The American Nursery & Landscape Association (ANLA) announced that its collaboration with the Small Business Legislative Council (SBLC) helped successfully secure a deduction from taxable income for production activities. The deduction, passed as part of the American Jobs Creation Act (H.R. 4520), is contained in the bill’s newly created section of the Internal Revenue Code known as Section 199.
The deduction, also available to individuals via their adjusted gross income, will be phased in beginning in taxable year 2005 at 3 percent and will reach maturation in taxable year 2009 when the deduction reaches 9 percent. One restriction notes that the deduction is limited to 50 percent of the wages paid by the taxpayer that year.
Qualifying gross receipts include any sale, exchange or other disposition of qualifying production property that was grown or extracted within the United States. Factoring in costs, the net income is subject to deductibility within the 50-percent limit cited above.
John Meredith, ANLA’s director of legislative relations, notes that the deduction currently applies to growers, though deductions for other industry professionals will be discussed as well. “There is an opportunity during the drafting of the regulatory language to implement a statute where landscape contractors and landscape architects would be included,” Meredith says. “As we begin the promulgation of the rules, we’ll work toward getting both of those groups definitively included in the regulatory process.”
ANLA will monitor the details of the legislation and the crafting of Internal Revenue Service regulations regarding implementation of the new law. Throughout that process ANLA will announce any issues or concerns regarding the green industry and the new Section 199 deduction.