Business: Aid for Small Business

Up for the President's signature this week is a bill designed to give $260 million in tax relief to small businesses. After the President, as expected, signs it, small businesses can:

¶ Elect to be taxed as partnerships if they have less than ten stockholders; thus losses in small corporations can be charged against other personal income.

¶ Carry back losses three years instead of two.

¶ Accumulate $100,000 instead of $60,000 before incurring surtaxes,

¶ Pay estate taxes over ten years at 4% interest. Previously, some small, closely held corporations had to be sold because estate taxes fell in a single year.

¶ Depreciate equipment up to $10,000 by 20% in addition to normal depreciation the year the property is acquired.

To aid small businesses in obtaining capital, the bill also provides that losses up to $25,000 on small business stock may be claimed as ordinary losses by an individual instead of capital losses, which are limited as a deduction. But the issue of stock involved cannot exceed $500,000, and the combined worth of stock and equity capital in the company cannot exceed $1,000,000.