2015 Year End Tax Planning Briefing UPDATED

December, 2015

By Steven G. Horn, CPA and Tax Partner

Just before recessing for the holidays, Congress passed the bill we were waiting for that addressed the “Extenders.” Called the “Protecting Americans From Tax Hikes Act of 2015” (Path Act), the bill went further than expected with the “Extenders,” making more than 20 of them permanent so that we do not have to guess about them in the future.

Some of the more popular permanent extenders include:

  • American Opportunity Tax Credit for education: $2,500, subject to phase out once certain Adjusted gross Income (AGI) thresholds are reached.
  • Child Tax Credit: $1,000 for qualifying dependents, subject to phase out once certain AGI thresholds are reached.
  • Section 179 expensing deduction for certain fixed asset acquisitions made by small businesses is $500,000 with a $2 million overall investment limit before being phased out. These limits will be indexed for inflation.
  • 15-year straight-line depreciation for certain qualified leasehold improvements rather than the usual 39-year life.
  • Research and development (R&D) credit, with certain modifications.
  • Teachers’ expense deduction “above-the-line” for up to $250 of qualified expenses, indexed for inflation.
  • Full gain exclusion on sale of certain qualified small business (C Corporation) stock.
  • Tax-free distributions from IRAs to charities for those 70-1/2 years and older.

Some other provisions of interest include:

  •  Bonus depreciation for business assets was extended for five years, but with a declining benefit: 50% bonus depreciation for qualified assets placed in service in 2015-2017, 40% for 2018 and 30% for 2019.
  • The excise tax under the Affordable Care Act attributable to “Cadillac” health insurance plans has been delayed for two years. The Act also imposes a two-year moratorium on the medical device excise tax.
  • Solar incentives: the solar investment tax credit and the credit for certain residential solar property were extended through 2021, but with a declining benefit.
  • Computer equipment and technology is now permanently considered a qualified expense for tax-free distributions from Section 529 college savings plans.

These were some of the highlights of the Path Act. If you have any specific questions on these items or other Act provisions, please do not hesitate to contact us.

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