The recently enacted American Recovery and Reinvestment Act of 2009 (the Stimulus Act) furnishes some tax relief for businesses attempting to deal with the economic downturn. Most significant is a provision designed to defer the tax effects of debt discharge income realized by companies that restructure their debts during 2009 and 2010. A second provision expands certain depreciation benefits to allow an additional year of bonus depreciation and increase the dollar limitations on property that can be expensed under section 179. The tax-relief provisions also include a one-time extension of the carryback period to 5 years, rather than the normal 2 years, for net operating losses recognized by certain small businesses (i.e., businesses with annual gross receipts under $15 million). A fourth, more narrowly targeted provision benefits S corporations that converted from C status at some point during the period from 1999 through 2003 and are seeking to sell assets during 2009 and 2010.
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