As promised, a look at Titles IV, V and VI…

Title IV – Bonus Depreciation Extension and 100 Percent Expensing of Certain Assets

Title IV is the first portion of the new act related to business, and kicks off by extending the bonus depreciation through 2013. Most importantly, this section creates a special class of property – bought after September 8, 2010 and before January 1, 2013 – which qualifies for 100% expense treatment. In lieu of expense treatment, the business can elect to accelerate AMT credits.

For property which is Round 2 extension property, that is, for property bought in the 2010-2012 period, businesses can elect whether or not to apply the accelerated AMT credit treatment to the ‘Round 2’ property. If no election is made, the acceleration provision applies.

This title also extends the benefit periods for Qualified Disaster Assistance (168(n)(2)), NY Liberty Zone (1400L), and Gulf Opportunity Zone (14ooN) credits through 2012.

The other major provision of this Title is the extension of elevated Section 179 rates. The rates, which were scheduled to return to investment-discouragingly low $25,000 is kept at $125,000, with a phaseout starting at $500,000 of qualified property purchases in a year. Given that most small businesses would struggle to get to $125,000, let alone $500,000, this is pretty much another ‘100% expense’ section. The extended increase lasts through 2012 (after which the $25,000/$200,000 limits return), and now also includes an inflation adjustment clause for out years.

Finally, the deduction for computer software (179(d)(1)(a)(ii)) is extended through 2013.

Title V – Temporary Extension of Unemployment Insurance and Related Matters

Simply put, this title extends Federal Unemployment Insurance payments scheduled to end on December 1, 2010. They are now scheduled to end on January 3, 2012 – so party hard on January 1, 2012, because it’ll be the last time!

Title VI –

This section reduces the employee side of the Social Security tax from 6.20 percent to 4.20 percent. Medicare remains unchanged at 1.45 percent. The employer side is unchanged at 6.20 and 1.45 percent, respectively. This change runs for all of 2011.

For employers, this incentive comes on top of the original payroll tax credits enacted under the HIRE act, which became law earlier this year. In that act, employers who hired staff off of unemployment were due tax credits in 2012 (when the 2011 return was filed) for those staff members who were kept on for the entire period from February 4, 2010 through December 31, 2010. Employers also got relief on their portion of Social Security tax for those workers during 2010.

This title also applies to self-employed individuals, who will be taxed at 13.30 percent (10.4 percent Social Security plus 2.90 percent Medicare), and who will be able to deduct the full”’employer’s” portion – 6.2 percent Social Security and 1.45 percent Medicare – on the front page of the 1040.

Part III, focusing on Title VII, in a bit.