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One-year Tax Extender Package Passes Congress


12/19/14

Synopsis
 
Following passage by the House of Representatives on December 3 and the U.S. Senate on December 16, H.R. 5771, the Tax Increase Prevention Act of 2014 (TIPA), which extends retroactively for one year various tax provisions that expired as of December 31, 2013, is expected to be signed by President Obama soon.
 
Issue
 
TIPA amends the Internal Revenue Code (IRC) to extend certain expiring tax provisions relating to individuals, businesses, and the energy sector.
 
Some of the major individual tax extenders that are extended through 2014 are the following:

  • The tax exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
  • The equalization of the tax exclusion for employer-provided commuter transit and parking benefits;
  • The tax deduction of state and local general sales taxes in lieu of state and local income taxes;
  • The tax deduction of contributions of capital gain real property for conservation purposes;
  • The tax deduction of qualified tuition and related expenses; and
  • The ability to transfer funds from IRAs to charities for those who have attained age 70 ½.
     

Further, some of the major business tax extenders that are extended through 2014 are the following:

  • The tax credit for increasing research activities (IRC § 41);
  • The low-income housing tax credit rate for newly constructed non-federally subsidized buildings (IRC § 42)
  • The new markets tax credit (IRC § 45D)
  • The increased expensing allowance for business assets, computer software, and qualified real property (i.e., leasehold improvement, restaurant, and retail improvement property) (IRC § 179); and
  • Accelerated depreciation of certain business property (50% bonus depreciation) (IRC § 168(k))
     

Along with the extenders, the measure includes the House-approved ABLE Bill, which creates tax-exempt accounts for use by individuals to pay qualified disability expenses. These include the costs of education and personal support.
 
What Does CohnReznick Think?
There is still time to take advantage of a number of the items in the extenders package before yearend, once the President has signed the bill. Of note is enhanced Code Sec. 179 expensing for businesses and the incentive related to charitable distributions from IRAs. All of these provisions will again expire come 2015 when Congress has promised to address comprehensive tax reform. We encourage you to review this alert and the accompanying briefing to understand how TIPA may impact you and/or your business.
 
Read a detailed briefing.

Contact
 
To discuss what this means to you and your business, please contact your CohnReznick tax professional.

In an upcoming issue of Capitol Connection, Robert C. Moss, CohnReznick principal and National Director of Governmental Affairs, will discuss how these provisions impact the affordable housing and tax credit communities.


Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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