The Tax Increase Prevention Act of 2014

You can now finalize your year end tax planning for 2014! The Tax Increase Prevention Act of 2014 legislation includes Sec 179 limits as well as the R&D tax credit. The 113th Congress H.R. bill 5771 was passed by the Senate the night of December 16 and Obama signed this bill on December 19. Please review summary below for areas that have been affected. Upon review, please call your Wilke & Associates tax manager at 412-278-2200 to evaluate your 2014 year end tax plan.

Individual Tax Provisions are in effect through 2014

• The deduction of expenses of elementary and secondary school teachers
• The 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 real property interests for conservation purposes
• The tax deduction of qualified tuition and related expenses
• The tax exemption of distributions from individual retirement accounts for charitable purposes.

Business Tax Provisions are in effect 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
• 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.

Energy Tax Provisions are in effect 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
• The excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

Other Noted Changes:

Multiemployer Defined Benefit Pension extensions in effect 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.

C corporation Refunds or Credits

This provision states 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.