2008 is a year to remember – or forget! The changes in the markets for housing, mortgage, financing, investment, construction…the list goes on…will affect us for years. Tax changes are only a part of this.

Changes for personal tax returns include:

• Exemptions, standard deduction, and other indexed items have been adjusted.
• Many existing items which were scheduled to expire have been extended, including:
• College Tuition Deduction
• Optional Sales Tax Deduction
• Educator Expense Deduction
• IRA Charitable Distribution Privilege
• Solar and Fuel cell Equipment credits – expanded and extended.
• Inclusion of combat pay as Earned Income for purposes of the earned income tax credit.
• Favorable consequences on conservation easements
• Larger refundable child tax credits
• Brokers must report gain or loss information on form 1099B when customers sell securities, starting in 2011.
• Brokers have been given until February 15 to provide form 1099 B. (This may mean that your tax appointment may need to be later than in the past).
• Tax free exclusion of mortgage debt forgiveness under certain circumstances and subject to limits.
• Increases for 2008 and decreases for 2009 in the standard mileage rates.
• An above the line deduction for non-itemizers’ deduction for State and local property taxes paid. Subject to limitations.
• Tightening of the rules on the sale of a second residence
• First time home buyers tax credit for home purchases after April 8, 2009 and before July 1, 2009.
• Estate tax thresholds are increased. 
• Increased exemption amounts for the Alternative Minimum Tax.  In addition, several of the nonrefundable tax credits can now be used to offset AMT liabilities. 
• Abatement of unpaid AMT liabilities, interest and penalties from pre-2008 ISO exercises.

Changes for business include the following:

• Enhanced charitable deductions for qualified contributions of book inventory; computers, and food inventory to corporations; and changed limitations on contributions related to disaster relief efforts.
• Basis adjustments to S corporations making charitable contributions of property.
• Changes in the standard mileage rates.
• Many changes related to energy credits for businesses.
• Changes to the depreciation rules for leasehold improvements and restaurants and for “bonus” and Section 179 depreciation. Changes for Farm equipment depreciation.
• Research credit extended and modified.
• Tax free fringe benefit for employees who commute to work by bicycle.
• Indian tax credit extended
• Exemption for producers of wooden arrows from excise tax!
• The FUTA (Federal Unemployment Tax Act) tax rate had been scheduled to drop to 6% after 2008, but under the new law it will remain at 6.2% through 2009 and will drop to 6% for 2010 and later. 
• For property placed in service after Aug. 31, 2008, the new law permits 50% first year bonus depreciation for qualified reuse and recycling property. 
• Increase in penalties for pass-through entities who file late. Additionally, the extended due dates for pass-through entities has been rolled back to September 15.

This notice is required by IRS Circular 230, which regulates written communications about federal tax matters between tax advisors and their clients.  To the extent the preceding correspondence and/or any attachment is written tax advice communication, it is not a full "covered opinion."  Accordingly, this advice is not intended and cannot be used for the purposes of avoiding penalties that may be imposed by the IRS.