Last week we discussed key individual provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. These individual provisions are intended to relieve many Americans of the impending tax burdens brought on by the expiration of the 2001 EGTRRA Act.

These provisions are intended to encourage hiring, spending and overall activity by businesses to spur the American economy. We have highlighted various provisions that could prove to be the most beneficial for companies for the next two years.

Extension and increase of bonus depreciation. Bonus depreciation is intended to encourage businesses to invest in more equipment by allowing them to immediately write off a percentage of the cost of depreciable property. The new law extends first-year depreciation to equal 100% of the cost of qualified assets placed in service after September 8, 2010, and before January 1, 2012. The provision also provides for an additional 50% first-year depreciation deduction of qualified assets placed in service January 1, 2012 through December 31, 2012.

Extension of Sec. 179 expensing and phase-out threshold for 2012. Currently, the Code Sec. 179 dollar and investment limits are $500,000 and $2 million, respectively, for tax years beginning in 2010 and 2011. For 2012 the new law provides for a $125,000 dollar limit (indexed for inflation) and a $500,000 investment limit (indexed for inflation). The estimated combined cost of these two provisions is $21 billion.

Extension of the Work Opportunity Credit through 2011. The Work Opportunity tax credit is for businesses hiring new employees between August 31, 2010 and January 1, 2012. This tax credit is equal to 40 percent of the qualifying employee's first-year wages of up to $6,000. This is a significant break for employers looking to hire in the next two years.

Health FSAs. Under the PPACA, purchases of over-the-counter (OTC) medicines without a doctor's prescription cannot be reimbursed by health flexible spending accounts (FSAs) or health reimbursement accounts (HRAs).  The IRS issued guidance describing the new limitations in Notice 2010-59, Rec. Rul. 2010-23.