AMT

After weeks of negotiation, Congress has passed the American Taxpayer Relief Act to avert the tax side of the “Fiscal Cliff” and bring some certainty to the Tax Code. Almost all taxpayers are affected by the numerous extensions and modifications. Many popular but temporary tax extenders relating to businesses are included in the American Taxpayer Relief Act. Among them is Code Sec. 179 small business expensing, bonus depreciation, the research tax credit, and the Work Opportunity Tax Credit. This letter provides some highlights of the American Taxpayer Relief Act as it applies to investments and business taxpayers.

The IRS has issued long-awaited and much needed proposed reliance regulations on the operation of the two new surtaxes imposed under the 2010 healthcare legislation: the 3.8 percent Net Investment Income Tax (NIIT), and the 0.9 percent Additional Medicare Tax. Both surtaxes are scheduled to come into full effect on January 1, 2013. The proposed reliance regulations and the frequently asked questions on the IRS website attempt to address many of the gaps in the application of these surtaxes that have been questioned by tax professionals, employers, and taxpayers. The guidance on each of these surtaxes is extensive and is immediately critical for affected taxpayers.