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New Rules Permanently Extend Tax Provisions

by Matthew Person on January 23, 2017

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With the passage of the Protecting Americans From Tax Hikes (PATH) Act in December 2015 (part of the Consolidated Appropriations Act, 2016, P.L. 113-114), Congress took care of a large part of the problem of expired tax provisions.

However, in the relief over the many extended provisions, which included such important items as the Sec. 41 research credit, the expanded Sec. 179 deduction, and bonus first-year depreciation, there were also some other, less-publicized changes that affected those individual tax credits and were less favorable for taxpayers

  • Sec. 45A, the Indian employment tax credit for employers of enrolled members of Indian tribes (or their spouses) who work on and live on or near an Indian reservation.
  • Sec. 45G, the railroad track maintenance credit, equal to 50% of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer.
  • Sec. 45N, the mine rescue team training credit, which provides a credit for a portion of training costs for qualified mine rescue team employees.
  • Sec. 54E qualified zone academy bonds, which allows qualified schools to issue bonds for renovations (but not new construction), equipment purchases, teacher training, or developing course materials when they partner with private businesses.
  • Sec. 168(e)(3)(A), which allows certain racehorses to be depreciated as three-year property instead of seven-year property.
  • Sec. 168(e)(3)(B)(vi)(I), which provides for five-year cost recovery for certain energy property.
  • Secs. 168(i)(15) and (e)(3)(C)(ii), which allow a seven-year recovery period for motorsports entertainment complexes.
  • Sec. 168(j), which allows owners accelerated depreciation for qualifying property used predominantly in the active conduct of a trade or business within an Indian reservation.
  • Sec. 179E, the election to expense mine safety equipment, which permits taxpayers to elect to treat 50% of the cost of any qualified advanced mine safety equipment as a deduction in the year the property is placed in service.
  • Sec. 181, the special expensing rules for certain film and television productions, which allows taxpayers to treat costs of any qualified film or television production as a deductible expense. The provision is modified to also apply to live theatrical productions.
  • Sec. 199(d)(8), which permits a deduction for income attributable to domestic production activities in Puerto Rico.
  • Sec. 1391 empowerment zone tax incentives. This provision is modified to allow employees to meet the enterprise zone facility bond requirement if they reside in the empowerment zone, an enterprise community, or a qualified low-income community.
  • Sec. 7652(f), the temporary increase in the limit on cover over of rum excise taxes from $10.50 to $13.25 per proof gallon to Puerto Rico and the Virgin Islands.
    The American Samoa economic development credit.

Concerned about how these changes may effect your small business? Contact us today for assistance with your Louisiana Tax return.

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