2015 Extender Bill Passed by Congress Congress finally passed legislation dealing with more than 50 tax provisions that expired December 31, 2014. On December 18, 2015, the President signed into law the Protecting Americans from Hikes Act of 2015. The new law extends several tax provisions retroactive to January 1, 2015 including educator expenses, Enhanced American Opportunity Tax Credit ( Hope Credit), Mortgage Insurance Premium, $500,000 expensing limit for for section 179 property and many others. Please contact us if you have and questions.
The Protecting Americans from Tax Hikes Act of 2015, which was passed by the House and the Senate at the end of last week and signed into law by President Obama on Friday, extends a number of important tax breaks, and makes many of them permanent. From the Committee on Ways and Means: PERMANENT PROVISIONS The bill makes over 20 tax relief provisions permanent, including provisions from 11 different bills marked up by the Ways and Means Committee in 2015. • Research and Development Credit (base credit, 14% ASC, AMT and Payroll provisions) • Section 179 expensing ($500,000 and $2 million limits, no limitation on real estate) • State and local sales tax deduction • 15-year depreciation for leaseholds and improvements • International tax relief: Active finance exception • Deduction for teacher classroom expenses • 100% exclusion on gains from sale of small business stock • Low-Income Housing Tax Credit extenders: the 9% floor and military housing allowance • Employer wage credit for employees on active duty (expanded for all employers) • All three charitable extenders: food inventory, conservation easements, and IRA charitable rollover, and exemption for certain payments to a controlling exempt organization • Both S corporation provisions: 5-year built in gains tax and charitable contributions • Mass transit parity • Deduction for teacher classroom expenses (indexed for inflation) • Enhancements since 2001: Earned Income Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit • Two provisions for mutual funds: treatment of RIC dividends for foreign investors and subjecting RICs to FIRPTA FIVE-YEAR PROVISIONS • Bonus depreciation (50% for 2015-17, 40% in 2018, 30% in 2019) • International tax relief: Controlled foreign corporation look-through rule • The New Markets Tax Credit • The Work Opportunity Tax Credit TWO-YEAR PROVISIONS • Exclusion of discharged mortgage debt relief from gross income (modified) • Mortgage insurance premiums treated as qualified residence interest • Above the line deduction for qualified tuition and related expenses • Indian Employment Tax Credit • Railroad Track Maintenance Credit (modified) • Mine Rescue Team Training Credit • Qualified Zone Academy Bonds • Race horses: 3-year recovery period • Motorsports complexes; 7-year recovery period • Accelerated depreciation for business property on Indian reservations (modified) • Election to expense mine safety equipment • Film and television expensing (modified to include live theater) • Section 199 deduction for activities in Puerto Rico • Empowerment Zone tax incentives (modified) • Temporary increase in rum cover over • American Samoa economic development credit • Nonbusiness energy property credit • Alternative fuel vehicle refueling property credit • 2-wheeled plug-in electric motor credit • Second generation biofuel producer credit • Biodiesel and renewable diesel incentives credit • Indian Coal Production Tax Credit (modified) • Credit for facilities producing energy from certain renewable resources • Credit for energy-efficient new homes • Special allowance for second generation biofuel plant property • Energy efficient commercial buildings deduction • Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities • Credits relating to alternative fuels • Credit for new qualified fuel cell motor vehicles • Medical device tax moratorium MISCELLANEOUS PROVISIONS Family Tax Relief • Exclusion for amounts received under the Work Colleges Program • Improvements to section 529 accounts • Elimination of residency requirement for qualified ABLE programs • Exclusion for wrongfully incarcerated individuals. • Clarification of special rule for certain governmental plans • Rollovers permitted from other retirement plans into simple retirement accounts • Technical amendment relating to rollover of certain airline payment amounts • Treatment of early retirement distributions for nuclear materials couriers, United States Capitol Police, Supreme Court Police, and diplomatic security special agents • Prevention of extension of tax collection period for members of the Armed Forces who are hospitalized as a result of combat zone injuries Real Estate Investment Trusts • Restriction on tax-free spinoffs involving REITs • Reduction in percentage limitation on assets of REIT which may be taxable REIT subsidiaries • Prohibited transaction safe harbors • Repeal of preferential dividend rule for publicly offered REITs • Authority for alternative remedies to address certain REIT distribution failures Limitations on designation of dividends by REITs • Debt instruments of publicly offered REITs and mortgages treated as real estate assets • Asset and income test clarification regarding ancillary personal property • Hedging provisions. • Modification of REIT earnings and profits calculation to avoid duplicate taxation • Treatment of certain services provided by taxable REIT subsidiaries • Exception from FIRPTA for certain stock of REITs • Exception for interests held by foreign retirement or pension funds • Increase in rate of withholding of tax on dispositions of United States real property interests • Interests in RICs and REITs not excluded from definition of United States real property interests • Dividends derived from RICs and REITs ineligible for deduction for United States source portion of dividends from certain foreign corporations Additional Provisions • Deductibility of charitable contributions to agricultural research organizations • Removal of bond requirements and extending filing periods for certain taxpayers with limited excise tax liability • Modifications to alternative tax for certain small insurance companies • Treatment of timber gains • Modification of definition of hard cider • Church plan clarification
