Posted by Jordon Rosen, CPA
The President signed legislation passed by Congress which retroactively extends from January 1, 2014 many individual and business tax provisions which otherwise expired at the end of 2013. The extension is only for 2014, so Congress will need to again address these same provisions sometime next year for 2015. Below are some of the key provisions.
- Above the line deduction for educator expenses up to $250
- Exclusion for Discharge Home Mortgage Debt up to $2 million
- Mortgage Insurance Premiums as deductible qualified residence interest expense
- State and Local Sales Tax deduction in lieu of income tax deduction
- The 50%/100% limitations on qualified conservation contributions of appreciated real property
- Above the line deduction for higher education expenses
- Nontaxable IRA transfers to charity up to $100,000 if age 70 ½
- Business Research credits, Work opportunity credits, Indian employment credits, new markets tax credit
- Enhanced deduction for food inventory
- Domestic Production Activities deduction rules for Puerto Rico
- Reduction in S Corporation recognition period for Built in Gains (BIG) tax
- Exclusion of 100% of gain on certain small business stock
- Lower shareholder basis adjustments for charitable contributions by S corporation
- 50% bonus depreciation for qualified property purchased AND placed in service before 2015. Also extended is treatment of qualified leasehold improvements and restaurant property.
- Additional $8,000 first year depreciation for business autos
- Choice to forego bonus depreciation and claim credit
- $500,000/$2 million Section 179 expensing limit/phase-out amount (goes back to $25,000/$200.000 of Qualified Leasehold Improvements in 2015!!). Includes off-the-shelf computer software.
- Various energy related credits including nonbusiness energy property and new energy efficient home credits
- Classification of certain race houses as 3-year property, for horses placed in service before January 1, 2015 (regardless of age when placed in service).
Facts and circumstances are different for everyone, so please contact your tax professional for further clarification on how these extenders could impact you.