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The Protecting Americans from Tax Hikes Act of 2015

by Matthew Person on December 21, 2015

The omnibus spending bill, ‘The Protecting Americans from Tax Hikes Act of 2015’ was signed into law last Friday and extends a number of important tax breaks. It also makes a number of them permanent. Among the deductions, credits and tax provisions included in the bill:

  • The Research & Development credit
  • Increased expensing limitations and treatment of certain real property as Section 179 property
  • The exclusion of 100% of gain on certain small business stock
  • Reduction in S corporation recognition period for built-in gains tax
  • The enhanced Child Tax Credit
  • The enhanced American Opportunity Tax Credit
  • The enhanced Earned Income Tax Credit
  • The deduction for certain expenses of elementary and secondary school teachers
  • Parity for exclusion from income for employer-provided mass transit and parking benefits
  • The deduction of state and local general sales taxes
  • The special rule for contributions of capital gain real property made for conservation purposes
  • Tax-free distributions from individual retirement plans for charitable purposes
  • The charitable deduction for contributions of food inventory
  • The tax treatment of certain payments to controlling exempt organizations
  • Basis adjustment to stock of S corporations making charitable contributions of property
  • The employer wage credit for employees who are active duty members of the uniformed services; 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • The treatment of certain dividends of regulated investment companies
  • The Subpart F exception for active financing income
  • The minimum low-income housing tax credit rates for non-federally subsidized buildings
  • The military housing allowance exclusion for determining whether a tenant in certain counties is low-income
  • Regulated investment company qualified investment entity treatment under the Foreign Investment in Real Property Tax Act.

These provisions have been made permanent. A number of other provisions were extended and modified through 2019 including:

  • Bonus depreciation, at 50 percent for 2015-2017 and phased down to 40 percent in 2018 and 30 percent in 2019
  • The Work Opportunity Tax Credit, modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) to 40 percent of the first $6,000 of wages
  • The New Markets Tax Credit, providing $3.5-billion allocation each year through 2019, the carryover period for the credit has also been extended to 2024

A few provisions were only extended through 2016:

  • Modification of the exclusion of mortgage debt discharge
  • Mortgage insurance premiums treated as qualified residence interest
  • The above-the-line deduction for qualified tuition and related expenses
  • Over a dozen incentives for energy production and conservation

The status of these credits and deductions probably means changing both your short and long-term business planning. Make sure you are taking all of the deductions and credits you are entitled to for 2015 and that you are planning correctly for 2016 and beyond. We understand all of the changes taking place in the law and will help you wring the most benefit – and profitability – from these changes. Contact us today!

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