On December 7, 2015, House Ways and Means Chairman Kevin Brady (R-TX) unveiled proposed legislation to extend a number of tax provisions that expired at the end of calendar year 2014. The proposed legislation would prevent tax increases on millions of families and businesses as the 2015 tax year filing season begins early next year. The Tax Prevention and Real Estate Investment Act of 2015 (H.R. 34) would extend and, in some instances, expand expired provisions for two years - retroactively from January 1, 2015, through December 31, 2016. As lawmakers continue their negotiations towards a more comprehensive and permanent solution, H.R. 34 was drafted by Mr. Brady as backup, should those negotiations fail. Below is a summary of some of the business extenders taken from a section-by-section summary of H.R. 34 provided by the Committee.
- Extension and modification of research credit. The provision extends through 2016 the Research and Development (R&D) tax credit. The provision also modifies the R&D credit to increase from 14 percent to 20 percent the alternative simplified credit (ASC), which replaces the traditional 20-percent research credit calculation method beginning in 2016. Additionally, under the provision, eligible small businesses ($50 million or less in gross receipts) may claim the credit against both alternative minimum tax (AMT) liability and payroll tax liability. » Find out if you qualify
- Extension of §45L credit for energy-efficient new homes. The provision extends through 2016 the tax credit for manufacturers of energy-efficient residential homes. An eligible contractor may claim a tax credit of $1,000 or $2,000 for the construction or manufacture of a new energy efficient home that meets qualifying criteria. » Find out if you qualify
- Extension of §179D energy efficient commercial buildings deduction. The provision extends through 2016 the above-the-line deduction for energy efficiency improvements to lighting, heating, cooling, ventilation, and hot water systems of commercial buildings. » Find out if you qualify
- Extension of 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements. The provision extends the 15-year recovery period for qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property to property placed in service during 2015 or 2016. » Find tax benefits from your building & improvements
- Extension and modification of bonus depreciation. The provision extends 50% bonus depreciation for property acquired and placed in service during 2015 or 2016 (2016 or 2017 for certain property with a longer production period). » Find tax benefits from your building & improvements
- Extension and modification of increased expensing limitations and treatment of certain real property as §179 property. The provision extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million) to property placed in service during 2015 or 2016. These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software, qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property also are extended through 2016. The provision modifies the expensing limitation by indexing both the $500,000 and $2,000,000 limits for inflation beginning in 2016 and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing. The provision further modifies the expensing limitation with respect to qualifying real property by eliminating the $250,000 cap.
KBKG can assist in determining potential tax savings of these extenders.
To find out how you can benefit, contact us today.