The Consolidated Appropriations Act of 2016, enacted Dec. 18, 2015, extends a long list of expired tax provisions into the future. Unlike past extension legislation, Congress extended many provisions permanently. In more traditional fashion, some of the others were extended for five years, and many for two years. The Joint Committee on Taxation estimates that the total cost of the tax provisions in the bill will be $622 billion over 10 years. Without Congress extending these various provisions, millions of Americans were in danger of losing these beneficial tax breaks by 2017.
Congress made permanent various provisions with incentives for businesses. Some are as follows:
- The § 41 research and development credit, which provides a credit for qualified research expenses, was permanently extended. Congress also modified this credit so that eligible businesses with $50 million or less in gross receipts may claim the credit against their alternative minimum tax liability. Also, certain small businesses may claim the credit against their payroll tax liability.
- The § 45P employer wage credit for employees who are active duty members of the uniformed services, which provides a credit for employers for up to 20% of the eligible differential wage payments made while an eligible employee is serving on active duty.
- § 168(e)(3), which allows 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
- § 179 increased $500,000 expensing limit and $2 million phase-out threshold and an expanded definition of § 179 property to include qualified real property. The $250,000 cap for qualified real property is eliminated beginning in 2016.
- §§ 871(k)(1) and (2), which exempt interest-related dividends and short-term capital gain dividends from a regulated investment company from tax.
- The Subpart F exception under I.R.C. §§ 953(e)(10) and 954(h)(9) for active financing income.
- § 1202, which provides an exclusion of 100% of gain on certain small business stock.
- § 1374(d)(7), reducing the S corporation recognition period for built-in gains tax to five years.
If you have a question based upon the implication of one of the tax provisions now extended by Congress going forward in 2016 and beyond, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
