TheTaxBook guarantees coverage of tax law changes through December 1, 2010. Numerous

tax provisions expired at the end of 2009, and it was expected that many of the provisions

would be extended. However, as of December 1, the extensions had not yet been

passed into law. On December 15, the U.S. Senate voted in favor or extender legislation,

and on December 16, the U.S. House of Representatives followed suit. On December 17,

2010, the President signed the Tax Relief, Unemployment Reauthorization, and Job Creation

Act of 2010.

Watch for complete coverage of the legislation, including information updating pages for

the 2010 Edition of TheTaxBook, on the Update Service at www.thetaxbook.com.

The following information is based on the Senate Finance Committee summary of the

legislation.

I. Temporary Extension of Tax Relief

Two major bills enacting tax cuts for individuals were set to expire at the end of 2010:

the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and the Jobs and

Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The new tax law extends these provisions

from EGTRRA and JGTRRA for an additional two years, through 2012. The new tax

law also extends a number of provisions enacted as part of EGTRRA that were modified

in the American Recovery and Reinvestment Act.

Reductions in Individual Income Tax Rates

Temporarily extend the 10% bracket. Under prior law, the 10% individual income tax

bracket was set to expire at the end of 2010. Upon expiration, the lowest tax rate was set

to be 15%. The new law extends the 10% individual income tax bracket for an additional

two years, through 2012.

Temporarily extend the 25%, 28%, 33%, and 35% brackets. Under prior law, the 25%,

28%, 33%, and 35% individual income tax brackets were set to expire at the end of 2010.

The new law extends the 25%, 28%, 33%, and 35% individual income tax brackets for an

additional two years, through 2012.

Temporarily repeal the Personal Exemption Phaseout. Personal exemptions allow a

certain amount per person to be exempt from tax. Due to the Personal Exemption Phaseout

(“PEP”), the exemptions are phased out for taxpayers with AGI above a certain level.

The EGTRRA repealed PEP for 2010. The new law extends the repeal of PEP for an additional

two years, through 2012.

Temporarily repeal the itemized deduction limitation. Generally, taxpayers itemize

deductions if the total deductions are more than the standard deduction amount. Since

1991, the amount of itemized deductions that a taxpayer may claim has been reduced,

to the extent the taxpayer’s AGI is above a certain amount. This limitation is generally

known as the “Pease limitation.” The EGTRRA repealed the Pease limitation on itemized

deductions for 2010. The new law extends the repeal of the Pease limitation for an additional

two years, though 2012.

Capital Gains and Dividends

Temporarily extend the capital gains and dividend rates. Under prior law, the capital

gains and dividend rates for taxpayers below the 25% bracket were equal to zero percent.

For those in the 25% bracket and above, the capital gains and dividend rates were 15%.

These rates were set to expire at the end of 2010. The new law extends the lower capital

gains and dividends rates for all taxpayers for an additional two years, through 2012.

Child Tax Credit

Temporarily extend the modified child tax credit. Generally, taxpayers with income

below certain threshold amounts may claim the child tax credit to reduce federal income

tax for each qualifying child under the age of 17. The EGTRRA increased the credit

from $500 to $1,000. The EGTRRA also expanded refundability. The amount that may be

claimed as a refund was 15% of earnings above $10,000. The American Recovery and Reinvestment

Act of 2009 provided that earnings above $3,000 would count towards refundability

for 2009 and 2010. The new law extends the current child tax credit for an additional

two years, through 2012.

Marriage Penalty Relief

Temporarily extend marriage penalty relief. The new law extends the marriage penalty

relief for the standard deduction, the 15% bracket, and the EITC for an additional two

years, through 2012.

Incentives for Families and Children

Temporarily extend the expanded dependent care credit. The dependent care credit

allows a taxpayer a credit for an applicable percentage of child care expenses for children

under 13 and disabled dependents. The EGTRRA increased the amount of eligible expenses

from $2,400 for one child and $4,800 for two or more children to $3,000 and $6,000,

respectively. The EGTRRA also increased the applicable percentage from 30% to 35%.

The new law extends the changes to the dependent care credit made by EGTRRA for an

additional two years, through 2012.

