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.
These tax breaks include but are not limited to savings for teachers, parking and transit benefits, and certain charitable contributions which will be discussed in this blog. 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 individuals. Some are as follows:
- The § 41 research credit with modifications;
- The § 62(a)(2)(D) above-the-line deduction for elementary and secondary school teachers, which allow teachers to deduct up to $250 spent on books, supplies, computer equipment, and other materials for classroom use. Beginning in 2016, the $250 is indexed for inflation.
- I.R.C. § 132(f), which provides parity between the exclusion for employer-provided mass transit and parking benefits;
- The § 164(b)(5) deduction for state and local general sales taxes in lieu of state and local income taxes;
- The § 179 deduction with modifications.
Congress made permanent various provisions with incentives for contributions to charity. Some are as follows:
- The § 170(b) charitable deduction for contributions of real property and the special rule for contributions of capital gain real property made for conservation purposes;
- I.R.C. § 170(e)(3)(C), which allows businesses to make contributions of “apparently wholesome food” to charities that will use it for the care of the ill, the needy, or infants and to take an above-basis deduction for these contributions. The limitation is increased from 10% to 15% of the taxpayer’s adjusted gross income (15% of taxable income for C corporations) per year.
- I.R.C. § 408(d)(8), which allows taxpayers who are at least 70½ years old to make up to $100,000 in qualified charitable distributions from individual retirement plans without including the distributions in income;
- I.R.C. § 512(b)(13)(E), which modifies the tax treatment of certain payments to controlling exempt organizations so that such payments are not treated as unrelated business income;
- I.R.C. § 1367(a)(2), which allows S corporation shareholders to adjust the basis in their stock when the S corporation makes charitable contributions of property using their basis in the property instead of its fair market value.
If you have a question based upon the implication of one of the tax provisions now extended by Congress going forward in 2016, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
