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New Tax Legislation—the PATH Act
Congress passed and President Obama signed legislation on December 18, 2015 extending a number of expired tax provisions. The legislation benefits businesses as well as individuals. Some key items are highlighted below.
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Section 179 is now permanent
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For 2015, Section 179 expensing limit is $500,000 with a $2 million overall limit.
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The $500,000 and $2 million limits are indexed for inflation beginning in 2016.
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Heating and air conditioning units placed in service in tax years after 2015 are eligible for expensing.
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The $250,000 expense limitation on qualifying real property is removed under this provision beginning in 2016.
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Expensing for computer software and treatment of qualified retail improvement property, restaurant property and leasehold improvement property as 15 year property is also permanently extended.
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Bonus Depreciation Extension with a phase out
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50% bonus depreciation is extended for property placed in service during 2015-2017
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Modification to 40% in 2018 and 30% in 2019
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Research & Development Credit is now permanent
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Alternative simplified credit rate increases to 20%
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In 2016, businesses with $50 million or less in gross receipts may claim the credit against alternative minimum tax liability
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Tax-free distributions from individual retirement plans for charitable purposes
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Permanent extension for individuals who are at least 70 ½ years of age to exclude from gross income qualified charity contributions from their individual retirement accounts (IRAs) (capped at $100,000 per taxpayer in any single tax year).
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Work Opportunity tax credit extension
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The work opportunity tax credit is extended through 2019.
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In 2016, the credit is also modified for employers who hire qualified individuals who have been unemployed for 27 or more weeks and increases the credit to 40 percent of the first $6,000 earned for these long-term unemployed individuals.
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Sales and Local General Sales Tax Deduction extension
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Permanent extension of the ability to claim an itemized deduction for state and local general sales taxes in the place of an itemized deduction for state and local income taxes.
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What does all this mean for you?
Contact Shannon & Associates if you have questions on this summary or want to understand how the PATH Act legislation may impact you or your business
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