Temporarily extend the increased adoption tax credit and the adoption assistance

programs exclusion. Taxpayers that adopt children can receive a tax credit for qualified

adoption expenses. A taxpayer may also exclude from income adoption expenses

paid by an employer. The EGTRRA increased the credit from $5,000 ($6,000 for a special

needs child) to $10,000, and provided a $10,000 income exclusion for employer-assistance

programs. The Patient Protection and Affordable Care Act of 2010 extended these benefits

to 2011 and made the credit refundable. The new law extends for an additional year,

through 2012, the increased adoption credit amount and the exclusion for employerassistance

programs as enacted in EGTRRA.

Temporarily extend the credit for employer expenses for child care assistance. The

EGTRRA provided employers with a credit of up to $150,000 for acquiring, constructing,

rehabilitating or expanding property which is used for a child care facility. The new law

extends this provision for an additional two years, through 2012.

Earned Income Tax Credit (EITC).

Temporarily extend third-child EITC. Under prior law, working families with two or

more children qualified for an earned income tax credit equal to 40% of the family’s

first $12,570 of earned income. The American Recovery and Reinvestment Act increased the

earned income tax credit to 45% of the family’s first $12,570 of earned income for families

with three or more children and increased the beginning point of the phase-out range for

all married couples filing a joint return (regardless of the number of children). The new

law extends for an additional two years, through 2012, the American Recovery and Reinvestment

Act provisions that increased the credit for families with three or more children and

increased the phase-out range for all married couples filing a joint return.

Education Incentives

Temporarily extend expanded Coverdell Accounts. Coverdell Education Savings Accounts

are tax-exempt savings accounts used to pay the higher education expenses of a

designated beneficiary. The EGTRRA increased the annual contribution amount from

$500 to $2,000 and expanded the definition of education expenses to include elementary

and secondary school expenses. The new law extends the changes to Coverdell accounts

for an additional two years, through 2012.

Temporarily extend the expanded exclusion for employer-provided educational

assistance. An employee may exclude from gross income up to $5,250 for income and

employment tax purposes per year of employer-provided education assistance. Prior to

2001, this incentive was temporary and only applied to undergraduate courses. The EGTRRA

expanded this provision to graduate education and extended the provision for undergraduate

and graduate education to the end of 2010. The new law extends the changes

to this provision for an additional two years, through 2012.

Temporarily extend the expanded student loan interest deduction. Certain individuals

who have paid interest on qualified education loans may claim an above-the-line

deduction for such interest expenses up to $2,500. Prior to 2001, this benefit was only

allowed for 60 months and phased out for taxpayers with income between $40,000 and

$55,000 ($60,000 and $75,000 for joint filers). The EGTRRA eliminated the 60 month rule and increased the income phaseout to $55,000 to $70,000 ($110,000 and $140,000 for joint

filers). The new law extends the changes to this provision for an additional two years,

through 2012.

Temporarily extend the exclusion from income of amounts received under certain

scholarship programs. Scholarships for qualified tuition and related expenses are excludible

from income. Qualified tuition reductions for certain education provided to

employees are also excluded. Generally, this exclusion does not apply to qualified scholarships

or tuition reductions that represent payment for teaching, research, or other

services. The National Health Service Corps Scholarship Program and the F. Edward

Hebert Armed Forces Health Professions Scholarship and Financial Assistance Program

provide education awards to participants on the condition that the participants perform

certain services. The EGTRRA allowed the scholarship exclusion to apply to these programs.

The new law extends the changes to this provision for an additional two years,

through 2012.

Arbitrage rebate exception for school construction bonds. The new law extends the

$15 million arbitrage rebate exception for school construction for an additional two years,

through 2012.

Tax-exempt private activity bonds for qualified education facilities. The new law extends

the allowance to issue tax-exempt private activity bonds for public school facilities

for an additional two years, through 2012.

Temporarily extend the American Opportunity Tax Credit. Created under the American

Recovery and Reinvestment Act, the American Opportunity Tax Credit is available for up

to $2,500 of the cost of tuition and related expenses paid during the taxable year. Under

this tax credit, taxpayers receive a tax credit based on 100% of the first $2,000 of tuition

and related expenses (including course materials) paid during the taxable year and 25%

of the next $2,000 of tuition and related expenses paid during the taxable year. 40% of the

credit is refundable. This tax credit is subject to a phaseout for taxpayers with adjusted

gross income in excess of $80,000 ($160,000 for married couples filing jointly). The new

law extends the American Opportunity Tax Credit for an additional two years, through

2012.

