The Small Business and Work Opportunity Tax Act of 2007 was passed by President Bush in May 2007. Here are just three of the highlights that will impact small businesses:
- Favorable Changes for S Corporations – Several favorable changes were made to the S corporation tax rules including S-corp stock gains not treated as passive income.
- Extension of one-time capital purchases write-off — The Section 179 deduction – providing for a one-time write off of the entire cost of equipment and software in the year bought – increases to $125,000 and extended for an additional year.
- Simplified Spousal Business Tax Treatment — If you and your spouse are in business together, you may be able to elect out of the partnership rules for federal tax purposes, eliminating the need to file Form 1065 and Schedule K-1, and instead treat the relationship as sole proprietors.