The United States Treasury has released an explanation of the tax provisions contained within the 2011 budget proposed by President Obama. The following list highlights some of the key tax provisions.  Please remember that these changes are only proposed in the budget. It will take a considerable amount of time before any of these changes are voted upon. 

• ·         Reinstate the 39.6% tax bracket for taxable incomes over $373,650
  ·         Reinstate the 36% tax bracket for married filing joint of $250,000 ($200,000 single)
  ·         Reinstate the personal exemption and itemized deduction phase-outs
  ·         Limit all itemized deductions to 28% of AGI for taxpayers in the top two tax brackets
  ·         Tax capital gains and qualified dividends at 20%
  ·         Provide $250 to recipients of Social Security or comparable payments in 2010
  ·         Extend the COBRA premium assistance to individuals involuntarily terminated prior          to 1/1/11
  ·         Extend the maximum §179 deduction of $250,000 through 2010
  ·         Extend the bonus depreciation deduction through 2010
  ·         Expand the Earned Income and Child and Dependent Care credits
  ·         Eliminate capital gains and AMT preference for qualified small business stock 
  ·         Make the Research & Experimentation Credit permanent
  ·         Remove cell phones from listed property
  ·         Extend "extenders" through 2011, including15-yr depreciable life for leasehold
•          improvements
  ·         Permanently extend 2009 estate tax provisions
  ·         Make Alternative Minimum Tax (AMT) exemption permanently indexed for inflation
  ·         Repeal LIFO
  ·         Repeal "lower of cost or market" method for inventory
  ·         Repeal expensing of Intangible Drilling Cost
  ·         Repeal passive loss exception for oil and gas properties
  ·         Repeal production deduction for oil and gas
  ·         "Carried interests" taxed as ordinary income
  ·         Expand 1099 reporting requirements
  ·         Place significant restrictions on valuation discounts for estate and gift purposes
  ·         Tightening of various offshore tax provisions

 

We will continue to monitor the progress of these proposals and inform you accordingly.