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House Resolution 1424, The Emergency Economic Stabilization Act of 2008, more commonly known as the $700m financial bailout package was signed into law by Congress and approved by the President on October 3, 2008. The bill includes several provisions which are good news for individual and corporate taxpayers:
- The bill extends the r&d credit through 2009 (ie; can be used to offset tax liabilities on 2008 and 2009 tax filings).
- The bill strengthens the credit by increasing the Alternative Simplified Credit rate from 12% to 14% for 2009.
- The bill amends the Internal Revenue Code to extend through 2008 for individual taxpayers: (1) the offset of nonrefundable personal tax credits against regular and alternative minimum tax (AMT) liability; and (2) the increased AMT exemption amounts.
- The bill increases the AMT refundable credit amount for individuals who have long-term unused minimum tax credits from prior taxable years. Abates any underpayment of tax attributable to the application of special AMT rules for the treatment of incentive stock options.
Cash flow benefits:
- Now that the credit has been enacted for tax year 2008, use expected r&d credits to reduce estimated tax payments due 12/15/2008.
- In today’s down economy, use credits (refunds) to gain access to additional cash to fund operations.
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