Congress’ parting Christmas present to the tax world was the extension of approximately 50 temporary tax provisions that had theretofore been routinely extended by Congress on only a one- or two-year basis. The Protecting Americans from Tax Hikes Act of 2015 retroactively extended a number of key business tax provisions; some, such as the research tax credit, permanently and others, like the New Markets Tax Credit, through 2019.
The now permanent business provisions include:
- An increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and expanded definition of property eligible for expensing;
- a 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
- the research credit is permanently extended and made creditable against other taxes;
- a reduction in S corporation recognition period for built-in gains tax;
- the exclusion from a tax-exempt organization’s unrelated business taxable income (UBTI) of interest, rent, royalties, and annuities paid to it from a controlled entity;
- the special treatment of certain dividends of regulated investment companies (RICs);
- the definition of RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act; and
- a 9% minimum low-income housing tax credit rate for non-Federally subsidized buildings.
And, the Act retroactively extended the following through 2019:
- The 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets);
- the enhanced first-year depreciation ceiling for cars and trucks;
- the work opportunity tax credit; and
- the new markets tax credit.