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Congress Approves Tax Extension Bill

12/19/2014 Articles

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Congress has finally approved the extenders bill in what is widely viewed as terrible tax policy, but a welcome holiday gift nonetheless.  The Tax Increase Prevention Act of 2014 extended a number of provisions for the calendar year 2014, which (as we are all too well aware) ends in 12 days.  The most interesting for our family wealth clients is the extension of the tax exemption of distributions from IRAs to public charities (but not donor advised funds or supporting organizations).  For those individuals who are required to take a minimum distribution this year and have not yet done so, up to $100,000 can now be directed to charity and the donor will not be required to include the amount as taxable income. 

Other interesting items in the bill are the following provisions extended through 2014:

Individual Tax Extenders

  • the tax deduction of expenses of elementary and secondary school teachers;
  • the tax exclusion of imputed income from the discharge of indebtedness for a principal residence;
  • the equalization of the tax exclusion for employer-provided commuter transit and parking benefits;
  • the tax deduction of mortgage insurance premiums;
  • the tax deduction of state and local general sales taxes in lieu of state and local income taxes;
  • the tax deduction of contributions of real property interests for conservation purposes; and
  • the tax deduction of qualified tuition and related expenses.

Business Tax Extenders

  • the tax credit for increasing research activities;
  • the low-income housing tax credit rate for newly constructed non-federally subsidized buildings;
  • the new markets tax credit;
  • the tax credit for differential wage payments to employees who are active duty members of the Uniformed Services;
  • the work opportunity tax credit;
  • accelerated depreciation of certain business property (bonus depreciation);
  • the special rule allowing a tax deduction for charitable contributions of food inventory by taxpayers other than C corporations;
  • the increased expensing allowance for business assets, computer software, and qualified real property (i.e., leasehold improvement, restaurant, and retail improvement property);
  • the 100% exclusion from gross income of gain from the sale of small business stock;
  • the basis adjustment rule for stock of an S corporation making charitable contributions of property;
  • the reduction of the recognition period for the built-in gains of S corporations; and
  • tax incentives for investment in empowerment zones.

Energy Tax Extenders

  • the tax credit for residential energy efficiency improvements;
  • the tax credit for energy efficient new homes; and
  • the tax deduction for energy efficient commercial buildings.