Congress has reached a deal.  It will be passed soon.  There are some great provisions in this Act – see below:

  • Section 179 made permanent at the $500,000 limit if qualifying Fixed Asset additions do not exceed $2,000,000.
  • Bonus depreciation has been extended. The bonus depreciation percentage is 50 percent for property (original-use) placed in service during 2015, 2016 and 2017 and phases down, with 40 percent in 2018, and 30 percent in 2019.
  • R&D Credit made permanent. AMT turn off in 2016 for Qualified Small businesses. Therefore, federal R&D credit will be available to reduce AMT in 2016. Also a start-up company can also now qualify for R&D credit even if not profitable. Credits can be used against payroll taxes up to $250,000 per year.
  • Permanent extension of rule reducing to five years (rather than 10 years) the period for which an S-Corporation must hold its assets following conversion from a C-Corporation to avoid the built-in gains tax.
  • Permanently extends the ability of Individuals at least 70 ½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts (IRAs) of up to $100,000 per taxpayer in any tax year.
  • Permanent provision to allow retailers to depreciate remodeling costs and other improvements to their stores over 15 years rather than the previous 39 years. A very attractive provision for restaurants.
  • Enhanced Child tax credit made permanent.
  • Enhanced American Opportunity tax credit made permanent.
  • Extension of above-the-line deduction for qualified tuition and related expenses through 2016.​

Please consult with your Somerset advisor to more thoroughly review these provisions to assist in tax reduction planning for 2015 and beyond.