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Has Congress Finally Given a Tax Extenders Holiday Gift That Keeps on Giving?

December 17, 2015 Business & Tax Blog Legislation

Congress has once again passed “Tax Extenders” legislation with only two weeks remaining in the year, but retroactively applicable to January 1. As a result, few will take advantage of its tax breaks in 2015. In past years Tax Extenders legislation expired at the end of the year, also making it useless in the following tax year.

This year’s bill, however, includes permanent extensions of many useful provisions. Amongst others, permanent extensions applicable now and in the future include:

  • allowing tax-free distributions from IRAs up to $100,000 per year to qualified charities for persons at least 70 and ½-year-old,
  • shorting of the post-C-corporation-to-S-corporation-conversion “built-in gains tax” period from ten years to five years,
  • increasing the annual deduction threshold and carryforward years for certain conservation donations,
  • allowing an optional state sales tax deductions for federal income tax purposes, in lieu of a state income tax deduction (particularly useful for residents of Florida, which has no personal income tax),
  • liberalizing depreciation rules for qualified leasehold, restaurant and retail improvements, and
  • increasing first-year expensing opportunities for certain capital expenditures.

The bill extends other recurring provisions more than one year, but not permanently. For example, bonus depreciation now applies through 2019, though the bonus depreciation percentage decreases by ten percent each year from the 50% 2015 percentage, to encourage investment sooner rather than later.

It remains frustrating that by once against waiting until December to act, Congress wasted the opportunity to give taxpayers a better opportunity to use these tax breaks in 2015. We can, however, at least be grateful for more planning certainty in the years ahead.

E. John Wagner, II
jwagner@williamsparker.com
941-536-2037