Congress extends “extender” tax laws

February 19, 2015 by Staff
Copeland Buhl

Congress has once again extended the “extenders,” a varied assortment of more than 50 individual and business tax deductions, tax credits and other tax-saving laws which have been on the books for years but, technically, are temporary because they have a specific end date. This package of tax breaks has repeatedly been temporarily extended for short periods of time (e.g., one or two years), which is why they are referred to as “extenders.” Most of the tax breaks expired at the end of 2013, but now in the recently enacted Tax Increase Prevention Act of 2014, the extenders have been revived and extended once again. The package generally renews the tax breaks for one year through the end of 2014, allowing businesses and individuals to claim them on their 2014 returns. The list of extended provisions includes several important tax breaks.

The extended individual provisions include:

  • The $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by the educator in the classroom
  • The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income
  • The deduction for mortgage insurance premiums deductible as qualified residence interest
  • The option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes
  • The increased contribution limits and carry-forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes
  • The above-the-line deduction for qualified tuition and related expenses
  • The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 ½ or older

The extended business credits and special depreciation and expensing rules include:

    • The research credit
    • The employer wage credit for activated military reservists
    • The work opportunity tax credit
    • Three-year depreciation for racehorses
    • 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
    • 7-year recovery period for motorsports entertainment complexes
    • 50% bonus depreciation
    • The election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation
    • The enhanced charitable deduction for contributions of food inventory
    • 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
    • Special expensing rules for certain film and television productions
    • 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 exclusion of 100% of gain on certain small business stock
    • The basis adjustment to stock of S corporations making charitable contributions of property
    • The reduction in S corporation recognition period for built-in gains tax

These extenders were only for 2014; Congress plans to do a complete overhaul of the Tax Code in 2015.


Mark Scheibel, Partner