CONTINUING EDUCATION FOR TAX & FINANCIAL PROFESSIONALS

Extender Bill Passed By Congress December 18, 2014

Late as usual, Congress finally extended almost 60 expiring tax provisions to December 31, 2014.

Sen. Ron Wyden, chairman of the Senate Finance Committee, who voted against the bill, criticized passage, saying that “with this stop-and-go tax extender bill, Congress is turning in its tax homework 11 months late and expecting to earn full credit.”

Yes, Sen. Wyden, but with tax season looming, taxpayers, tax preparers, tax software programmers and the IRS are all breathing a sigh of relief now that we know what law will apply on the 2014 tax returns.

A few of our clients might need an urgent phone call to tell them that an IRA transfer to charity is OK again or that the purchase of machinery or a business vehicle with a placed in service date before year end can reap a big tax incentive.

The following is a partial list of the items extended from December 31, 2013 to December 31, 2014. A complete list is included in the text of H. R. 5771. IRC

  • Individual Provisions New Expiration Date §62 $250 teacher supply deduction December 31, 2014 §108 Exclusion for personal residence COD income December 31, 2014
  • 163 Mortgage insurance premium deduction as mortgage interest December 31, 2014
  • 164 Election for itemizers to deduct sales tax in lieu of income tax December 31, 2014 §170 Contributions of real property for qualified conservation purposes December 31, 2014
  • 222 Tuition deduction December 31, 2014 §408 IRA transfers to charity in lieu of RMDs December 31, 2014 IRC Business Provisions New Expiration Date
  • 41 R & D tax credit December 31, 2017 §45P Wage credit for activated military reservists December 31, 2014
  • 51 WOTC for employers hiring qualified veterans and employees from December 31, 2014 www.WesternCPE.com 800.822.4194 other targeted groups
  • 132 Increased fringe benefit allowance for transit passes December 31, 2014
  • 168 50% bonus depreciation for qualified purchases December 31, 2014
  • 168 Election to accelerate AMT credit in lieu of bonus depreciation December 31, 2014
  • 168 15-year recovery period for qualified leasehold improvements, qualified restaurant property and qualified retail improvements December 31, 2014
  • 170 Enhanced charitable deductions for food inventory December 31, 2014
  • 179 Increased expensing limit ($500,000) December 31, 2014
  • 179 Treatment of certain real property as
  • 179 property December 31, 2014 §1202 100% gain exclusion for qualified small business stock December 31, 2014
  • 1367 Basis adjustment to S corp stock for charitable contributions December 31, 2014
  • 1374 Reduced built in gains recognition period for S corporations December 31, 2014 ABLE Act Included with the Extender Bill The Extender Bill also provides for ABLE (Achieving a Better Life Experience) accounts established under state programs for the care of family members with disabilities. This tax deferred savings vehicle is housed under Section 529. Details are available at ABLE Act FAQs- 113th Congress. 529 Plan Investments Can Be Changed Twice a Year Beginning in 2015, investment changes in a 529 account can be made up to two times in any calendar year. This replaces the current IRS-imposed once-yearly limitation. Civil Penalties Inflation Adjusted To help fund the $42 billion cost of the one-year extension, many civil penalties will be adjusted for inflation after 2014. The penalties affected are: the penalty for failure to file a tax return or pay tax, the penalty to file certain information returns, the return preparer penalty, the penalties for failure to file a partnership or S corporation return, the penalty to file a correct information return, and the penalty to furnish correct payee statements.

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