Other EGTRRA Provisions

Temporarily extend tax relief for Alaska settlement funds. The new law extends the

elective tax treatment for Alaska Native settlement trusts for an additional two years,

through 2012.

II. Temporary Individual Alternative Minimum Tax (AMT) Relief

Two-year AMT patch. The new law increases the exemption amounts for 2010 to $47,450

(individuals) and $72,450 (married filing jointly) and for 2011 to $48,450 (individuals) and

$74,450 (married filing jointly). The new law also allows the nonrefundable personal credits

against the AMT. The new law is effective for taxable years beginning after December

31, 2009.

II. Temporary Estate Tax Relief

Temporary estate, gift and generation skipping transfer tax relief. The EGTRRA

phased out the estate and generation-skipping transfer taxes so that they were fully repealed

in 2010 and lowered the gift tax rate to 35% and increased the gift tax exemption

to $1 million for 2010. The new law sets the exemption at $5 million per person and $10

million per couple and a top tax rate of 35% for the estate, gift, and generation skipping

transfer taxes for two years, through 2012. The exemption amount is indexed beginning

in 2012. The new law is effective January 1, 2010, but allows an election to choose no estate

tax and modified carryover basis for estates arising on or after January 1, 2010 and before

January 1, 2011. The new law sets a $5 million generation-skipping transfer tax exemption

and zero percent rate for the 2010 year.

Reunification. Prior to the EGTRRA, the estate and gift taxes were unified, creating a

single graduated rate schedule for both. That single lifetime exemption could be used

for gifts and/or bequests. The EGTRRA decoupled these systems. The new law reunifies

the estate and gift taxes. The new law is effective for gifts made after December 31, 2010.

IV. Temporary Extension of Investment Incentives

Extension of bonus depreciation. Under prior law, businesses were allowed to recover

the cost of capital expenditures over time according to a depreciation schedule. Congress

allowed businesses, beginning January 1, 2008 through December 31, 2009, to take an

additional depreciation deduction allowance equal to 50% of the cost of the depreciable

property placed in service in those years. Under the Small Business Jobs Act of 2010, this

temporary increase in the depreciation deduction allowance was extended through December

31, 2010. The new law extends and temporarily increases this bonus depreciation

provision for investments in new business equipment. For investments placed in

service after September 8, 2010 and through December 31, 2011, the new law provides for

100% bonus depreciation. For investments placed in service after December 31, 2011 and

through December 31, 2012, the new law provides for 50% bonus depreciation. The new

law also allows taxpayers to elect to accelerate some AMT credits in lieu of bonus depreciation

for taxable years 2011 and 2012.

Temporarily extend increase in the maximum amount and phaseout threshold under

Section 179. Under prior law, a taxpayer with a sufficiently small amount of annual

investment could elect to deduct the cost of certain property placed in service for the year

rather than depreciate those costs over time. These amounts have been increased and

extended several times on a temporary basis, including most recently as part of the Small

Business Jobs Act which increased the thresholds to $500,000 and $2,000,000 for the taxable

years beginning in 2010 and 2011. The new law extends the 2007 maximum amount

and phase-out thresholds for taxable years beginning in 2012, at $125,000 and $500,000

respectively, indexed for inflation. The new law is effective for taxable years beginning

after December 31, 2011.

V. Temporary Extension of Unemployment Insurance

Extension of unemployment insurance. The unemployment insurance new law provides

a one-year reauthorization of federal UI benefits. The new law continues the Emergency

Unemployment Compensation (EUC) benefits for one year. In addition, it continues

100% Federal Financing of Extended Benefits (EB) for one year, and makes changes

to the EB look-back enabling states to continue to trigger on EB.

VI. Temporary Employee Payroll Tax Cut

Temporary reduction in employee-paid payroll taxes. Under prior law, employees paid

a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed

individuals paid a 12.4% Social Security self-employment tax on all their self-employment

income up to the same threshold. The new law provides a payroll/self-employment

tax holiday during 2011 of two percentage points. This means employees will pay only

4.2% on wages and self-employment. Individuals will pay only 10.4% on self-employment

income up to the threshold.

VI. Temporary Extension of Certain Expiring Provisions

Energy

Biodiesel and renewable diesel. The new law extends through 2011 the $1.00 per gallon

production tax credit for biodiesel, as well as the small agri-biodiesel producer credit of

10¢ per gallon. The new law also extends through 2011 the $1.00 per gallon production tax

credit for diesel fuel created from biomass.

