House and Senate Pass Tax Relief and Health are Act in 2006

Among other provisions:

Indian Employment Credit Extended for Two Years
The Indian employment credit is retroactively reinstated and made available for tax years beginning after Dec. 31, 2005, and before Jan. 1, 2008. (Code Sec. 45A(f), as amended by Act Sec. 111) Under pre-Act law, the credit was not available for tax years beginning after Dec. 31, 2005.

How the Indian employment credit works.
The Indian employment credit (claimed on Form 8845) is 20% of the excess, if any, of the sum of qualified wages and qualified employee health insurance costs (not in excess of $20,000 per employee) paid or incurred (other than paid under salary reduction arrangements) to qualified employees (enrolled Indian tribe members and their spouses who meet certain requirements) during the tax year (Code Sec. 45A(a)(1); Code Sec. 45A(b)(2)) over the sum of these same costs paid or incurred in calendar year '93—determined as if the Indian employment credit had been in effect in '93. (Code Sec. 45A(a)(2); Code Sec. 45A(c)) Tax credits claimed for certain terminated employees are recaptured. (Code Sec. 45A(d)) Deductions for wages and health insurance costs are reduced by the credit. (Code Sec. 280C(a))

Quicker Writeoff for Business Property on Indian Reservation Extended Through 2007
Under Code Sec. 168(j) , shorter depreciation recovery periods apply to qualified Indian reservation property. For example, the recovery period is three years for what otherwise would be five-year property. The Act extends the shorter depreciation periods for two additional years. They apply to qualified Indian reservation property placed in service after Dec. 31, 2005, and before Jan. 1, 2008 (Code Sec. 168(j)(8), as amended by Act Sec. 112(a))

In general, qualified Indian reservation property is property used predominantly in the active conduct of a trade or business within an Indian reservation, which is not used outside the reservation on a regular basis and was not acquired from a related person.

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