Economic stimulus bill enacted.
* Allows additional 30% depreciation of certain capital assets for three years, starting Sept. 11, 2001 (perhaps requiring amended 2001 returns).
* Extends various expiring tax provisions (for example, the work opportunity and electric-vehicle tax credits).
* Permits a 13-week extension of unemployment benefits for employees whose regular benefits have terminated and who live in a state with a minimum 4% unemployment rate.
* Enlarges the net operating loss carryback period from two years to five and waives alternative minimum tax depreciation.
* Offers tax benefits for New York City reconstruction.
Congress introduced these changes in the expectation they would promote economic growth.
Another change. Among other issues, the act dealt with S corporation shareholders. Cancellation of debt (COD) income is excluded from an insolvent S corporation's gross income. Hotly debated was whether a shareholder in an insolvent S corporation could nevertheless increase his stock basis by the amount of the excluded COD income.
Last year, the U.S. Supreme Court held, in Gitlitz, 531 US 206 (2001), that an S corporation shareholder could increase his stock basis in this manner. The act reversed the Court's decision, providing that S corporation COD income does not increase shareholder basis. This rule applies to debt cancellations occurring after October 11, 2001.
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|Title Annotation:||Job Creation and Worker Assistance Act of 2002|
|Publication:||Journal of Accountancy|
|Date:||May 1, 2002|
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