Protecting Americans from Tax Hikes Act of 2015

Protecting Americans from Tax Hikes Act of 2015 was signed by the president on Dec.18, 2015. With everyone waiting for the extenders, it was a nice holiday surprise that many are now made permanent. Among the extenders that have been made permanent are the following:

  • The research and development credit, with special utilization by small businesses

  • Code Sec. 179 expensing, at an indexed $500,000 level/$2 million limit (and eliminating the $250,000 cap beginning in 2016)

  • State and local sales tax deductions

  • Special 15-year, straight-line cost recovery for qualified leasehold improvements, and qualified restaurant and retail improvement property

  • An enhanced Earned Income Tax Credit

  • An enhanced Child Tax Credit

  • A modified classroom-expense deduction

  • Parity for exclusion of employer-provided mass transit and parking benefits

  • Tax-free distributions of Required Minimum Distributions up to $100,000 from IRAs for charitable purposes (among other incentives for charitable giving)

  • An enhanced American Opportunity Tax Credit

This Tax Act also extends and modifies through 2019 the following:

  • Bonus depreciation, at 50 percent for 2015-2017 and phased down to 40 percent in 2018 and 30 percent in 2019

  • The Work Opportunity Tax Credit, modified and enhanced for employers who hire long-term unemployed individuals to 40 percent of the first $6,000 of wages

  • The New Markets Tax Credit, with a $3.5-billion allocation

Finally, most other tax provisions that were in the last extenders package and had expired retroactively after Dec. 31, 2014, are revived for two years, through 2016. These provisions include:

  • An extension and modification of the exclusion of mortgage debt discharge

  • An extension of the above-the-line deduction for qualified tuition and related expenses

  • Numerous incentives for energy production and conservation

Many other miscellaneous tax provisions are non-extenders that were added to the package and are classified under the headings:

  • Program Integrity — dealing with safeguards surrounding taxpayer identification numbers, information returns, and restrictions regarding education incentives, among others

  • Family Tax Relief — notably, exclusions under the Work College Program, improvements to Code Sec. 529 accounts, and rollovers into simple retirement accounts

  • Real Estate Investment Trusts — restrictions on tax-free spinoffs, limitations on designation of dividends, hedging provisions, and over 10 other REIT-related provisions

  • Tax Administration — notably are the rules for IRS employees, truncated Social Security Numbers for Form W-2, clarification of enrolled agent credentials, and tweaks to the new partnership audit rules

  • S. Tax Cour — rules regarding taxpayer access to the Tax Court with additional rules and clarifications.

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