President signs extender bill (12-18-15)

[JRS]

President signs extender bill (12-18-15) The President has signed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). Here is a list of key provisions. Made permanent: Enhanced Child Tax Credit Enhanced American Opportunity Tax Credit Enhanced Earned Income Tax Credit Above-the-line educator deduction Sales tax deduction Enhanced mass transit and parking pass benefits IRA-to-charity — California automatically conforms R&D credit IRC §179 — enhanced Enhanced exclusion of gain on sale of small business stock Built-in gains holding period Extended through 2016: Qualified tuition deduction Nonbusiness Energy Property Credit COD principal residence exclusion Mortgage insurance premium deductible as interest Extended through 2019: Bonus depreciation — phases out First year bonus depreciation on automobiles — enhanced Work Opportunity Tax Credit

[Randall]

Where do they come up with the names of these ACTs?

[Lion EA]

They hire a bunch of highly paid execs to sit around dreaming up acronyms that ultimately make fun of us taxpayers.

[kcjenkins]

What Lion said !!!

[jklcpa]

Yes!  Look at that list of items that have finally been made permanent.

Now if only we could have one across-the-board definition of MAGI. If deductions and credits need to be tweaked in other ways, so be it, but standardizing MAGI would lessen the potential for errors.

[JRS]

SpidellPublishingInc.® FLASH E-MAIL CORRECTION: PATH Act not yet signed by President (12-18-15) The PATH Act has been signed by the House and the Senate. The President has not yet signed the bill, as previously reported; however, he is expected to sign the bill later today.

[Lee B]

MORE DETAIL ON THE NON-PERMANENT EXTENDERS FROM FORBES :

Provisions Extended Through December 31, 2019

Not all of the 52 provisions were made permanent, however. The following were extended only through 2019:

• The new markets tax credit,
• Bonus depreciation: the 50% immediate expensing of asset acquisitions that we’ve known in one form or another since 2001 is on its last legs. It will be permitted at 50% for 2015, 2016 and 2017 before reducing to 40% in 2018 and 30% in 2019, when it will then disappear altogether.

Provisions Extended Through December 31, 2016

The majority of the remaining 52 provisions were extended for two years, through December 31, 2016. Included among the two-year extenders are the following:

• Exclusion of COD income on principal residence: Since 2007, Section 108(a)(1)(E) has allowed a taxpayer who renegotiates the mortgage on his principal residence — or is forced to sell the home in a foreclosure or short sale that does not fully repay the lender, with the excess deficiency forgiven — to exclude up to $2 million of what would ordinarily be “cancellation of indebtedness” income under Section 61(a)(12). This deal extends the exclusion for an additional two years, at which point I would hope the real estate market would be adequately recovered so as to necessitate no further extension.
• Tuition deduction: a maximum above-the-line deduction of $4,000 will continue to be permitted for tuition costs for higher education.
• Film and television productions: taxpayers will continue to be permitted to deduct the first $15 million of costs for qualified film, television and live theater productions.
• Energy incentives: the following energy incentives were extended for two years:
  • A $500 credit for the purchase of certain non-business energy-efficient property,
  • Up to a $2,000 credit available to the manufacturer of energy-efficient homes,
  • Section 179D expensing of certain heating, cooling, and lighting improvements to commercial property.

Delay of Obamacare Provisions

Obamacare came under fire as part of the negotiations, as the agreement would pause the 2.3% excise tax on medical devices in 2016 and 2017, while the start of the so-called Cadillac tax on high-cost employer-sponsored health insurance would be delayed from 2018 to 2020.

Other provisions:

Because the earned income credit is a lightning rod for fraud, taxpayers will not be permitted to file amended returns claiming the credit for a year when they did not have a valid social security number. The same holds true for the child tax credit; a taxpayer may not file an amended return claiming the credit for any year in which they did not have a valid ITIN (taxpayer identification number). In addition, taxpayers convicted of fraud in claiming the earned income credit will be barred from claiming the credit for ten years, while those found to have recklessly disregarded the rules will be prohibited from claiming the credit for two years. A 20% penalty will also be applied to the refundable portion of improperly claimed credits, reversing an earlier court decision.

The new deal also makes material changes to the treatment of tax-free spinoffs under Section 355 that involve a real estate investment trust, generally requiring that the spinoff will be tax free only if immediately after the transaction, both the distributing and controlled corporations are REITs.

Foreign taxpayers selling a interest in US real property will be subject to a higher 15% withholding tax as opposed to the previous tax of 10%.

Summary

To restate, a deal is not done, and many Democrats are unhappy with what they perceive to be cuts too heavily weighted towards businesses, without enough done for families. Also a concern is the price tag; as you’ll notice, there are little offsets to all of the permanent tax cuts, and as a result, the plan is rumored to cost in the neighborhood of $700 billion over ten years.

In its current form, the deal is a win for Republicans, as it provides long-sought after permanency in the R&D credit and enhanced Section 179 deductions. And while the Republicans were reluctant to give concessions on the earned income credit, by reducing the tax revenue baseline by $700 billion over the next ten years, it should make future Republican proposals for tax cuts easier to swallow, because the drop in projected revenue won’t look quite as daunting as it otherwise would have.

But at a time like this, winners and losers don’t matter. As taxpayers, we just need to know which tax provisions we have available to us for planning and reporting purposes. Here’s to hoping this gets done by the end of the week

[Lion EA]

And, make the universal definition of a child actually universal.

[easytax]

21 hours ago, Lion EA said:

And, make the universal definition of a child actually universal.

/s    Why ---- they just make it the preparers "duty" ---

Refundable credits for lower- and middle-incomers are made permanent:

Higher earned income and child credits. Plus the American Opportunity college credit.

Tighter rules will apply to preparers of returns that claim the child credit…

Or the American Opportunity Tax Credit. Beginning with 2016 tax returns

filed in 2017, they’ll have to document how they determined the filer’s claim was valid,

similar to the rules that now apply to returns claiming the earned income credit.

[Abby Normal]

On 12/18/2015, 2:58:07, Lion EA said:

They hire a bunch of highly paid execs to sit around dreaming up acronyms that ultimately make fun of us taxpayers.

They're called 'backronyms' when they deliberately craft a name to produce a desired acronym.

CPU, FYI, FBI, LAPD are initialisms, not acronyms, because you don't say them as a word.