(Bloomberg) Congress passed a $1.1 trillion spending measure that extends a number of important tax provisions, and makes several of them permanent. The Senate passed the Tax bill 65-33 on Friday, shortly after a 316-113 House vote. The legislation, which will finance the government through September 2016, goes to President Barack Obama, who plans to sign it. The two measures, combined in H.R. 2029, include about $680 billion in revived tax breaks over the next 10 years. A number of them would be made permanent, including those for business research and development, small business expenses, individual deductions for state and local sales taxes, and financing rules for multinational corporations. The tax provisions The tax-extension measure passed by the House Thursday would also make permanent an enhanced Child Tax Credit and the Earned Income Tax Credit, both Democratic priorities, as well as tax breaks for charitable giving and schoolteachers’ expenses. The two pieces of legislation would suspend three taxes intended to fund the Affordable Care Act -- a so-called Cadillac tax on high-cost health insurance plans would be delayed from 2018 to 2020; a 2.3 percent tax on medical devices would be paused in 2016 and 2017; and a fee on health insurers would be paused for 2016.
A thing of the past ? It may be if President Obama gets his way. President Obama's 2016 Budget Proposal includes provisions that would modify current laws relating to §1031 limiting the deferral on real property to a $1 million dollar cap annually and recommending that art and collectibles would no longer be eligible for like-kind exchanges. See page 111 from the link below: http://www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-FY2016.pdf In addition to the §1031 provisions, the Budget Proposal also addresses tax relief for small business, tax reform for families and individuals as well reforms to capital gains and upper-income benefits.
Congress has passed the 2014 tax Extenders this week with just a half a month left in the year. The Extenders were passed just for 2014 and will need additional legislation to be valid for future years. Some of the key Extenders include- - the above the line deduction for teacher classroom expenses -discharge of Indebtedness on principal residence excluded from gross income for individuals up tp $2 mil - Mortgage insurance premiums treated as qualified residence interest - Tax-free distributions from IRAs to certain public charities for individuals age 70 1/2 or older up to $100,000 per taxpayer per year -Bonus Depreciation and an increase of Section 179 fixed asset expense limitations back to 2013 levels And many other tax provisions were restored for both Individuals and Businesses. Please contact our office if you have any questions.
Charitable contributions are one area that the IRS has cracked down on in recent years. The bigger your charitable deductions, the more stringent the substantiation rules are -- and the more likely the IRS is to audit them. A recent U.S. Tax Court case demonstrates that it's critical for taxpayers to provide (and retain) adequate documentation to support their charitable contribution deductions. Facts of the case: After his mother's death, Thad Smith deducted nearly $28,000 in charitable contributions on his 2009 personal tax return for donations of his parents' household goods, clothing and electronic equipment to AMVETS, a qualified charity. Smith combined all of the donation acknowledgments on two blank "tax receipts" provided by the charity and prepared a spreadsheet that identified the items donated and valued them using lists found on the Salvation Army's website. However, there was no evidence that this spreadsheet was ever provided to or seen by AMVETS. The values that Smith placed on many of the items he allegedly donated were considerably higher than the "high" values shown on the Salvation Army's website. Smith offered no explanation for this discrepancy. He also didn't obtain any appraisals, take photographs or introduce evidence to establish the condition of the items he allegedly donated. Moreover, he failed to provide written records establishing when his parents had acquired the items or what their cost and fair market values were on the contribution date. Despite having no doubt that Smith donated property to a charitable organization, the Tax Court ruled that none of his contributions were deductible because he failed the charitable contribution substantiation tests. The nature of the required substantiation depends on the size of the contribution and on whether it is a gift of cash or property. Don't let this happen to you. The IRS has explicit rules that vary depending on the value of your donation and the type of property contributed. Please contact us if you plan to donate noncash items worth $250 or more on your personal tax return. For more information on this case, see below: (Thad Deshawn Smith v. Commissioner, T.C. Memo 2014-203.) http://www.ustaxcourt.gov/InOpHistoric/SmithMemo.Lauber.TCM.WPD.pdf
Starting with 2014, the Obamacare individual mandate regarding health insurance takes effect. While the Obama administration delayed the requirement that employers with 50 or more full-time workers provide employees with affordable health care coverage or pay a stiff fine, the individual mandate was not deferred.