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updated 4/2/2010 8:26:24 AM ET 2010-04-02T12:26:24

It's tax season.

Those words usually strike dread into the hearts of everyone who hears them. And after a particularly rough year like 2009, the last thing you want to do is shell out more money.

Small business owners: Cheer up!

This year, doing your taxes should be slightly less painful for many of you. Congress has recently implemented some cool tax breaks — mainly in The American Recovery and Reinvestment Act of 2009 (a.k.a. the "Recovery Act") — to make things a little easier on small businesses.

We spoke with Jean Baxley, a tax attorney in Washington, DC, about the latest changes.

Be sure to talk to your accountant about whether or not you qualify for these breaks.

First-year expensing
For businesses that were profitable in 2009, here's some great news:

"Usually, the cost of equipment and machinery purchases has to be recovered by depreciation, which is an allowance deducted over a number of years (typically five or seven years)," according to the Wall Street Journal.

But, under the amended Sec. 179 deduction, you can now expense up to $250,000 of the cost of your property and equipment put in use during 2009, all at once.

First-year bonus depreciation
If you weren't profitable, the Recovery Act also made "bonus" depreciation available on top of (as opposed to "instead of") regular depreciation — you can now immediately depreciate 50 percent of the cost of any office-related property that you put in use during 2009.

"Bonus depreciation is taken before regular depreciation and so reduces a taxpayer's depreciable basis in the property for regular depreciation purposes," Baxley says.

If your business was profitable, and you bought more than $250,000 in equipment, you can combine this provision with expensing to get a huge deduction.

The Wall Street Journal offers this example: "[If] a medical office bought high technology medical equipment in 2009 totaling $350,000 (the equipment has a five-year recovery period for depreciation), it could write off more than 88% of the cost in the first year. Assuming eligibility for both the Sec. 179 deduction and bonus depreciation, the write-off for 2009 would be $310,000 ($250,000 expensing + $50,000 bonus depreciation + $10,000 depreciation)."

General business credit
If your business was operating at a loss, bonus depreciation is not very useful to you right now.

So the Recovery Act also allows businesses to claim a higher limit on their refundable credits instead, if you would rather do so.

Cancellation of debt
Normally, any debt you've had forgiven automatically gets added to your taxable income — raising your taxes.

But under the The Recovery Act, a business whose debt has been forgiven can spread out the inclusion of that amount in their taxable income over a five-year period (for 2009 forgiveness only).

"So, for example, forgiveness of a $5,000 debt in 2009 would result in $1,000 of taxable income in each of the years 2014 through 2018," says Baxley. For those debts forgiven in 2010, it's spread out over a four-year period.

If a business is struggling enough that it can't repay its loans, "[adding] taxes for debt forgiveness to this already difficult situation seems like a set-up for failure," Baxley comments. This provision softens the blow.

Work Opportunity Tax Credit expansion
The existing Work Opportunity Tax Credit reduces income tax liability for small businesses if they hire employees who fall into certain "target groups who have consistently faced significant barriers to employment," according to the US Department of Labor.

The new provisions in the Recovery Act add two new categories: unemployed veterans and disconnected youth (you can find IRS definitions of both groups here.)

The terms apply to employees who were hired and began to work in 2009 or 2010.

NOL carrybacks
Normally, businesses can carryback net operating losses (NOLs) just two years to generate a tax refund against previous profits.

In 2008, that time period was temporarily extended to five years for small businesses. The Recovery Act renews this provision, and gives small businesses the option to choose a three-, four-, or five-year carryback.

Your small business qualifies if you averaged $15 million or less in annual gross receipts for the last three years.

Higher caps on business vehicle depreciation
There's a limit on the maximum depreciation deduction a business can take on a car, light truck, or van the year it's bought. The Recovery Act increased that limit by $8,000.

Deferral of estimated taxes
The Recovery Act enables qualified small businesses to reduce their estimated taxes to only 90 percent of their liability for the preceding year (as opposed to 100 percent.)

To qualify, your income must fall under $500,000 and you must have earned more than 50 percent of it from your small business.

S-corp built-in gains tax period reduction
If you're an S-corp, check this one out.

According to the Journal of Accountancy, "the recognition period for assets subject to the built-in gains tax is reduced from 10 years to seven years for S corporation tax years beginning in 2009 and 2010."

Normally, the built-in gains tax "applies a 35% tax when an S corporation takes "built-in gains" into income. "Built-in gains" are items for which a former C corporation had accrued economic benefit on the day its S corporation took effect, but which had not been recognized for tax purposes," explains Roth & Company's Tax Update Blog.

That means "[for] 2009, that benefits corporations that made S elections effective in 2000-2002; in 2010, it would help S elections made in 2001-2003," the blog post continues.

Exclusions on gains from sales of small business stock
If you're invested in eligible small business stock, you may be able to exclude 75 percent of the gain you receive upon the sale of the stock (as opposed to the normal 50 percent). It also reduced the time you had to hold the stock from 5 years to 3 years.

This is applicable only if you acquired the stock after February 2009 and before January 2011.

Bonus: Section 1231 losses and gains
Even though it's not that new, if you don't know about this one, you should.

Business property that falls under Section 1231 gets a big break: Net gains from the disposal of this property are taxed as capital gains, but net losses from the disposal of this property are taxed as though they're ordinary losses.

And, if you had Section 1231 losses in the last five years, you treat any gains this year as ordinary income, as opposed to capital gains. This is known as the five-year lookback rule, and it's a big break for anyone who suffered this past year.

Copyright 2012 by Business Insider, Inc. All rights reserved. Reproduced with permission from Business Insider, Inc.

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