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With the end of the 2014 calendar year quickly approaching, President Obama signed a bill that approves a one-year retroactive extension of a large number of temporary tax deductions, credits, and incentives that expired at the end of 2013. Many of the tax breaks in the bill relate to businesses, but a handful of them will pertain to individuals. Below are some of the major tax provisions that have been renewed and will remain in effect for the 2014 tax year:

General Business Credits & Incentives

  • Tax credit for research and experimentation expenses
  • Additional first-year depreciation for 50 percent of basis of qualified property
  • Election to accelerate AMT credits in lieu of additional first-year depreciation
  • 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Increased expensing limits ($500,000/$2 million) and expanded definition of section 179 property
  • Employer wage credit for activated members of the military reserve force
  • Treatment of certain dividends of regulated investment companies (RICs)
  • Special rules for qualified small business stock
  • Reduction in recognition period for S corporation built-in gains tax
  • Determination of low-income housing credit rate for credit allocations with respect to non-federally subsidized buildings
  • Treatment of military basic housing allowance under low-income housing tax credit

Energy Tax Incentives

  • Credit for construction of new energy-efficient homes
  •     Deduction for energy-efficient commercial buildings
  •     Credit for energy-efficiency improvements to existing homes
  •     Alternative fuel vehicle refueling property (non-hydrogen refueling property)
  •     Incentives for biodiesel and renewable diesel
  •     Incentives for alternative fuel and alternative fuel mixtures
  •     Second generation biofuel producer credit
  •     Special depreciation allowance for second generation biofuel plant property

Infrastructure, Economic Development & Community Assistance Provisions

  • New markets tax credit
    • Work opportunity taxcredit
    • Qualified zone academy bonds: allocation of bond limitation
    • Empowerment zone tax incentives:

o   Designation of an empowerment zone and of additional empowerment zones

o   Increased exclusion of gain (attributable to periods through 12/31/18) on the sale of qualified business stock of an empowerment zone business

o   Empowerment zone tax-exempt bonds

o   Empowerment zone employment credit

o   Increased expensing under section 179

o   Non-recognition of gain on rollover of empowerment zone investments

Individual Tax Incentives

  • Deduction for state and local general sales taxes
  • Above-the-line deduction for qualified tuition and related expenses
  • Parity for exclusion from income for employer-provided mass transit and parking benefits
  • Deduction for certain expenses of elementary and secondary school teachers
  • Discharge of indebtedness on principal residence excluded from gross income of individuals
  • Premiums for mortgage insurance deductible as interest that is qualified residence interest

Provisions Governing Charitable Giving, Tax-Exempt Entities

  • Tax-free distributions from individual retirement plans by individuals age 70.5 and older for charitable purposes
  • Special rules for contributions of capital gain real property made for conservation purposes
  • Enhanced charitable deduction for contributions of food inventory
  • Modification of tax treatment of certain payments to controlling exempt organizations
  • Basis adjustment to stock of S corporations making charitable contributions of property

If you have any questions regarding how these tax extenders may affect you, please call Lindsay & Brownell at (858) 558-9200 and we will help you take advantage before the end of the year! Don’t miss this potential tax saving opportunity!

Details of the extender bill can be found on the legislative website by following this link:

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