Federal tax legislation always had a certain fascination and enjoyment for me probably, in part, because I cut my teeth in publishing working on the old Prentice Hall loose-leaf tax services. For a period of time, I was the head of the federal tax department and it was not uncommon, when a major piece of tax legislation came down, to work 30 days straight on it to get out a Complete Guide to tax practitioners. I was tremendously proud of my co-workers' efforts and that IRS also purchased 25,000 copies of the guide.

Well, the excitement is now gone. It started to dissipate with the "Economic Growth and Tax Relief Reconciliation Act of 2001," which repeals the federal estate tax in 2010 and reinstates it in 2011. At the time, I was told tongue-in- cheek by more then one tax practitioner that "Some advisors are having clients sign a living will where the plug will get pulled five minutes before the end of 2010."

I really thought that piece of legislation was a abnormality, a once in a century Congressional weird happening. But I was wrong. We now have the recently enacted economic stimulus legislation.

Included in that legislation is a new above-the-line deduction for classroom material. Sure sounds good. Not so fast! First of all, it is not available for everyone. And there's more.

Basically, it is an above-the-line deduction for up to $250 annually for expenses paid or incurred by an eligible educator for books, supplies, etc., used in the classroom. It only applies to kindergarten through grade 12 educators, so you can tell those clients who are nursery school teachers and college professors to forget it. By the way, the deduction is only available for taxable years beginning in 2002 and 2003. Oh, one more thing: The deduction is only allowed "to the extent the amount of such expenses exceeds the amount excludable under Section 135, 529(c)(1), or 530(d)(2) for the taxable year."

So, Congress for all of its work has created a small above-the-line deduction for a very limited time with a qualifier to boot. It is not going to stimulate the economy; the only thing it is likely to stimulate is a headache for tax practitioners. It is no wonder to me that the excitement is gone. How about you?-Howard Wolosky
howard.wolosky@amgpubs.com

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