Wednesday, January 7, 2015
Tax Increase Prevention Act of 2014 (HR 5771)
Last month, Congress passed the Tax Increase Prevention Act of 2014 and the President signed it into law. Over 50 popular incentives and credits were extended through 2014, some of the more popular of these “extenders” as they are called are highlighted below.
50% Bonus Depreciation - The 50% bonus depreciation provisions for new, qualified business property would be extended for property placed in service before January 1, 2015.
§179 Expensing Thresholds - Section 179’s increased expensing amounts would be extended through 2014. Specifically, for qualified property placed in service before January 1, 2015, the Act extends for one year the increased $500,000 maximum expensing amount under §179 and the increased $2 million investment-based phaseout amount. Afterwards, should there be no further extensions, the maximum expensing amount is scheduled to revert back to $25,000 and the phaseout will dip to $200,000.
Additional 179 Property – Allows taxpayers to treat capital expenditures related to qualified leasehold improvements, qualified restaurant property and off the shelf computer software as 179 property eligible for the accelerated deduction.
15-Year Life for Qualified Leasehold Improvements - Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property will have a 15-year depreciation recovery period if placed in service before January 1, 2015.
S Corporation Built in Gains Tax – reduces the recognition period from ten years to five years on the sale of qualified small business stock held for at least five years.
Work Opportunity Tax Credit – Allows a credit of 40% on a maximum of $6,000 in qualified wages for employers who hire military veterans or other qualified personnel who began work for an employer prior to January 1, 2015.
Energy Efficiency Deductions for Commercial Buildings - Under §179D, deductions of up to $1.80 per square foot for energy efficient commercial building property would be extended for property placed in service before January 1, 2015.
R&D Tax Credit - Tax credits for qualified increasing research activities would be retroactively extended for one year to apply to amounts paid or accrued before January 1, 2015.
IRA Distributions to Nonprofits - Individuals age 70 1/2 and older can make tax-free distributions of up to $100,000 per year from their individual retirement plans to charitable organizations for tax years beginning before January 1, 2015.
State and Local Sales and Use Taxes - The Act retroactively allows taxpayers who itemize deductions to deduct state and local sales and use taxes instead of state and local income taxes for tax years beginning before January 1, 2015. This is beneficial for taxpayers living in a state with no income tax.
Exclusion for Discharged Home Mortgage Debt - Discharge of indebtedness income from a qualified principal residence — up to $2 million and $1 million for married filing separately — is excluded from gross income. The Act extends this exclusion to apply to home mortgage debt discharged before January 1, 2015.
Should you have any questions on any of these, as always feel free to contact me.