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.
Here are some provisions for individual taxpayers that were extended by Congress for two years:
- I.R.C. § 108(a)(1)(E), which excludes from gross income discharge of qualified principal residence indebtedness income.
- The I.R.C. § 163(h)(3) treatment of mortgage insurance premiums as qualified residence interest, which permits a taxpayer whose income is below certain thresholds to deduct the cost of premiums on mortgage insurance purchased in connection with acquisition indebtedness on the taxpayer’s principal residence.
- I.R.C. § 222, which provides an above-the-line deduction for qualified tuition and related expenses.
Provisions for businesses extended through 2016 include:
- The I.R.C.§ 45A 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.
- I.R.C. § 45G, the railroad track maintenance credit, equal to 50% of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer.
- The I.R.C. § 45N mine rescue team training credit, which allows a credit for a portion of training costs for qualified mine rescue team employees.
- I.R.C. § 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.
- I.R.C. § 168(e)(3)(A), which allows certain racehorses to be depreciated as three-year property instead of seven-year property.
- I.R.C. §§ 168(i)(15) and (e)(3)(C)(ii) allowing a seven-year recovery period for motorsports entertainment complexes.
- I.R.C. § 168(j), which allows accelerated depreciation for qualifying property used predominantly in the active conduct of a trade or business within an Indian reservation.
- The I.R.C. § 179E election to expense mine safety equipment, which permits an election 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.
- The I.R.C. § 181 special expensing rules for certain film and television productions, which allows the costs of any qualified film or television production as a deductible expense. The provision is modified to also apply to live theatrical productions.
- I.R.C. § 199(d)(8), which permits a deduction for income attributable to domestic production activities in Puerto Rico.
- The I.R.C. § 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.
- The I.R.C. § 7652(f) 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.
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.
