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Senate Extends Tax Breaks... But Only to the End of 2014

12.17.2014 | Client Alert

On December 16, the Senate approved the Tax Increase Prevention Act of 2014 (The Act) that would extend dozens of expired tax deductions, credits, and incentives — but only to the end of this year. This extenders bill, which has already been cleared by the House of Representatives, is expected to be signed by President Obama shortly.

Here are some key provisions.

50% Bonus Depreciation: The 50% bonus depreciation provisions for 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. 

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.

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 research activities would be retroactively extended for one year to apply to amounts paid or accrued before January 1, 2015.

Hiring & Employment Credit: The Act retroactively extends the Work Opportunity Tax Credit so that it applies to eligible individuals who began work for an employer 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.

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.

Mass Transit and Parking Benefits: The Act extends for one year parity for the monthly exclusion for employer-provided transit benefits with employer-provided parking benefits. Both are $250 per month.  Had there been no extension, the exclusion would have been $250 per month for parking and $130 per month for transit.   

These are selections from the Act. If you have questions about these or other provisions, contact your Berdon advisor or Saul Brenner at 212.331.7630 | sbrenner@berdonllp.com.

Important Reminder: Take Your Required Retirement Plan Distributions

Taxpayers born before July 1, 1944 generally must receive payments from their workplace retirement plans and IRAs by the end of the year. For first-year recipients who reached 70 ½ in 2014, a special rule allows you to wait until April 1, 2015 to take the required distribution. For all subsequent years, you must take the distribution by December 31. 

 

 

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