009, the rule that barred taxpayers with more than $100,000 of modified AGI from converting traditional IRAs to Roth IRAs is eliminated. Additionally, married taxpayers filing a separate return may convert amounts in a traditional IRA into a Roth IRA (before 2010 they were barred from doing so). Additionally, for such conversions made in 2010, any amounts that would be included as income as a result of the conversion will be included in income in equal amounts in 2011 and 2012, unless the taxpayer elects to include the entire amount in income in 2010.

AGI-based personal exemption phaseout and itemized deduction reduction are gone for 2010, so taxpayers with higher levels of AGI will no longer face a phaseout of their deduction for personal exemptions or a reduction in their itemized deductions. For 2009, the personal exemption phaseout began when AGI exceeded these threshold amounts: $250,200 (joint return or surviving spouse), $208,500 (head of household), $166,800 (single) and $125,100 (married filing separately). And the itemized deduction reduction began when AGI exceeded $166,800 ($83,400 for married filing separately).

Recapture of first-time homebuyer credit is required for taxpayers who claimed a Code Sec. 36 first-time homebuyer credit (FTHTC) for homes bought after Apr. 8, 2008 and before Jan. 1, 2009 beginning in 2010. The FTHTC must generally be recaptured (i.e., repaid) in equal installments over a 15-year period. Recapture is accelerated if a taxpayer disposes of his residence or it ceases to be his and his spouse's principal residence before the end of the 15-year recapture period.

New modified carryover basis regime for property acquired from a decedent in 2010 As part of the estate tax repeal that applies for individuals dying in 2010, the income tax basis rules are now similar to the gift tax carryover basis rules but with many opportunities for heirs to get increases in basis. For example, it is possible to increase the basis of assets received from an individual dying in 2010 by $1.3 million and by an additional $3 million for assets going to a spouse. The step-up in basis rules return for 2011.

Eased casualty loss rules return are in effect for 2010. In general, personal casualty or theft losses for the tax year generally are allowable only if they exceed a dollar limitation per casualty or theft. In addition, aggregate net casualty and theft losses generally may be claimed as an itemized deduction only to the extent they exceed 10% of an individual's adjusted gross income (AGI). For 2010, the dollar limitation per casualty or theft is reduced to $100; it had been $500 for 2009.

Expired tax breaks will not be available for 2010 (they expire at the end of 2009) unless Congress acts to retroactively revive them. This include:

The ability to exclude part of unemployment compensation benefits. For 2009, up to $2,400 of unemployment compensation benefits received in 2009 was excluded from gross income under IRC Sec. 85(c).
The ability to claim either an itemized deduction or an increased standard deduction for state or local sales or excise taxes on the purchase of a new motor vehicle.
The ability to claim additional personal exemptions for housing Midwestern disaster area displaced persons.
Where the employer (or controlling corporation) is a debtor in bankruptcy, and an indictment or conviction resulted from transactions related to the bankruptcy, participants in a 401(k) plan, whose contributions the employer matched at least 50% with employer stock, can no longer elect to make additional IRA contributions (limited to 3 times the catch-up amount for taxpayers over 50).
The District of Columbia first-time homebuyer credit.
The election to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes.
The additional standard deduction for State and local real property taxes, limited to the lesser of the amount allowable as an itemized deduction for real property taxes or $500 ($1,000 on a joint return).
The additional standard deduction for disaster losses. Also, taxpayers who have suffered losses as a result of a federally declared disaster may no longer calculate their casualty loss deduction without regard to the usual 10-%-of-AGI limit.
The above-the-line tax deduction for qualified tuition and related expenses.
The $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, computer equipment, other equipment, and supplementary materials used by the educator in the classroom.
The rule allowing taxpayers who are age 70 1/2 or older to make tax-free distributions to charity from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per tax year.

Business Changes

Deduction for domestic production activities increases for tax years beginning after 2009.. Taxpayers will be able to claim a deduction under IRC Sec. 199 (deduction for domestic production activities) generally equal to 9% (up from 6% for tax years beginning in 2007-2009) of the lesser of: (1) the taxpayer's "qualified production activities income" (QPAI) for the tax year or (2) taxable income (modified adjusted gross income, for individual taxpayers) without regard to this deduction, for the tax year. The deduction is further limited to 50% of the W-2 wages of the employer for the tax year.

Reduced domestic production activities deduction for oil-related activities are in effect for tax years beginning after 2009. The otherwise allowable Code Sec. 199 deduction of a taxpayer with oil-related QPAI is reduced by 3% of the least of (1) oil-related QPAI for the tax year; (2) QPAI for the tax year; or (3) taxable income (or for individuals, AGI), determined without regard to the domestic production activities deduction.

Smaller employers may establish combined plans. For plan years beginning after 2009, employers with 500 or fewer employees may establish a combined defined benefit-401(k) plan (a "DB(k) plan"). In general, the defined benefit rules apply to the defined benefit portion of the plan and the defined contribution rules apply to the defined contribution portion of the plan. The 401(k) component must have automatic enrollment and must meet minimum matching contribution requirements.

Nonspouse beneficiary rollover option mandatory for qualified plans. For plan years beginning after Dec. 31, 2009, qualified retirement plans must offer nonspouse beneficiaries the opportunity to roll over an inherited plan account balance to an IRA set up to receive the rollover on the nonspouse beneficiary's behalf. For earlier plan years, could, but were not required to, offer nonspouse beneficiaries this rollover option.

