The beneficiaries must keep the business for at least 10 years. If they sell it in less than seven years, the full value of the exemption becomes taxable. The AMT, which tax specialists say has rarely applied to small businesses anyway, is a special tax designed to prevent corporations from getting too much benefit from tax breaks. Starting this year, the carryback period for unused credits is reduced from three years to one year, and the carryforward period is increased from 15 years to 20 years. Under the new law, unused credits that arise in tax years beginning before 1998 can still be carried back for three years, but any unused credit arising in 1998 can be carried back only to 1997.
Losses reduce taxable income.
A business with no taxable income for the year can also use the carryforward and carryback provisions to apply its net operating losses to future or past income tax years. However, the waiver applies only if you fail to make the deposit by electronic funds transfer. The deposit itself still must be made on time to avoid a late deposit penalty. Corporate gifts of computer technology and equipment to elementary and secondary schools made before 2000 get a charitable-deduction tax break. This provision effectively overturns the 1993 Supreme Court ruling in Com.