More than 50 Tax Provisions Extended for One Year

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Posted by Randy Eickhoff on Dec 22, 2014 8:56:00 AM

More than 50 Tax Provisions Extended for One Year

This just in! Congress successfully came to an agreement for extending more than 50 expiring tax provisions. The Tax Increase Prevention Act (H.R. 5771) has been signed by President Obama just in time for Congress to return home for the holidays.

H.R. 5771 includes provisions for both individual taxpayers and businesses as well as extending benefits for various energy tax credits. Key tax provisions extended for business include the research and development tax credit and bonus depreciation. Listed below are the benefits for each:

Individual Tax Extenders

  •  the tax deduction of expenses of elementary and secondary school teachers;
  • the tax exclusion of imputed income from the discharge of indebtedness for a principal residence;
  • the equalization of the tax exclusion for employer-provided commuter transit and parking benefits;
  • the tax deduction of mortgage insurance premiums;
  • the tax deduction of state and local general sales taxes in lieu of state and local income taxes;
  • the tax deduction of contributions of real property interests for conservation purposes;
  • the tax deduction of qualified tuition and related expenses; and
  • the tax exemption of distributions from individual retirement accounts for charitable purposes.

Business Tax Extenders

  • the tax credit for increasing research activities;
  • the low-income housing tax credit rate for newly constructed non-federally subsidized buildings;
  • the Indian employment tax credit;
  • the new markets tax credit;
  • the tax credit for qualified railroad track maintenance expenditures;
  • the tax credit for mine rescue team training expenses;
  • the tax credit for differential wage payments to employees who are active duty members of the Uniformed Services;
  • the work opportunity tax credit;
  • authority for issuance of qualified zone academy bonds;
  • the classification of race horses as three-year property for depreciation purposes;
  • accelerated depreciation of qualified leasehold improvement, restaurant, and retail improvement property, of motorsports entertainment complexes, and of business property on Indian reservations;
  • accelerated depreciation of certain business property (bonus depreciation);
  • the special rule allowing a tax deduction for charitable contributions of food inventory by taxpayers other than C corporations;
  • the increased expensing allowance for business assets, computer software, and qualified real property (i.e., leasehold improvement, restaurant, and retail improvement property);
  • the election to expense advanced mine safety equipment expenditures;
  • the expensing allowance for film and television production costs and costs of live theatrical productions;
  • the tax deduction for income attributable to domestic production activities in Puerto Rico;
  • tax rules relating to payments between related foreign corporations and dividends of regulated investment companies;
  • the treatment of regulated investment companies as qualified investment entities for purposes of the Foreign Investment in Real Property Tax Act (FIRPTA);
  • the subpart F income exemption for income derived in the active conduct of a banking, financing, or insurance business;
  • the tax rule exempting dividends, interest, rents, and royalties received or accrued from certain controlled foreign corporations by a related entity from treatment as foreign holding company income;
  • the 100% exclusion from gross income of gain from the sale of small business stock;
  • the basis adjustment rule for stock of an S corporation making charitable contributions of property;
  • the reduction of the recognition period for the built-in gains of S corporations;
  • tax incentives for investment in empowerment zones;
  • the increased level of distilled spirit excise tax payments into the treasuries of Puerto Rico and the Virgin Islands; and
  • the tax credit for American Samoa economic development expenditures.

Energy Tax Extenders

  • the tax credit for residential energy efficiency improvements;
  • the tax credit for second-generation biofuel production;
  • the income and excise tax credits for biodiesel and renewable diesel fuel mixtures;
  • the tax credit for producing electricity using Indian coal facilities placed in service before 2009;
  • the tax credit for producing electricity using wind, biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic renewable energy facilities;
  • the tax credit for energy efficient new homes;
  • the special depreciation allowance for second-generation biofuel plant property;
  • the tax deduction for energy efficient commercial buildings;
  • tax deferral rules for sales or dispositions to qualified electric utilities; and
  • the excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

The extension of these provisions will mean significant tax savings opportunities for both individual taxpayers and small businesses. Individuals can receive some relief from the cost of higher education as well as support for commuter costs.

Businesses can take advantage the all-important bonus deprecation up to $500,000 for capital equipment purchases and continue to see tax credits (both federal and state) from their research and development efforts through the R&D tax credit.

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