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ARTICLE · 19 FEBRUARY 2009

U.S. Stimulus Package Includes Significant Tax Provisions For U.S. Businesses

Osler, Hoskin & Harcourt LLP
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On February 17, 2009 U.S. President Barack Obama signed into law the “American Recovery and Reinvestment Act of 2009” – a package of spending provisions and tax incentives with an estimated cost of US$787 billion.

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Osler'S National Tax Department
Osler'S National Tax Department
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On February 17, 2009 U.S. President Barack Obama signed into law the "American Recovery and Reinvestment Act of 2009" – a package of spending provisions and tax incentives with an estimated cost of US$787 billion. While many of the provisions are targeted to relieving the tax burden on individuals and small businesses and providing incentives for renewable energy, infrastructure and state and municipal bonds, the legislation includes several significant changes to the U.S. tax regime generally applicable to U.S. businesses.

Tax Incentives for Business

Elective deferral of income from cancellation of indebtedness
The legislation permits taxpayers to elect to defer income from cancellation of indebtedness (COD) recognized as a result of a repurchase (or deemed repurchase) of the taxpayer's indebtedness by the taxpayer or a related person. The taxpayer electing deferral will generally be able to defer tax on the COD income until 2014 and recognize the COD income

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