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LBMC Alert- Senate Passes Tax Extender Provisions



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Senate Passes Tax Extender Provisions
December 17, 2014
2014 Tax Extenders Pass House And Senate, President Obama Expected To Sign
Proper tax planning can be a thing of beauty. Minimizing a client’s tax liability by taking advantage of opportunities requires knowledge of the current tax laws, and specific areas of those laws must be assured. However, professionals and taxpayers have been undeniably challenged in tax planning in recent years due to uncertainties within the Federal government. Among these uncertainties has been the consistent last minute, year-end passages of the so-called “tax extenders.” Congress followed suit again this year, and as of December 16, 2014, passed what is known as the Tax Increase Prevention Act of 2014. This Act retroactively prolongs the majority of the “tax extenders” and applies them to 2014. President Obama is expected to sign the Act, and now is the time for taxpayers and their CPAs to take action and consider which extenders will help them reduce their tax liability before December 31, 2014. Because this Act only impacts tax year 2014, these extenders will expire and we will have to revisit the “Tax Extenders” again in 2015. The following is a broad overview of the major extenders.


State and Local Sales Tax Deduction

Itemized deduction for state and local sales taxes in lieu of income taxes

Qualified Tuition Deduction

Above-the-line deduction for qualified tuition and fees

Mortgage Debt Exclusion

Excludes from income Cancellation of Mortgage Debt on a principal residence of up to $2 million

Energy Efficient Tax Credit on Residential Property

Tax credit for qualified energy efficiency improvements to residential property


50% Bonus Depreciation

Additional first-year depreciation deduction limited to 50% of cost

Section 179 Expensing

Additional depreciation deduction (Limit $500,000, $2 million investment)

15-Year Depreciation on Qualified Leasehold/Retail Improvements and Restaurant Property

Additional depreciation deduction under Section 179 (Limit $250,000)

Tax Credit for Increasing Research Activities

20% or 14% tax credit for qualified business research expenses

Work Opportunity Tax Credit

40% tax credit ($6,000 maximum) on first-year wages for qualified individuals

100% Gain Exclusion from Qualified Small Business Stock

Exclusion of gain on qualified small business stock held more than 5 years

Charitable Contribution Deduction for Food Inventory

Tax deduction for charitable contributions of food inventory (not applicable to C-Corps)

 Empowerment Zones Incentives

Tax incentives for investments in empowerment zones

Commercial Building Energy Efficient Deduction

Tax deduction for qualified energy efficiency improvements to commercial property

The Tax Increase Prevention Act of 2014 does not extend the following:
  • Plug-In Electric Vehicle Credit
  • Energy-Efficient Appliance Credit
  • Place-In-Service Date for Partial Expensing of Certain Refinery Property
  • New York Liberty Zone Tax-Exempt Bond Financing
  • Health Coverage Credit for Displaced Works