Refined Coal. The new law extends through 2011 the placed-in-service deadline for

qualifying refined coal facilities.

Energy-efficient new homes credit. The new law extends through 2011 the credit for

manufacturers of energy-efficient residential homes.

Alternative fuels credit. The new law extends through 2011 the $0.50 per gallon alternative

fuel tax credit. The new law does not extend this credit for any liquid fuel derived

from a pulp or paper manufacturing process (i.e., black liquor).

Special rule for sales of electric transmission property. The new law extends through

2011 the present law deferral of gain on sales of transmission property by vertically integrated

electric utilities to FERC-approved independent transmission companies.

Special rule for marginal wells. The new law extends through 2011 the suspension on

the taxable income limit for purposes of depleting a marginal oil or gas well.

Section 1603. The new law extends for one year the start-of-construction deadline for

the cash grant in lieu of tax credit program, established in Section 1603 of the American

Recovery and Reinvestment Act.

Ethanol. The new law extends through 2011 the per-gallon tax credits and outlay payments

for ethanol. The new law also extends through 2011 the existing 14.27¢ per liter (54¢

per gallon) tariff on imported ethanol and the related 5.99¢ per liter (22.67¢ per gallon)

tariff on ethyl tertiary-butyl ether (ETBE).

Energy-efficient appliances. The new law extends through 2011 and modifies standards

for the Section 45M credit for US-based manufacture of energy-efficient clothes washers,

dishwashers, and refrigerators.

Energy-efficient existing homes. The new law extends through 2011 the credit under

Section 25C of the Code for energy-efficient improvements to existing homes, reinstating

the credit as it existed before passage of the American Recovery and Reinvestment Act.

Standards for property eligible under Section 25C are updated to reflect improvements

in energy efficiency.

Alternative vehicle refueling property. The new law extends through 2011 the 30% investment

tax credit for alternative vehicle refueling property.

Individual Tax Relief

Above-the-line deduction for certain expenses of elementary and secondary school

teachers. The new law extends for two years (through 2011) the $250 above-the-line tax

deduction for teachers and other school professionals for expenses paid or incurred for

books, supplies (other than non-athletic supplies for courses of instruction in health or

physical education), computer equipment (including related software and service), other

equipment, and supplementary materials used by the educator in the classroom.

Deduction of state and local general sales taxes. The new law extends for two years

(through 2011) the election to take an itemized deduction for state and local general sales

taxes in lieu of the itemized deduction permitted for state and local income taxes.

Extension of provision encouraging contributions of capital gain real property for

conservation purposes. The new law extends for two years (through 2011) the increased

contribution limits and carryforward period for contributions of appreciated real property

(including partial interests in real property) for conservation purposes.

Above-the-line deduction for qualified tuition and related expenses. The new law extends

for two years (through 2011) the above-the-line tax deduction for qualified education

expenses.

Extension of tax-free distributions from individual retirement plans for charitable

purposes. The new law extends for two years (through 2011) the provision that permits

tax-free distributions to charity from an Individual Retirement Account (IRA) of up to

$100,000 per taxpayer, per taxable year. The new law allows individuals to make charitable

transfers during January 2011 and treat them as if made during 2010.

Estate tax look-through of certain Regulated Investment Company (RIC) stock held

by nonresidents. The new law permits the look-through rule for RIC stock to apply to

estates of decedents dying before January 1, 2012.

Parity for mass transit benefits. The new law extends through 2011 the increase in the

monthly exclusion for employer-provided transit and vanpool benefits to that of the exclusion

for employer-provided parking benefits.

Refund and tax credit disregard for means tested programs. Current law ensures that

the refundable components of the EITC and the Child Tax Credit do not make households

ineligible for means-tested benefit programs and includes provisions stating that

these tax credits do not count as income in determining eligibility (and benefit levels) in means-tested benefit programs, and also do not count as assets for specified periods of

time. Without them, the receipt of a tax credit would put a substantial number of families

over the income limits for these programs in the month that the tax refund is received.

The new law disregards all refundable tax credits and refunds as income for means tested

programs. The new law is effective for amounts received after December 31, 2009 and

does not apply to amounts received after December 31, 2012.

Business Tax Relief

R&D credit. The new law reinstates for two years (through 2011) the research credit.

