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.