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New Tax Development - Congress Passes Extenders Package
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Murrill/Gerbino, LLP
9191 Towne Centre Drive
Suite 355
San Diego, CA 92122
Phone: (858) 455-5400
Larry Murrill:
Jason Gerbino:
Kristin Cartwright:
Nancy Young:
Johanna Lampert:
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Dear Clients and Friends,
Happy Holidays from all of us at Murrill/Gerbino, LLP! We hope this holiday season finds you well and that the New Year will bring health and joy to you and your families. We were very glad to see a lot of you at our holiday party last week; a good time was had by all. If you missed it, we hope to see you next year!
Aside from holiday greetings, we want to alert you to important recent tax developments that might be of interest to you for the filing of your 2014 income taxes.
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 Extender Package Just Passed by Congress
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 which 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 for individuals and businesses. We want to give you an overview of these key tax breaks that were extended by the new law. Please call our office for details of how the new changes may affect you.
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Individual extenders in the 2014 Tax Increase Prevention Act
The following provisions which affect individual taxpayers are extended through 2014:
- 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;
- parity for the exclusions for employer-provided mass transit and parking benefits;
- 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 carryforward 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; and
- 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� or older.
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Business extenders in the 2014 Tax Increase Prevention Act
The extended business credits and special depreciation and expensing rules include:
- 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;
- 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;
- accelerated depreciation for business property on an Indian reservation;
- 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets);
- the election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation;
- three-year depreciation for racehorses;
- the research credit;
- 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;
- the empowerment zone tax incentives;
- the temporary minimum low-income housing tax credit rate for nonfederally subsidized new buildings;
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Energy-related tax breaks extended in the 2014 Tax Increase Prevention Act
The energy provisions which are extended through 2014 include:
- the credit for nonbusiness energy property;
- the second generation biofuel producer credit (formerly cellulosic biofuels producer tax credit);
- the incentives for biodiesel and renewable diesel;
- the Indian country coal production tax credit;
- the renewable electricity production credit, and the election to claim the energy credit in lieu of the renewable electricity production credit;
- the credit for construction of energy efficient new homes;
- second generation biofuels bonus depreciation;
- the energy efficient commercial buildings deduction;
- the special rule for sale or disposition to implement federal energy regulatory commission (FERC) or State electric restructuring policy for qualified electric utilities;
- the incentives for alternative fuel and alternative fuel mixtures; and
- the alternative fuel vehicle refueling property credit.
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If you have any questions on this or any other matter, please feel free to call us. Also, we want to remind you that if you have any annoying uncertainty about the outlook for your 2014 tax liability, please call us to discuss preparing a tax projection for you.
All of us at Murrill/Gerbino, LLP would like to extend our good wishes to you and your families in the coming year. We value our relationships with our clients and friends and hope that you feel free to contact us for any reason.
Very truly yours,
Murrill/Gerbino, LLP
(Larry Murrill, Jason Gerbino, Kristen Cartwright, Nancy Powell, Nancy Young and Johanna Lampert)
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Copyright � 2014. All Rights Reserved.
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