Tax & Assurance Guidance

Congress Passes Law to Make Some “Tax Extenders” Permanent

Posted on December 21, 2015 by

Margaret Amsden

Margaret Amsden

Share This

Share on facebook
Share on twitter
Share on linkedin
Share on email

For most of the year, taxpayers have been wondering if the “tax extenders,” all of which expired as of December 31, 2014, would be extended again. Congress continued to say it would get done, but taxpayers entered December with no assurances. As the congressional sessions drew to a close for 2015, the House (on December 17) and the Senate (on December 18) passed a bill that went to President Obama late in the day on December 18, which was signed.

This bill included many of the “tax extenders” that had been renewed one year at a time for many years, but took a different approach by including provisions that retroactively extend the expiration date several years for some provisions, and makes others permanent. There is some hope that this is the first step to a broader overall reform of the US Tax Code, but that will need to wait until 2016, and possibly 2017. In the meantime, following is a brief summary of how this most recent bill will impact 2015 and forward.

General Business Provisions

  • Provisions made permanent include:
    • Research and Development credit.
    • Enhanced limitations for asset expensing under IRC Section 179.
  • Provisions that received a 5-year extension through 2019 include:
    • “Bonus” depreciation for qualified property.
    • The work opportunity tax credit.
    • The new markets tax credit.
  • Provisions that received a 2-year extension through the end of 2016 include:
    • The energy efficient commercial buildings deduction.
    • The special expensing rules for certain film and television productions.
    • The Indian employment tax credit.

S Corporations

  • The holding period under IRC Section 1374 related to built-in-gains are permanently extended to 5 years.
  • Provisions under IRC Section 1367 providing that a shareholder’s basis is reduced only by the basis of donated property (versus the fair market value of the property) is permanently extended.

Qualified Small Business Stock

  • For taxpayers other than corporations, the exclusion from gross income under IRC Section 1202 of 100% of the gain recognized on the sale or exchange of Qualified Small Business Stock held more than 5 years is permanently extended.

Individual and Family Provisions

  • Some of the key provisions made permanent are:
    • The enhanced child tax credit.
    • The enhanced American opportunity tax credit.
    • The enhanced earned income tax credit.
    • The deduction of certain expenses for elementary and secondary school teachers.
    • The deduction for state and local general sales taxes in lieu of state and local income taxes.
  • Three provisions particularly important to homeowners are extended through 2016:
    • The exclusion from gross income of discharge of qualified principal residence indebtedness.
    • The provision allowing mortgage insurance premiums to be treated as qualified residence interest.
    • The credit for non-business energy property.

Due Date Changes

Earlier this year, congress passed legislation that, beginning with 2016 tax returns, will change the due dates for various forms including Partnerships, S Corporations, Employee Benefit Plans and others. This trend has continued with the most recent bill which provides for changes to the due date of Forms W-2 and W-3. These forms, which have generally been due on the last day of February, will be due on or before January 31 for 2016 forms filed in early 2017.

Affordable Care Act

Congress also passed a 2-year delay in the enactment of the 40% Cadillac tax on high-cost health insurance plans. The bill also includes a 2-year delay in the excise tax on medical devices.

It should be noted that with 2016 being a presidential election year, the time period of most of these extensions and deferrals will put these issues to bed until after the election and a new Congress and President have had time to set their agendas.

Margaret Amsden

Shareholder

Leading the firm’s private client services group, Margaret’s strategic & educational approach fosters a culture of learning among clients and colleagues.

Related Insights

Tax & Assurance Guidance

Foreign Tax Withholding: What You Need to Know

Posted on April 26, 2022 by

Rob Cheyne
Making service payments to a foreign person is a common cross-border transaction. U.S. taxpayers need to be aware of the applicability of withholding tax and related reporting requirements to ensure they comply and avoid unintended consequences. A U.S. payor must collect withholding tax and remit it to the IRS in the case it is applicable.

Tax & Assurance Guidance

SALT Relief for Partners and S Corps

Posted on February 23, 2022 by

Miroslav Georgiev
With small businesses supporting nearly 47% of U.S. employees, states have been advocating for pass-through entities, operating partnerships and S corporations that have been harshly impacted by the Tax Cuts and Job Act ‘s state and local taxes deduction limit. Recent legislative activity is finally providing relief for many of these businesses. 

Tax & Assurance Guidance

IRS Provides Relief on K-2 and K-3

Posted on February 17, 2022 by

Margaret Amsden
In an attempt to provide more transparency with regard to reporting of foreign activity and/or information to foreign owners, the IRS came out with two new forms: Schedule K-2 (an addendum to the Schedule K) and Schedule K-3 (an addendum to the Schedule K-1). Learn about the latest K-2 and K-3 reporting requirements issued by the IRS.

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

The Sound of Automation: Looking ahead to CSIA 2022

In this episode we talk with Lisa Richter, Director of Industry Outreach and Growth at Control System Integrators Association (CSIA) . Lisa and Bryan look ahead to the CSIA Executive conference taking place in Denver, CO on June 27-30, 2022 and share with listeners what to expect, who will be there, and the discussion panel topics focusing on this years’ theme “The Future of Work”. 

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content