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American Jobs Creation Act

The American Jobs Creation Act of 2004 was a federal tax act composed of tax credits for agricultural and business institutions. This included the repeal of some excise taxes on fuel and alcohol; also it created tax credits for bio fuels. Below are some of the most commonly asked questions about the American Jobs Creation Act answered by the Experts.

Are corporations able to deduct luxury Sports Utility Vehicles (SUV), if so what are the requirements or criteria?

In most cases passenger autos are subject to a limitation on how much a person can deduct per year. Extravagant vehicles, such as a Ferrari, Lamborghinis, etc. are not usually deductable. Generally most cars use the weight of 6,000 pounds loaded as a cutoff point. Some SUV’s can be written off subject to business use limitations. However the American Jobs Creation act of 2004 specifies a maximum deduction for a SUV to be $25,000 per year in 2004, the remainder of the cost is to be otherwise depreciated in the first year.

If a person is paid $10,000 in commissions and their employer withholds $3,000 including Medicare and Federal Insurance Contributions Act (FICA), would this withholding be correct?

Most generally an employer can withhold up to 25% as federal withholding on supplementary wages, therefore they could deduct $2,500 as federal withholding and 7.65% as FICA and Medicare on a payment of this amount.

If an individual has received a settlement that falls under the American Jobs Creation is the individual allowed to deduct any attorney fees or cost for the previous years?

Typically attorney fees paid in years prior to a resolution are deductable; however there are no clear indications on how to determine the deductible amount. Attaching an itemized note with expenses to the person’s tax return could prove to be a benefit in such a case. Also deductions may only be claimed in the year that the taxable income is paid.

Could property be sold as residence for tax purposes instead of rental property if an individual has bought this property from the section 1031 exchange and lived in the home for 2 out of 5 years?

In most cases when a property is acquired as a part of a section 1031 exchange. The owner must own the property for a minimum of five years before they can qualify for the exclusion on the sale of a primary residence. Therefore the individual would most likely qualify for a partial exclusion since the property was used as an investment property after being a primary residence. Most generally two out of five years or 40% of the gain would not be excluded in this matter.

If a person bought items in order to take advantage of section 179 then found out it wasn’t used on last year’s tax return, should they claim it on this year’s tax return or amend in order to make the change?

In some cases the person would be advised to amend last year’s return and elect using section 179 for qualified property.

The American Jobs Creation Act was initially designed to repeal the Export Tax Incentive, which had been declared illegal by the World Trade Organization several times and started retaliatory Tariffs by the European Union. The act made American manufacturing, service, and technology businesses, along with American workers more competitive and productive both at home and abroad. This subject can supply insight to just a few of the problems facing America; it can also open a wide variety of questions that need to be answered by the Experts.
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