The Protecting Americans from Tax Hikes (PATH) Act of 2015 and the Consolidated Appropriations Act, 2016 were approved by the House of Representatives as two separate bills on December 17, 2015, and December 18, 2015, respectively.
The PATH Act includes the permanent extension of many popular tax-favorable provisions including the research and development credit, bonus depreciation, Code Sec. 179 expensing, child tax credit, and American Opportunity credit, many of which were modified in making them permanent. It also includes other provisions extended through the 2016 tax year, as well as a two-year moratorium on the medical device excise tax.
The Consolidated Appropriations Act, 2016, includes a few additional tax provisions, most notable a delay in the implementation of the excise tax on so-called “Cadillac” medical plans. The Senate approved the measures in a consolidated vote on both bills on December 18, 2015. President Obama signed the bill into law December 18, 2015.
BUSINESS TAX PROVISIONS
The PATH Act permanently extended the following tax provisions for businesses:
- 15- Year write-off for qualified leasehold, retail improvement and restaurant property
- Section 179 expense limitation & phase-out
- Research Tax Credit
- Tax treatment of certain payments to controlling exempt organizations
- Special rules for qualified small business stock
- Lower shareholder basis adjustment for charitable contributions by S Corps
- Reduction in S corporation recognition period for built-in gains tax
- Differential Wage Payment Credit for Employers (details included in other business extenders sections)
These business tax provisions received a 5 year extension:
- Bonus depreciation
- Work Opportunity Tax Credit
- New Markets Tax Credit, extended through
- First Year Depreciation Cap for Autos and Trucks, extended through
INDIVIDUAL TAX PROVISIONS
The PATH Act permanently extended the following tax provisions for individuals:
- Deduction for state and local general sales tax
- Tax-free distributions from individual retirement account (IRA) for charitable purposes
- Educator expense deduction, permanently
- American Opportunity Tax Credit
- Child Tax Credit
These tax provisions for individuals received a 2 year extension:
- Mortgage Debt Relief, extended through 2016
- Deduction for mortgage insurance premiums, extended through 2016
Energy provisions 2 year extenders:
- Credit for non-business energy property
- Credit for construction of new energy efficient homes
- Energy efficient commercial buildings deduction
We look forward to working with you to identify these and other tax-savings opportunities and put them to work to lower your tax outlay. Please call our office today (972-644-7112) for details on any of the PATH and CAA provisions.