Business provisions in the law include:
- Improved Section 179 deductions. The new law makes permanent a $500,000 Section 179 expensing limitation ($2,000,000 maximum investment), indexed for inflation (before passage, the limitation was $25,000).
- The popular 50% bonus depreciation provision has been reinstated for the 2015-2017 tax years. In 2018, the allowable deduction is 40%; in 2019 the deduction falls to 30%.
- The R&D tax credit is now permanent. Additionally, taxpayers with gross receipts under $50 million can utilize the credit against their AMT. Taxpayers with gross receipts under $5 million can utilize the credit against the employer’s payroll tax liability.
- The basis provisions related to S corporations making charitable deductions has been permanently extended.
- The five-year recognition period for built-in gains following conversion from a C corporation to an S corporation has been made permanent.
Individual provisions now made permanent in the law include:
- Exclusion from income for IRA distributions made directly to a charity for those aged at least 70 ½ years old ($100,000 maximum).
- The Enhanced Child Care Credit.
- The American Opportunity Tax Credit.
- Sales tax deduction in lieu of an income tax deduction.
- $250 educator deduction.
If you have any questions regarding these changes or need assistance in your 2015 tax planning, please feel free to contact Cray, Kaiser Ltd.