Just ahead of the six-month anniversary of the terrorist attacks of September 11, 2001, Congress passed the Job Creation and Worker Assistance Act of 2002 (Pub. L. No. 107-147),¹ providing more rapid depreciation deductions, greater opportunities to use net operating losses, extended unemployment benefits, special tax relief for New York reconstruction, and other tax law changes. The Act became law March 9, 2002, when President Bush signed it.

The major business provisions of the Act include a "bonus" depreciation allowance under which 30 percent of the cost of certain new property is deductible in the year the property is placed in service, net operating loss carrybacks for five years rather than two, and extension of expiring provisions -- most actually expired in December 2001 -- for two years (five years in the case of the active financing income exception under Subpart F).

Most provisions are effective for a limited period, consistent with the Act's original rationale that the economy needed a short-term boost that would not drain the fisc in the long term. Democrats and Republicans spent five months debating the terms of the stimulus bill. In the end, they agreed to a bill that cost $42 billion² over 10 years.

Both parties started with ambitious agenda but were forced to give up favored items. Among the jettisoned provisions: increased small business expensing deductions, acceleration of the timetable for the marginal income tax rate cuts enacted in 2001, retroactive repeal of the corporate alternative minimum tax, refunds for those who did not receive last summer's advance payment checks, and assistance to help laid-off workers retain health insurance. Other issues, such as the growing effect of the individual alternative minimum tax on the middle class and the sunset of last summer's tax legislation, remain for another day.

A description of the Act can be found under the navigational categories to the left.³

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability to specific situations is to be determined through consultation with your tax adviser.

¹ For statutory language of the "Act," see the Library of Congress Web site: http://thomas.loc.gov/.

² $ = USD.

³ Grouping of subjects generally corresponds to titles under the Act.