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Congress Passes Tax Increase Prevention Act of 2014

December 17, 2014

Be aware of significant changes to your 2014 tax returns under the TIPA of 2014.

Congress approved the Tax Increase Prevention Act of 2014 (TIPA on December 16th, which is expected to be signed by the President in the coming days. The new legislation will provide significant tax savings for businesses and individuals on their 2014 returns. Here are some of the extenders, please contact a member of our Tax Services Team for a full list of items that were extended.

Individual Extenders

For individuals, the extenders package extends the election of the following deductions through 2014:

  • Teachers’ Classroom Expense Deduction
  • Higher Education Deduction
  • Mortgage Insurance Premium Deduction
  • State and Local Sales Tax Deduction

Other extensions include:

  • Charitable Distribution from IRAs- Those age 70 ½ + can make tax-free distributions (up to 100,000 each year) from individual retirement accounts to charitable organizations. This is extended through 2014.
  • Mortgage Debt Exclusion- Cancellation of mortgage debt on a principal residence (worth up to $2 million) through 2014 is excluded from income in the new act.
  • Transit Benefits Parity- The income exclusion for employer-provided mass transit and parking benefits will stay the same through 2014- $250/month.

Business Extenders

  • R&D Tax Credits- The new act extends the research tax credit through 2014.
  • Bonus Depreciation- The new act extends 50% bonus depreciation through 2014 and through 2015 for specific properties with more extended production periods and for certain aircraft.
  • Section 179 Limits- The new legislation sets the Code Sec. 179 at $500,000 for 2014 with a $2 million total investment limit.
  • 15 year Qualified Leasehold Improvements and Restaurant Property- Up to $250,000 of qualified real property can be recognized as Section 179 property through 2014.
  • Reduced recognition period for S corporation built-in tax- The period when built-in gains in S corporations are subject to tax has been changed from 10 years to 5 years for built-in gain assets being sold during 2014.
  • 100% Exclusion for Gain on Qualified Small Business Stock- This exclusion has been extended for one more year and will be applicable to stock purchased prior to January 1, 2015.
  • Work Opportunity Tax Credit – Has been extended through 2014 for employers that hire qualified individuals and military veterans.

Stay tuned for updates on necessary steps that need to be taken before January 1, 2015 to fully take advantage of the benefits of the new legislation.

Questions? Contact our Tax Services Team.

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