Individual and tax penalty provisions of the Small Business Jobs Act of 2010: the following article was first printed in the EisnerAmper legislative Alert. October 11, 2010. It is reprinted here with the permission of EisnerAmper LLP.

In an effort to provide financial assistance to small businesses, Congress has passed the Small Business Jobs Act of 2010 (ILK. 5297 or the "Act") which was signed into law by the President on September 27, 2010. The Act is intended to encourage investment and job creation in part by establishing a $30 billion small business fund. The tax provisions of the Act aim to provide tax relief primarily to small businesses.

Our Alert dated October 4, 2010, summarized several of the more significant tax provisions of the Act that may affect our business clients (see www.eisnerllp.com/Nep/News.aspx?id -5113.).

Our special Alert dated October 6, 2010, described key Roth retirement plan changes (see www. eisnerlIp.com/Nep/News.aspx?id = 5117).

In this Alert, we note certain additional tax provisions affecting our individual clients and tax penalties.

Temporary Deduction of Health Insurance Costs

For 2010 the cost of health insurance for an individual taxpayer and immediate family is excluded from the income base used to compute self-employment tax.

Observation: This provides a relatively small reduction in tax to sole proprietors and partners who derive self-employment income.

Removal of Cell Phones from "Listed Property" Limitations

Stringent recordkeeping is required for adequate substantiation of business use of "listed property," such as passenger automobiles, in order to obtain tax deductions for business use of such property. Limited depreciation rules also apply to listed property if, for the first year the listed property is placed in service, the substantiated business use does not exceed 50% . Under the Act, cell phones are removed from the definition of listed property beginning with 2010.

Observation: Cell phones were first classified as listed property when they were very expensive and not widely used. Congress now recognizes that their extensive daily use makes it infeasible to keep detailed records separating business and personal use.

Annuitization of Non-qualified Contracts

A non-qualified annuity, endowment, or life insurance contract is one held outside a qualified retirement plan or IRA. The Act allows an owner of a nonqualified contract to split that contract so that a portion is taken as a stream of income and the balance remains undistributed to grow tax-deferred, effective for amounts received after 2010.

Observation: The annuitization period must be for 10 years or more or for the lives of one or more individuals.

Limitations...