On December 17 and 18, 2015, the House and Senate approved the “Protecting Americans from Tax Hikes” (PATH) Act of 2015.  The President signed this legislation referred to by tax professionals as “The Tax Extenders Provision”, December 18, 2015.  The PATH Act extends or modifies many, many tax provisions.

We believe taxpayers are most interested in the following extensions/changes:

  • Permanent extension of the Section 179 expensing provisions at the $500,000 level and $2 million phase-out level, post 2014. Indexed for inflation beginning in 2016.
  • Bonus depreciation extended to December 31, 2019. 50% in 2015 to 2017; 40% in 2018 and 30% in 2019.
  • R & D tax credit is made permanent. Beginning in 2016, eligible small businesses may claim the credit against Alternative Minimum Tax (AMT) and also may be utilized against payroll tax liability for smaller start-up companies.
  • 15 year depreciation recovery period for qualified leasehold improvements, qualified restaurant property and qualified retail property is made permanent.
  • The Work Opportunity Tax Credit for hiring qualified veterans and employees from other targeted groups is extended to December 31, 2019 with some modifications.
  • The election to deduct sales tax in lieu of income tax is made permanent.
  • Direct transfers from Individual Retirement Accounts by individuals age 70½ to charity of up to $100,000 per year is permanently extended.
  • Enhanced American Opportunity Tax Credit is made permanent.
  • Enhanced Child Tax Credit is made permanent.
  • Permanent extension of the 5-year Built-In Gains recognition period after a corporation elects subchapter S Status. The prior recognition period was 10 years.

Contact Us for Tax Planning and Guidance

To discuss your unique tax situation or options available to you, contact your DS+B tax professional or Paul Simons for more information on the PATH Act.