If a new company takes the EGTRRA Tax Credit, will they still be able to take business deductions or is this tax credit in lieu of business deductions? It is my understanding that the tax credit can not be deducted, but the other plan expenses and other expenses a company incurs can be deducted still.


The 50% of qualifying expenses that are effectively offset by the tax credit are not deductible; the other 50% of the qualifying expenses (and other expenses) are deductible to the extent permitted under present law. However, an employer can elect not to have Code section 45E apply for a taxable year.