Tax Extenders for Businesses

The “Protecting Americans from Tax Hikes Act of 2015″ has finally been approved.  This law extends a number of the popular business tax deductions and credits.   View a copy of the summary presented by the Ways and Means Committee for greater detail.

The following tax provisions were made permanent:

Section 179 Property Deduction – Section 179 allows a business to expense up to $500,000 in fixed assets placed into service during the current tax year. If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. If the cost of your section 179 property placed in service during the year is $2,500,000 or more, you cannot take a section 179 deduction.

Research and Development Tax Credit – In addition to making the R&D Tax Credit permanent, starting in 2016, eligible small businesses (with gross receipts less than or equal to $50 million) may claim the credit against AMT (alternative minimum tax).

Built In C Corp Gains for S Corp Election – The built in gain period is 5 years for S Corps that were previously taxed as a C Corp.  An S Corp with built in gains will be taxed at the corporate tax rate if gains are recognized within the 5 year period.

 

The following is a temporary extension that phases out after 2019:

Bonus Depreciation – Bonus depreciation allows a business to take additional depreciation on capital assets purchased during the tax year.  For the 2015 and 2016 tax years, the business may take up to 50% in bonus depreciation.  This drops to 50% for the 2018 tax year and 30% for 2019.