New limitation on deduction of farm losses. For tax years beginning after 2009, the farming loss of a taxpayer, other than a C corporation, is limited for any tax year in which any applicable subsidies are received. The loss is limited to the greater of (a) $300,000 ($150,000 for a married person filing separately), or (b) the taxpayer's total net farm income for the prior five tax years. Applicable subsidies are (1) any direct or counter-cyclical payments under title I of the Food, Conservation, and Energy Act of 2008 (or any payment elected in lieu of any such payment), or (2) any Commodity Credit Corporation (CCC) loan. For partnerships and S corporations, the limit is applied at the partner or shareholder level. Total net farm income is an aggregation of all income and loss from farming businesses for the prior five tax years. Any loss that is disallowed under this rule in a particular year is carried forward to the next tax year and treated as a deduction attributable to farming businesses in that year. Farming losses due to fire, storm, or other casualty, or disease or drought, are disregarded for purposes of calculating the limitation.

Increased penalty for failure to file partnership or S corporation returns. Civil penalties apply for failure to file a partnership and S corporation returns. The penalty is a statutory dollar amount times the number of partners or shareholders for each month (or fraction of a month) that the failure continues, up to a maximum of 12 months. The base amount on which a penalty is computed for a failure with respect to filing either a partnership or S corporation return for a tax year beginning after Dec. 31, 2009, increases from $89 to $195 per partner or shareholder.

Electronic filing changes go into effect. Beginning in 2010, IRS will allow the electronic filing of Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, using the Employment Tax e-file System. Schedule R is a new form that must be completed by consolidated Form 941 filers, beginning with the first quarter 2010 Form 941. Form 2678, Employer/Payer Appointment of Agent, must be mailed to the applicable address listed on the instructions for the agent to be eligible to file Schedule R. After receiving IRS approval, the agent must file one Form 941 return for each tax period, using the agent's own employer identification number (EIN), regardless of the number of employers for whom the agent acts. The agent must maintain records that will disclose the full wages paid for each of his or her clients, as reported on the Schedule R.

Standard mileage rate changes. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 50¢ per mile for business travel after 2009 (5¢ less than the 55¢ allowance for business mileage during 2009). For 2010, the depreciation component of the mileage rate is 23¢ per mile (up from 21¢ per mile for 2009 and 2008).

Employers that require employees to supply their own autos may reimburse them at a rate that doesn't exceed 50¢ per mile for employment-connected business mileage during 2010 (down from 55¢ per mile for 2009), whether the autos are owned or leased. The reimbursement is treated as a tax-free accountable-plan reimbursement if the employee substantiates the time, place, business purpose, and mileage of each trip. Additionally, an employee's personal use of lower-priced company autos during 2010 may be valued at 50¢ per mile if the conditions specified in Reg. § 1.61-21(e)(1) are met.

Expiring tax breaks as of the end of 2009. Unless Congress acts to retroactively revive them, all of the following business tax breaks will not be available in 2010:

Additional first-year 50% bonus depreciation for qualified property under Code Sec. 168(k)(2) (but note that certain aircraft and long-production-period property continues to be eligible if placed in service in 2010). In addition, the $8,000 increase in the first-year depreciation limit for passenger automobiles that are qualified property also expired at the end of 2009.
IRC 179 expense. For tax years beginning in 2010, (a) the maximum amount that may be expensed under IRC Sec. 179 is $134,000 (down from $250,000 for tax years beginning in 2008 or 2009); and (b) the maximum annual expensing amount generally is reduced dollar-for-dollar by the amount of Code Sec. 179 property placed in service during the tax year in excess of $530,000 (down from $800,000 for tax years beginning in 2008 or 2009).
Election to accelerate AMT and research credits in lieu of additional first-year depreciation under Code Sec. 168(k)(4).
Credit for construction of new energy efficient homes under Code Sec. 45L.
Suspension on the taxable income limit for purposes of claiming depletion deductions on a marginal oil or gas well.
Incremental research credit under Code Sec. 41.
Five-year depreciation for farming business machinery and equipment under Code Sec. 168(e)(3)(B)(vii).
Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements under Code Sec. 168(e)(3)(E)(iv), Code Sec. 168(e)(3)(E)(v), and Code Sec. 168(e)(3)(E)(ix).
Deduction allowable for income attributable to domestic production activities in Puerto Rico under Code Sec. 199.
Expensing of "brownfields" environmental remediation costs under Code Sec. 198(h).
Encouragement of contributions of capital gain real property made for conservation purposes under Code Sec. 170(b)(1)(E) and Code Sec. 170(b)(2)(B).
Enhanced charitable deduction for contributions of food inventory under Code Sec. 170(e)(3)(C).
Enhanced charitable deduction for contributions of book inventories to public schools under Code Sec. 170(e)(3)(D).
Enhanced deduction for corporate contributions of computer equipment for educational purposes under Code Sec. 170(e)(6)(G).
The active financing exception from Subpart F of the Code.
The look-through treatment of payments between related controlled foreign corporations.
Seven-year straight line cost recovery period for property used for land improvement and support facilities at motorsports entertainment complexes.
Accelerated depreciation for business property on an Indian reservation.
The railroad track maintenance credit.
Film and television producers' election to expense the first $15 million of production costs incurred in the U.S. ($20 million if the costs are incurred in economically depressed areas in the U.S.).
The credit for training mine rescue team members.
Election to expense 50% of the cost of qualified underground mine safety equipment.
The credit for eligible small business employers equal to 20% of the sum of differential wage payments to activated military reservists.
The tax treatment of interest-related dividends, short-term capital gain dividends, and other special rules applicable to foreign shareholders that invest in regulated investment companies (RICs). (Code Sec. 871(k))
The new markets tax credit. (Code Sec. 45(f)(1))

Sincerely,

MONTANO & ASSOCIATES