Indian employment credit. The new law extends for two years (through 2011) the business

tax credit for employers of qualified employees that work and live on or near an

Indian reservation. The amount of the credit is 20% of the excess of wages and health

insurance costs paid to qualified employees (up to $20,000 per employee) in the current

year over the amount paid in 1993.

New Markets Tax Credit. The new law extends for two years (through 2011) the new markets

tax credit, permitting a maximum annual amount of qualified equity investments of

$3.5 billion each year. This is effective for calendar years beginning after December 31, 2009.

Extension of railroad track maintenance credit. The new law extends for two years

(through 2011) the railroad track maintenance credit.

Mine rescue team training credit. The new law extends for two years (through 2011) the

credit for training mine rescue team members.

Employer wage credit for activated military reservists. The new law extends for two

years (through 2011) the provision that provides eligible small business employers with a

credit against the taxpayer’s income tax liability for a taxable year in an amount equal to

20% of the sum of differential wage payments to activated military reservists.

Tax benefits for certain real estate developments. The new law extends for two years

(through 2011) the special 15-year cost recovery period for certain leasehold improvements,

restaurant buildings and improvements, and retail improvements.

Extension of seven year straight line cost recovery period for motorsports entertainment

complexes. The new law extends for two years (through 2011) the special seven

year cost recovery period for property used for land improvement and support facilities

at motorsports entertainment complexes.

Accelerated depreciation for business property on an Indian reservation. The new

law extends for two years (through 2011) the placed-in-service date for the special depreciation

recovery period for qualified Indian reservation property.

Extension of enhanced charitable deduction for contributions of food inventory. The

new law extends for two years (through 2011) the provision allowing businesses to claim

an enhanced deduction for the contribution of food inventory.

Extension of enhanced charitable deduction for contributions of book inventories

to public schools. The new law extends for two years (through 2011) the provision allowing

C corporations to claim an enhanced deduction for contributions of book inventory

to public schools (kindergarten through grade 12).

Extension of enhanced charitable deduction for corporate contributions of computer

equipment for educational purposes. The new law extends for two years (through

2011) the provision that encourages businesses to contribute computer equipment and

software to elementary, secondary, and post-secondary schools by allowing an enhanced

deduction for such contributions.

Election to expense advanced mine safety equipment. The new law extends for two

years (through 2010) the provision that provides businesses with 50% bonus depreciation

for certain qualified underground mine safety equipment.

Extension of special expensing rules for U.S. film and television productions. The

new law extends for two years (through 2011) the provision that allows film and television

producers to expense the first $15 million of production costs incurred in the United

States ($20 million if the costs are incurred in economically depressed areas in the United

States).

Extension of expensing of environmental remediation costs. The new law extends for

two years (through 2011) the provision that allows for the expensing of costs associated

with cleaning up hazardous sites.

Deduction allowable with respect to income attributable to domestic production

activities in Puerto Rico. The new law extends for two years (through 2011) the provision

extending the Section 199 domestic production activities deduction to activities in

Puerto Rico.

Extension of special tax treatment of certain payments to controlling exempt organizations.

The new law extends for two years (through 2011) the special rules for interest,

rents, royalties, and annuities received by a tax exempt entity from a controlled entity.

Treatment of certain dividends of Regulated Investment Companies (RICs). The

new law extends the treatment of interest-related dividends and short-term capital gain

dividends received by a RIC to taxable years of the RIC beginning before January 1, 2012.

Treatment of RIC investments as “Qualified Investment Entities” under FIRPTA.

The new law extends the inclusion of a RIC within the definition of a “qualified investment

entity” under Section 897 of the Tax Code through December 31, 2011.

Active financing exception. The new law extends for two years (through 2011) the active

financing exception from Subpart F of the tax code.

Look-through treatment of payments between related controlled foreign corporations.

The new law extends for two years (through 2011) the current law look-through

treatment of payments between related controlled foreign corporations.

Extension of special rule for S corporations making charitable contributions of property.

The new law extends for two years (through 2011) the provision allowing S corporation

shareholders to take into account their pro rata share of charitable deductions even

if such deductions would exceed such shareholder’s adjusted basis in the S corporation.

Empowerment Zones. The new law extends for two years (through 2011) the designation

of certain economically depressed census tracts as Empowerment Zones. Businesses and

individual residents within Empowerment Zones are eligible for special tax incentives.

