*Update: The live stream is now over. Full video of President Obama signing the Small Business Jobs Act is embedded below.

A hurdle for small businesses that want to capture and utilize Federal tax incentives, including the R&D tax credit, has just cleared the senate.  The Small Business Jobs Act eliminates the Alternative Minimum Tax (AMT) for manufacturers with less than $50 Million in revenue. Our Company President, Brandon Edwards, writes today in the Huffington Post that,

This rights a long-standing wrong in the tax code that has prevented well-deserving small businesses from realizing the value of federal tax incentives, most notably, the research & development tax credit.

In addition, The Small Business Jobs Act increases the usability of general business credits by extending their carryback period from one to five years, thus allowing “taxpayers the opportunity to claim significantly larger refunds.”

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From the San Jose Mercury News:

The first thing she’d do as governor, Whitman said, would be to place a moratorium on all new regulations, while eliminating others. She continued her call for tax breaks for businesses, including eliminating the factory tax, which currently charges a sales tax on equipment purchases, eliminating the business startup tax and increasing the research and development tax credit from 15 percent to 20 percent.

The R&D credit is a highly effective targeted tax incentive that helps drive the global competitive edge that we need.

So Says our company President, Brandon Edwards, in a new Op-Ed published by the Los Angeles Business Journal.  Speaking specifically of the value the credit offers to manufacturing companies, Mr. Edwards notes that,

It [The R&D credit] is designed to encourage economic risk-taking by companies that employ people within our borders and it specifically excludes benefits based on work performed by employees outside of the United States. The federal credit combined with the state credit (most states have some kind of matching program) reduces developmental costs by up to 13 percent

Mr. Edwards continues that:

The R&D credit currently costs an estimated $7 billion a year and according to studies, it more than pays for itself. According to a 2010 report by the Milken Institute, Obama’s permanent credit coupled with a 25 percent increase could boost real GDP by $206 billion, generate 270,000 manufacturing jobs and raise total employment by 510,000 within a decade.

The message here is clear: The R&D tax credit is good for business. Making it permanent is the logical next step to ensuring The United States’ continued leadership as the world’s largest economy.

Republicans and Democrats agree on the value of the program and I can’t think of a better time to increase its impact. The R&D credit should be a fixture of our tax code. It’s time to put the politics aside and help slow the outflow of high-value jobs from Los Angeles and the rest of the country.

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The Small Business Jobs Act, approved by the House of Representative in July, aims to bolster small business hiring by facilitating access to capital and encouraging investment.  On Tuesday, September 14, the Senate voted for cloture on the Small Business Jobs Act, and the bill is widely expected to be approved in a final vote this week.

The Senate version of the bill contains two provisions which could provide substantial tax relief for small and mid-sized business under $50 million in annual revenue.

First, the bill waives the Alternative Minimum Tax (AMT) restrictions that typically apply to the majority of the general business tax credits.  Under current AMT rules, taxpayers can only take advantage of these credits to the extent that their regular tax liability exceeds their AMT threshold.  This frequently limits (or outright eliminates) the benefit of these incentives to small businesses.  The Small Business Jobs Act would eliminate this restriction for 2010, allowing taxpayers to lower their tax due by the full value of available credits.

Second, the bill provides extended carryback terms for any unused general business credits.  Under current law, unused credits may be carried back to the preceding tax year, potentially allowing the taxpayer to receive a refund.  The Small Business Jobs Act would extend the carryback period to include the five preceding years for credits generated in 2010, providing taxpayers with the opportunity to claim significantly larger refunds.

These provisions could free up a substantial amount of capital to promote hiring.  For example, many mid-sized manufacturing firms with receipts under $50 million will generate Research & Development tax credits in excess of $100,000 dollars in 2010 (pending the expected renewal of the R&D credit).  The Small Business Jobs Act would allow such a business to receive the maximum benefit of this credit, without having the credit value effectively reduced by AMT restrictions.  Even if a company is not in a taxable position in 2010, significant refunds could still be generated.  The 2010 credit amounts could be carried back and applied against taxes paid in prior years, regardless of AMT.

The House or Representatives introduced and passed the initial version of the act (H.R. 5297), which was substantially improved upon by the Senate.  The promising revisions in the Senate’s version of the bill – including the AMT relief and carryback extension mentioned above – must be reconciled with the House before the legislation is submitted for President Obama’s approval.