WASHINGTON — The banking lobby was able to push small business tax relief through as part of the U.S. Troop Readiness and Iraq Appropriations Act (H.R. 2206), providing $4.84 billion in tax relief for thousands of small businesses and community banks.
The president signed the bill into law May 25. The new law provides more than $750 million in ICBA-backed small business tax relief, including improved small business expensing and beneficial Subchapter S tax provisions. Several provisions were part of the ICBA-advanced Communities First Act (S. 1405 and H.R. 1869). They would:
?? 1/2 Exclude capital gains from passive investment income for Subchapter S businesses;
?? 1/2 Ease the treatment of Subchapter S bank director shares;
?? 1/2 Improve the tax treatment of bank bad debt reserves;
?? 1/2 Modify the treatment of the sale of interest on a qualified Subchapter S subsidiary; and
?? 1/2 Ease the interest expense of an electing small business trust to acquire S corporation stock.
Independent Community Bankers of America Chairman James P. Ghiglieri, president of Alpha Community Bank, Toluca, Ill., stated, “Community banks are the backbone of our local economies and this new law helps free up resources to better support the communities we serve.”
The credit union trade groups noted the banks' hypocrisy in pushing their own tax relief while trying to tax credit unions.
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