District of Columbia Enterprise Zone. The new law extends for two years (through

2011) the designation of certain economically depressed census tracts within the District

of Columbia as the District of Columbia Enterprise Zone. Businesses and individual

residents within this enterprise zone are eligible for special tax incentives. The new law

also extends for two years (through 2011) the $5,000 first-time homebuyer credit for the

District of Columbia.

Extension of temporary increase in limit on cover over of rum excise tax revenues to

Puerto Rico and the Virgin Islands. The new law extends for two years (through 2011)

the provision providing for payment of $13.25 per gallon to cover over a $13.50 per proof

gallon excise tax on distilled spirits produced in or imported into the United States.

Extension of American Samoa economic development credit. The new law extends

through 2011 the American Samoa economic development credit.

Work opportunity tax credit (WOTC). Under current law, businesses are allowed to

claim a work opportunity tax credit equal to 40% of the first $6,000 of wages paid to new

hires of one of nine targeted groups. These groups include members of families receiving

benefits under the Temporary Assistance to Needy Families (TANF) program, qualified

veterans, designated community residents, and others. The WOTC program was set to

expire August 31, 2011. The new law extends this provision through December 31, 2011

and would be effective for employees hired after date of enactment.

Extension and increase in authorization for qualified zone academy bonds (QZABs).

The new law extends the QZAB program providing an additional $400 million for

2011. It also repeals the direct subsidy feature created as part of the American Recovery and

Reinvestment Act for 2011 and for any carryforward of unused allocation.

Premiums for mortgage insurance deductible as interest that is qualified residence

interest. Under current law, a taxpayer may itemize the cost of mortgage insurance on a

qualified personal residence. The deduction is phased out ratably by 10% for each $1,000

by which the taxpayer’s AGI exceeds $100,000. Thus, the deduction is unavailable for a

taxpayer with an AGI in excess of $110,000. The new law extends this provision for an additional

year, through 2011.

Exclusion of small business capital gains. Generally, non-corporate taxpayers may

exclude 50% of the gain from the sale of certain small business stock acquired at original

issue and held for more than five years. For stock acquired after February 17, 2009 and on

or before September 27, 2010, the exclusion is increased to 75%. For stock acquired after

September 27, 2010 and before January 1, 2011, the exclusion is 100% and the AMT preference

item attributable for the sale is eliminated. Qualifying small business stock is from

a C corporation whose gross assets do not exceed $50 million (including the proceeds

received from the issuance of the stock) and who meets a specific active business requirement.

The amount of gain eligible for the exclusion is limited to the greater of ten times

the taxpayer’s basis in the stock or $10 million of gain from stock in that corporation. The

new law extends the 100% exclusion of the gain from the sale of qualifying small business

stock that is acquired before January 1, 2012 and held for more than five years.

Disaster Relief Provisions

Extension of tax incentives for the New York Liberty Zone. The new law extends for

two years (through 2011) the time for issuing New York Liberty Zone bonds effective for

bonds issued after December 31, 2009.

Extension of increased rehabilitation credit for historic structures in the Gulf Opportunity

Zone. The new law extends for two years (through 2011) the increased rehabilitation

credit for qualified expenditures in the Gulf Opportunity Zone.

One-year extension of Gulf Opportunity Zone low-income housing placed-in-service

date. The Gulf Opportunity Zone Act of 2005 provided an additional allocation of

low-income housing tax credits to the Gulf Opportunity Zone in an amount equal to the

product of $18.00 multiplied by the portion of the state population which is in the Gulf

Opportunity Zone. The additional allocations were made in calendar years 2006, 2007,

and 2008, and required that the properties be placed in service before January 1, 2011. The

new law extends that placed-in-service date for one year (through 2011).

Extension of Tax-Exempt Bonds for the Gulf Opportunity Zone. Under prior law,

bonds were authorized to help rebuild areas devastated by Hurricane Katrina and must

be issued by December 31, 2010. The amendment provides one additional year to utilize

these bonds, through December 31, 2011.

Temporary Depreciation Allowance for Gulf Opportunity Zone Property. The new

law extends for two years, through 2011, an additional depreciation deduction claimed by

businesses equal to 50% of the cost of new property investments made in the Gulf Opportunity

Zone. The provision makes expenditures in 2011 eligible provided the property

is placed in service by December 31, 2011.