Tax
Services- In the recently enacted “Tax Increase
Prevention Act of 2014,” Congress has once again extended a package of expired
or expiring individual, business, and energy provisions known as “extenders.”
The extenders are a varied assortment of more than 50 individual and business
tax deductions, tax credits, and other tax-saving laws which have been on the
books for years but which technically are temporary because they have a
specific end date. Congress has repeatedly temporarily extended the tax breaks
for short periods of time (e.g., one or two years), which is why they are
referred to as “extenders.” The new legislation generally extends the tax
breaks retroactively, most of which expired at the end of 2013, for one year
through 2014.
Please
read our Complete Analysis or call our office for details of how the new
changes may affect you or your business.
Individual extenders
The
following provisions which affect individual taxpayers are extended through
2014:
...
the $250 above-the-line deduction for teachers and other school professionals
for expenses paid or incurred for books, certain supplies, equipment, and
supplementary material used by the educator in the classroom;
...
the exclusion of up to $2 million ($1 million if married filing separately) of
discharged principal residence indebtedness from gross income;
...
parity for the exclusions for employer-provided mass transit and parking
benefits;
...
the deduction for mortgage insurance premiums deductible as qualified residence
interest;
...
the option to take an itemized deduction for State and local general sales
taxes instead of the itemized deduction permitted for State and local income
taxes;
...
the increased contribution limits and carryforward period for contributions of
appreciated real property (including partial interests in real property) for
conservation purposes;
...
the above-the-line deduction for qualified tuition and related expenses; and
...
the provision that permits tax-free distributions to charity from an individual
retirement account (IRA) of up to $100,000 per taxpayer per tax year, by
taxpayers age 70 and ½ or older.
Business
extenders
The
following business credits and
special rules are generally extended through 2014:
...
the research credit;
...
the temporary minimum low-income housing tax credit rate for nonfederally
subsidized new buildings;
...
the military housing allowance exclusion for determining whether a tenant in
certain counties is low-income;
...
the Indian employment tax credit;
...
the new markets tax credit;
...
the railroad track maintenance credit;
...
the mine rescue team training credit;
...
the employer wage credit for activated military reservists;
...
the work opportunity tax credit;
...
qualified zone academy bond program;
...
three-year depreciation for racehorses;
...
15-year straight line cost recovery for qualified leasehold improvements,
qualified restaurant buildings and improvements, and qualified retail
improvements;
...
7-year recovery period for motorsports entertainment complexes;
...
accelerated depreciation for business property on an Indian reservation;
...
50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived
and transportation assets);
...
the election to accelerate alternative minimum tax (AMT) credits in lieu of
additional first-year depreciation;
...
the enhanced charitable deduction for contributions of food inventory;
...
the increase in expensing (up to $500,000 write-off of capital expenditures
subject to a gradual reduction once capital expenditures exceed $2,000,000) and
an expanded definition of property eligible for expensing;
...
the election to expense mine safety equipment;
...
special expensing rules for certain film and television productions;
...
the deduction allowable with respect to income attributable to domestic
production activities in Puerto Rico;
...
the exclusion from a tax-exempt organization's unrelated business taxable
income (UBTI) of interest, rent, royalties, and annuities paid to it from a
controlled entity;
...
the special treatment of certain dividends of regulated investment companies
(RICs);
...
the definition of RICs as qualified investment entities under the Foreign
Investment in Real Property Tax Act;
...
exceptions under subpart F for active financing income;
...
look-through treatment for payments between related controlled foreign
corporations (CFCs) under the foreign personal holding company rules;
...
the exclusion of 100% of gain on certain small business stock;
...
the basis adjustment to stock of S corporations making charitable contributions
of property;
...
the reduction in S corporation recognition period for built-in gains tax;
...
the empowerment zone tax incentives;
...
the American Samoa economic development credit; and
...
two provisions dealing with multiemployer defined benefit pension plans
(dealing with an automatic extension of amortization periods and shortfall
funding method and endangered and critical rules), are extended through 2015.
Energy-related
extenders
The
following energy provisions are retroactively extended through 2014:
...
the credit for nonbusiness energy property;
...
the second generation biofuel producer credit (formerly cellulosic biofuels
producer tax credit);
...
the incentives for biodiesel and renewable diesel;
...
the Indian country coal production tax credit;
...
the renewable electricity production credit, and the election to claim the
energy credit in lieu of the renewable electricity production credit;
...
the credit for construction of energy efficient new homes;
...
second generation biofuels bonus depreciation;
...
the energy efficient commercial buildings deduction;
...
the special rule for sale or disposition to implement federal energy regulatory
commission (FERC) or State electric restructuring policy for qualified electric
utilities;
...
the incentives for alternative fuel and alternative fuel mixtures; and
...
the alternative fuel vehicle refueling property credit.
I
hope this information is helpful. If you would like more details about these
changes or any other aspect of the new law, please do not hesitate to call.
(651) 621-5777, (952) 583-9108, (612) 224-2476, (763)
269-5396
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