Agents Like Expensing Options In President's Tax-Cut Package

A two-year extension of enhanced expensing options for small businesses signed into law this week by President Bush will help independent insurance agencies to afford investments in depreciable assets, according to the Independent Insurance Agents & Brokers of America.

The law extends the ability of small firms to claim expensed deductions of as much as $100,000 in depreciable assets, as currently allowed under Section 179 of the Internal Revenue Code.

Firms whose annual investments exceed $400,000 are subject to a dollar-for-dollar phase-out of their ability to take the deduction. Without the extension, the tax code would have reverted after 2007 to a $25,000 limit on expensing and a $200,000 phase-out threshold.

The provision was one of a host of tax-cut extensions included as part of H.R. 4297, the Tax Increase Prevention and Reconciliation Act, signed by the president May 17. The bill also extends capital-gains and dividend tax cuts through 2010 and institutes a temporary "patch" to the alternative minimum tax system by extending exemption levels of $62,550 for joint filers and $42,500 for single filers through the end of 2006.

"Raising the alternative minimum tax exemption, allowing greater expense write-offs and decreasing taxes on capital gains will all help our members and their employees by shielding them from unanticipated or onerous federal taxation," Charles E. Symington, the Big I's senior vice president for government affairs and federal relations, said in a statement.

The bill also removes modified adjusted gross income limitations on taxpayers who wish to roll over traditional Individual Retirement Accounts into Roth IRAs. Under the new rules, account holders who covert to a Roth IRA in 2010 may opt to pay their conversion "toll" in equal installments in 2011 and 2012.

Source: A.M. Best Company (www.ambest.com)

From Inurance News Net (www.insurancenewsnet.com)