Stimulus Package Contains Business Incentives

January 26, 2009 ( - The U.S. Senate Finance Committee is scheduled to take up a proposed $455-billion federal bailout package Tuesday morning that backers say should help businesses start returning to profitability and create new jobs.

A summary by Chairman Max Baucus (D-Montana) said the Senate Appropriations Committee will consider a separate piece of the stimulus plan.

According to the Finance Committee summary of the version to be considered Tuesday, the bill includes a(n):

  • increase of the Net Operating Loss (NOL) Carry Back Period to   extend the carry back period for NOLs from two years to five years for NOLs arising in taxable years ending in 2008 and 2009. Thisprovision would not apply to entities receiving federal bailout dollars. The item’s estimated cost is $17.2 billion over ten years.
  • delay in recognition of Certain Cancellation of Debt Income to   allow business to recognize cancellation of indebtedness income over four years for specified types of business debt repurchased by the business after December 31, 2008, and before January 1, 2011. This proposal is estimated to cost $511 million over ten years.
  • extension of Bonus Depreciation that extends into 2009, a provision of the   February 2008 stimulus bill allowing a trade or business to depreciate an additional 50% of the cost of an asset acquired and placed into service in 2008.  This proposal is estimated to cost $5.3 billion over ten years.
  • improvement in the Marketability of Tax Exempt Bonds issued by States and by local governments in 2009 and 2010, by eliminating the tax exempt interest on tax exempt private activity bonds as a preference item of the alternative minimum tax, expanding the ability of banks and brokers to invest in the bonds, and raising the amount of bonds a small issuer can issue from $10 million to $30 million. The item carries an estimated $3.7 billion price tag over 10 years.
  • move to provide $500 million for unemployment compensation administrative costs to be shared by all states and a provision of one-third of the allotted funds (based on a formula) to states that allow workers to count more recent wages by adopting the Alternative Base Period. The remaining two-thirds of the funding for this item will go to states adopting two of the following: Providing some level of unemployment compensation benefits to individuals seeking part-time work; providing unemployment compensation for workers who have left their jobs due to illness or disability of an immediate family member, the relocation of a spouse for employment, or domestic violence; providing training benefits to unemployed workers laid off from a “declining” occupation who are enrolled in a state-approved training program for entry into a high-demand occupation; or paying unemployed workers at least an extra $15 per week for each of the worker’s dependents. The item carries an estimated $2.6-billion cost.

The Senate panel’s bill summary is available here .