December 22, 2014

H.R. 5571 – How does it impact you?

As a follow up to our year end planning email, we wanted to provide you with some timely tax updates regarding some recently passed Federal tax legislation. On December 16th, the Senate passed bill H.R. 5571 which retroactively extends 54 previously expired tax provisions though December 31, 2014.  This bill is expected to be signed by the President this week.

Below are some of the highlights from the passed bill:

  • QSBS benefit – The 100% exclusion allowed for gain on the sale or exchange of qualified small business stock held for more than five years by non-corporate taxpayers has been extended for any qualified investment made by December 31, 2014. Qualified investments made between September 28, 2010 and December 31, 2014 may qualify for the 100% exclusion.
  • Tax-free distributions to charity from individual retirement plans – Individuals age 70 ½ and older can make tax free distributions from their IRAs to a qualified charitable organization up to $100,000.
  • Deduction for state and local general sales tax (in lieu of state and local income taxes)

Tax provisions extended through 2014 for businesses:

  • Increased the Section 179 expense – Taxpayers will be allowed to deduct certain fixed assets up to a maximum of $500,000 for 2014.
  • 50% bonus depreciation -Taxpayers can also deduct 50% of the cost of new assets placed in service during 2014.
  • Research & Development Credit – A 20% credit for qualified research expenses can be taken in 2014.
  • Work opportunity tax credit – Companies that hire military veterans and other qualified individuals may be eligible for a credit of 40% of up to $6,000 in qualified first year wages for employees who began work prior to January 1, 2015.
  • Leasehold improvement – Taxpayers will be allowed to depreciate their qualified leasehold improvements over 15 years (vs the previous 39 years allowed).

We look forward to discussing this new legislation with you and determining what provisions might benefit you.