Smith Dickson, An Accountancy Corporation 

December 2014

PRESIDENT OBAMA SIGNS ONE-YEAR TAX EXTENDERS PACKAGE:

Are there tax breaks for you? Section 179 back in play for 2014!

The Tax Increase Prevention Act of 2014 (HR 5771) was passed by the Senate on December 16th, by a vote of 76 to 16, and was signed by President Obama today. The bill retroactively extends to January 1, 2014 over 50 expired tax provisions, as well as including technical corrections to existing tax laws. The bill is only applicable to the 2014 tax year, with all provisions expiring on December 31, 2014 (unless Congress takes further action in 2015).

 

Below is a list of the tax provisions for individuals, businesses and energy tax. Please contact our office at (949) 553-1020 for any specific questions as well as advice on how you can capture these tax breaks before the year ends.

 

Businesses:

  • Section 179 deduction limit restored to $500,000 on total investment of up to $2,000,000;

  • additional (bonus) depreciation of business assets and the election to accelerate the alternative minimum tax (AMT) credit in lieu of bonus depreciation;

  • increased expensing allowance for business property, including computer software, and depreciation of qualified real property;

  • 100% exclusion from gross income of gain from the sale of small business stock;

  • incentives for investment in empowerment zones;

  • tax credit for increasing research expenditures;

  • low-income housing tax credit rate for newly constructed non-federally subsidized buildings;

  • Indian employment tax credit;

  • new markets tax credit;

  • tax credit for qualified railroad track maintenance expenditures;

  • tax credit for mine rescue team training expenses;

  • tax credit for differential wage payments to employees who are active duty members of the Uniformed Services;

  • work opportunity tax credit;

  • authority for issuing qualified zone academy bonds;

  • classification of race horses as three-year property for depreciation purposes;

  • accelerated depreciation of qualified leasehold, restaurant, and retail property, of motorsports entertainment complexes, and of business property on Indian reservations;

  • tax deduction for contributions of food inventory by taxpayers other than C corporations;

  • election to expense advanced mine safety equipment expenditures;

  • enhanced expensing allowance for certain film and television production costs;

  • tax deduction for income attributable to domestic production activities in Puerto Rico;

  • tax rules relating to payments between related foreign corporations and regulated investment companies;

  • the subpart F income exemption for income derived in the active conduct of a banking, financing, or insurance business;

  • basis adjustment rule for stock of an S corporation making charitable contributions of property;

  • reduction of the recognition period for the built-in gains of S corporations;

  • increased level of distilled spirit excise tax payments into the treasuries of Puerto Rico and the Virgin Islands; and

  • tax credit for American Samoa economic development expenditures.


Amends the Housing Assistance Tax Act of 2008 to extend through 2014 the exemption of the basic military housing allowance from the income test for programs financed by tax-exempt housing bonds.

 

Individuals:

  • tax credit for purchasing health care insurance;

  • tax deduction for expenses of elementary and secondary school teachers;

  • exclusion from gross income of imputed income from the discharge of indebtedness for a principal residence;

  • equalization of the exclusion from gross income for employer-provided commuter transit and parking benefits;

  • tax deduction for mortgage insurance premiums;

  • tax deduction for state and local general sales taxes in lieu of state and local income taxes;

  • tax deduction for contributions of capital gain real property made for conservation purposes;

  • deduction from gross income for qualified tuition and related expenses; and

  • tax-free distributions from individual retirement accounts (IRAs) for charitable purposes.


Extends through 2014 provisions allowing continuation of health care benefits for eligible trade adjustment assistance (TAA) and Pension Benefit Guaranty Corporation (PBGC) beneficiaries.

 

Energy Tax Extenders:

  • the tax credit for residential energy efficiency improvements;

  • tax credit for alternative fuel vehicle refueling property expenditures;

  • tax credit for two- or three-wheeled plug-in electric vehicles;

  • tax credit for second generation biofuel production;

  • income and excise tax credits for biodiesel and renewable diesel fuel mixtures;

  • tax credit for producing electricity using Indian coal facilities;

  • tax credit for producing electricity using wind, biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic renewable energy facilities;

  • tax credit for energy efficient new homes;

  • tax credit for energy efficient appliances;

  • special depreciation allowance for second generation biofuel plant property;

  • placed-in-service deadline for refinery property for which expensing of assets is allowed;

  • tax deduction for energy efficient commercial buildings;

  • deferral rules for sales or dispositions of qualified electric utilities; and

  • excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

 

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ABOUT SMITH DICKSON

 

Smith Dickson is a full-service Southern California CPA firm that specializes in providing high-quality services designed to create long-term value for our clients. Our services include accounting, tax compliance and planning, litigation support, business consulting and estate/trust tax compliance. Please contact us with your questions.

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Smith Dickson, An Accountancy Corporation | 18100 Von Karman Avenue | Suite 420 | Irvine | CA | 92612