Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

2014 Tax Extenders Last Minute Passage

Posted by William Byrnes on December 17, 2014


9dc30-6a00d8341bfae553ef01bb07b43355970d-piReports PwC, the spending bill provides $10.6 billion in funding for the IRS – a reduction of $345.6 million from the fiscal year 2014.

Tax Increase Prevention Act of 2014Title I: Certain Expiring Provisions – Amends the Internal Revenue Code to extend certain expiring tax provisions relating to individuals, businesses, and the energy sector.

Subtitle A: Individual Tax Extenders – Extends through 2014:

  • 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 capital gain real property for conservation purposes;
  • the tax deduction of qualified tuition and related expenses; and
  • the tax exemption of distributions from individual retirement accounts for charitable purposes.

Subtitle B: Business Tax Extenders – Extends through 2014:

  • the tax credit for increasing research activities;
  • the low-income housing tax credit rate for newly constructed non-federally subsidized buildings;
  • the Indian employment tax credit;
  • the new markets tax credit;the tax credit for qualified railroad track maintenance expenditures;
  • the tax credit for mine rescue team training expenses;
  • the tax credit for differential wage payments to employees who are active duty members of the Uniformed Services;
  • the work opportunity tax credit;
  • authority for issuance of qualified zone academy bonds;
  • the classification of race horses as three-year property for depreciation purposes;
  • accelerated depreciation of qualified leasehold improvement, restaurant, and retail improvement property, of motorsports entertainment complexes, and of business property on Indian reservations;
  • 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 election to expense advanced mine safety equipment expenditures;
  • the expensing allowance for film and television production costs and costs of live theatrical productions;
  • the tax deduction for income attributable to domestic production activities in Puerto Rico;
  • tax rules relating to payments between related foreign corporations and dividends of regulated investment companies;
  • the treatment of regulated investment companies as qualified investment entities for purposes of the Foreign Investment in Real Property Tax Act (FIRPTA);
  • the subpart F income exemption for income derived in the active conduct of a banking, financing, or insurance business;
  • the tax rule exempting dividends, interest, rents, and royalties received or accrued from certain controlled foreign corporations by a related entity from treatment as foreign holding company income;
  • 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;
  • tax incentives for investment in empowerment zones;
  • the increased level of distilled spirit excise tax payments into the treasuries of Puerto Rico and the Virgin Islands; and
  • the tax credit for American Samoa economic development expenditures.

Amends the Housing Assistance Tax Act of 2008 to extend through 2014 the exemption of the basic military housing allowance from the income test for programs financed by tax-exempt housing bonds.

Subtitle C: Energy Tax Extenders – Extends through 2014:

  • the tax credit for residential energy efficiency improvements;
  • the tax credit for second generation biofuel production;
  • the income and excise tax credits for biodiesel and renewable diesel fuel mixtures;
  • the tax credit for producing electricity using Indian coal facilities placed in service before 2009;
  • the tax credit for producing electricity using wind, biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic renewable energy facilities;
  • the tax credit for energy efficient new homes;
  • the special depreciation allowance for second generation biofuel plant property;
  • the tax deduction for energy efficient commercial buildings;
  • tax deferral rules for sales or dispositions of qualified electric utilities; and
  • the excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

Subtitle D: Extenders Relating to Multiemployer Defined Benefit Pension Plans – Extends through 2015 the automatic extensions of amortization periods for multiemployer defined benefit pension plans and for multiemployer funding rules under the Pension Protection Act of 2006.

Title II: Technical Corrections – Tax Technical Corrections Act of 2014Makes technical and clerical amendments to:

  • the American Taxpayer Relief Act of 2012;
  • the Middle Class Tax Relief and Job Creation Act of 2012;
  • the FAA Modernization and Reform Act of 2012;
  • the Regulated Investment Company Modernization Act of 2010;
  • the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010;
  • the Creating Small Business Jobs Act of 2010;
  • the Hiring Incentives to Restore Employment Act;
  • the American Recovery and Reinvestment Tax Act of 2009;
  • the Energy Improvement and Extension Act of 2008;
  • the Tax Extenders and Alternative Minimum Tax Relief Act of 2008;
  • the Housing Assistance Tax Act of 2008;
  • the Heroes Earnings Assistance and Relief Tax Act of 2008;
  • the Economic Stimulus Act of 2008;
  • the Tax Technical Corrections Act of 2007;
  • the Tax Relief and Health Care Act of 2006;
  • the Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005: A Legacy for Users;
  • the Energy Tax Incentives Act of 2005; and
  • the American Jobs Creation Act of 2004.

Eliminates provisions in the Internal Revenue Code that are not used in computing current tax liabilities (referred to as deadwood provisions).

Title III: Joint Committee on Taxation – Provides that any refund or credit in excess of $5 million due to a C corporation taxpayer may not be made until the Secretary of the Treasury submits a report to the Joint Committee on Taxation providing information on such refund or credit.

Title IV: Budgetary Effects – Prohibits the entry of the budgetary effects of this Act on certain PAYGO scorecards.

JCX-107-14R (December 03, 2014) Estimated Revenue Effects Of H.R. 5771, The “Tax Increase Prevention Act Of 2014,”

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