March 14, 2002

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Retroactive Changes to 2001 Just Announced! 

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 I HAVE COMPLETED THIS TEXT SUMMARY FOR YOU - HOWEVER I HAVE NOT TAKEN THE TIME TO PRODUCE THE AUDIO AND VIDEO REPORT.  HOPEFULLY THAT WILL BE AVAILABLE SOON .

Businesses and individuals may be in line for immediate, additional tax refunds based on provisions in the new Job Creation and Workers Assistance Act of 2002, signed this past weekend by President Bush.

The act not only provides extended jobless benefits and employment-related incentives, but also contains significant retroactive benefits for depreciation of certain assets acquired after Sept.10, 2001.

Businesses and individuals can receive an additional amount of depreciation equivalent to 30 percent of the cost of the eligible property, which typically includes equipment, computer software, furniture, and land improvements. If the 2001 return has already been filed, an amended return is mandatory.

For those who purchased luxury cars after Sept. 10, 2001,  the act increases the limitation on first-year depreciation on luxury autos by $4,600. Thus, the maximum first-year deduction goes from $3,060 to $7,660.

Alert!

President Bush signed the Jobs Creation and Workers Assistance Act of 2002 into law on March 9, 2002. A number of provisions in the bill have effective dates which are retroactive to September 2001. Because of the retroactive provisions, the IRS has indicated that it will be issuing several revised forms, instructions, and publications for the 2001 tax year. We will keep you posted on the web-site concerning all developments.  The new provisions are mandatory - in other words, the new computations must be made, unless the taxpayer "opts out" by placing a written statement with the tax return.

At this point, the IRS has suggested filing extensions for returns that are likely to be affected by this new law.

The major retroactive provisions include:

Consequently, the IRS has indicated that the following 2001 forms and instructions may change for calendar year filers:

• Form 4562, Depreciation and Amortization
• Form 2106, Employee Business Expenses
• Form 1045, Application for Tentative Refund
• Form 1139, Corporation Application for Tentative Refund
• Form 4626, Alternative Minimum Tax - Corporations
• Form 6251, Alternative Minimum Tax - Individuals
• Form 1041, U. S. Income Tax Return for Estates and Trusts

Moreover, at least the following IRS publications will need to be revised:

• Publication 553- Highlights of Tax Changes(2001 Returns)
• Publication 946- How to Depreciate Property(2001 Returns)
• Publication 954- Tax Incentives for Empowerment Zones and other Distressed Communities

FOR FISCAL YEAR FILERS: The IRS has indicated that the following 2001 forms and/or instructions may change for fiscal year filers: · Form 5884, Work Opportunity Credit · Form 8834, Qualified Electric Vehicle Credit · Form 8835, Renewable Electricity Production credit · Form 8861, Welfare-to-Work Credit · plus a new New York Liberty Zone (NYLZ) credit form will be created

NOTE! Due to the nature of these retroactive changes, you may need to amend returns already filed.

In addition, it is important to note and plan for the impact that amended "flow-through" entities, such as S-corporations, partnerships, trusts and estates, may have on taxpayers in the weeks and months ahead.  Any K-1 you receive or furnish to others may be in need of amending.

Furthermore:  Form the initial reading the language in the legislation indicates the application of the new computation is mandatory and if not used, the taxpayer must attach a written statement the old rules should be used if the old rules are available.

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  Read Transcript:  Transcript PowerPoint 

  Read Transcript:  Transcript PowerPoint