The American Recovery and Reinvestment Act of 2009 include provisions related to the taxation of businesses and individuals. Although tax benefits to most businesses are limited, below are the key aspects of the business tax provisions of the Act which should be noted:

• Deferral of Discharge of Indebtedness Income. Unless an exception applies, under current law a taxpayer must recognize income that arises from the discharge of indebtedness. Such income recognition requirements also apply to a debtor’s exchange or modification of a debt obligation, or a debtor’s (or related party’s) repurchase of its debt instrument for an amount that is less than its "adjusted issue price." The Act amends Section 108 to permit a C corporation and any taxpayer who borrowed funds in connection with a trade or business to elect to have debt discharge income arising from the "reacquisition" of an applicable debt instrument during 2009 and 2010, to defer the income from the discharge and include it in income ratably over a five-tax-year period from 2014 to 2018. The reacquisition includes not only a repurchase at a discount, but also an exchange for a new debt instrument, a modification, a contribution to capital, an exchange for stock or partnership interests, as well as a complete forgiveness of the debt. An election to defer the recognition of debt discharge income is made by including with the income tax return for the tax year in which the debt instrument is reacquired a statement that clearly identifies the instrument and includes any other information as may be required by the IRS. The deferral of income is accelerated in certain events, including the termination of the taxpayer’s business. For an ongoing business having financial difficulty, this provision can be of great value to the business by deferring the "phantom income" problem that is triggered by the discharge of debt income in reworking the debt structure.
• Extended Net Operating Loss Carry back Period for Electing Small Businesses. A net operating loss ("NOL") is calculated as the excess of business deductions over gross income. Generally, a taxpayer can carry back an NOL for two years and forward for 20 years to offset taxable income in such years. The Act permits small businesses with gross annual receipts of less than $15 million to elect to extend the carry back period for any 2008 NOL (defined as any taxable year ending in calendar year 2008, or, at the election of the taxpayer, beginning in calendar year 2008) from two years to a period of up to five years. This provision allows qualifying small businesses to carry back 2008 Nil’s to the 2003 through 2005 tax years and receives an immediate tax refund
• Extended Section 179 Expensing for 2009. Under Internal Revenue Code Section 179, a taxpayer can elect to deduct rather than depreciate the costs of new or used tangible personal property placed in service during the tax year by the taxpayer's trade or business. For the 2008 tax year, a taxpayer could currently deduct up to $250,000 of such purchases, provided the taxpayer’s total of such purchases did not exceed $800,000. The Act extends the $250,000 expense amount and the $800,000 ceiling limit for 2009 rather than permitting the benefit to expire.
• Extended 50% First-Year Depreciation for Most Types of New Depreciable Property Placed in Service in 2009. The cost of most business property placed into service is recovered through the depreciation of the asset under the modified accelerated cost recovery depreciation rules. Legislation enacted earlier in this decade had allowed for an additional depreciation deduction to 50% of the adjusted basis of "qualified property" placed in service. However, this additional depreciation generally only applied to property placed in service for tax years prior to January 1, 2009. The Act extends this bonus depreciation to property placed in service during the 2009 tax year.
• S Corporation Built-In Gains Tax Period Temporarily Reduced to Seven Years. When a C corporation files an election to convert and be taxed as an S corporation, any built-in gains on assets that exist at the time of conversion that are recognized by the S corporation within 10 years of the election to convert are subject to tax at the highest corporate rate. The Act provides that for the sale of built-in gain assets during 2009 and 2010, the 10-year period is reduced to seven years.
• Notice 2008-83 Repealed. Internal Revenue Code Section 382 limits the ability of an acquiring company to utilize built in losses of the acquired company. The IRS has previously issued Notice 2008-83, 2008-42 IRB 905 (the "Notice"), which exempted bank acquisitions from the Section 382 limitations on an acquiring entity’s ability to make use of losses and built-in losses of target banks. The Act provides that Notice will not apply to any ownership change which occurs after January 16, 2009, unless the ownership change is pursuant to a written binding contract entered into on or before that date or was described in a public announcement or filing with the SEC made on or before that date.