Year-End Legislation Extending Federal Tax Provisions10/06/2015 | Winter 2015 Newsletter
In December 2014, as the 113th Congress came to a close, our elected representatives, in what seems to have become an annual tradition, voted to extend more than 50 different tax provisions. President Obama quickly signed the legislation (H.R. 5771) on December 19, 2014.
What made this year’s vote somewhat unusual is that these provisions had actually expired on January 1, 2014 so these changes were in essence retroactive. Unfortunately, Congress did not do what many of us had hoped – make these changes permanent. Instead, these provisions expired as of midnight on December 31, 2014, so we will all need to see when or if these provisions will again be extended. As the Mets, Yankees, Jets, Giants, Knicks and Nets fans, say – wait till next year?
The following are some of the key (at least in this author’s opinion) provisions which were extended for the tax year ending December 31, 2014, by the legislation:
- Ability to deduct state and local general sales taxes.
- Ability to deduct qualified tuition and related expenses above the line.
- Ability for individuals to have tax-free distributions made from their retirement plans directly to charities.
- Ability of elementary and secondary school teachers to deduct certain expenses.
- Exclusion from gross income of debt forgiven in connection with the restructuring qualified personal residence loans.
- Ability to treat mortgage insurance premiums as qualified personal residence interest.
- Non-taxation of employer provided mass transit and parking benefits.
- Application of Section 179 to certain real property, which allows businesses to deduct the full purchase price of qualifying property purchased or financed during the tax year.
- Ability to depreciate qualified leasehold improvements, qualified restaurant buildings and improvements and qualified retail improvements using the 15-year straight-line cost recovery method.
- Reduction in recognition period for built in gains tax for S-corporations.
- Subpart F exception for active financing income, providing an exception to the rule that income derived from a banking or finance business—such as interest, rents or royalties—earned by a foreign subsidiary is taxed in the United States.
- Temporary exclusion of 100% of gain on certain small business stock.
- Credits for research, new markets, work opportunity, and wages paid to employees on active duty.
- Empowerment Zone tax incentives.
- Credits for non-business energy property, second- generation biofuel production, energy efficient homes, and excise tax credits for certain fuels.
- Incentives for biodiesel and renewable diesel fuel usage.
- Deduction for energy efficient commercial buildings.
About the author: David N. Milner is a partner at Gallet Dreyer & Berkey LLP. Mr. Milner’s practice focuses on tax law, estate planning, corporate law, and real estate. Mr. Milner, who is also a certified public accountant, helps clients to structure transactions in a manner calculated to reduce adverse tax consequences, and helps families develop estate planning strategies. He is a frequent speaker before community groups and trade organizations on matters relating to estate planning. Mr. Milner can be reached at firstname.lastname@example.org.