Once again we approach the end of a year following the so-called “Tax Extenders” legislation, which addresses federal tax incentives that expire on December 31 of each year, unless renewed by Congress. The2014 bill was enacted with retroactive effect in mid-December 2014, and expired December 31, 2014. Will Congress give us a 2015 Thanksgiving treat by enacting a similar bill before the end of November?
Unfortunately, replicating the pattern from 2014, it appears 2015 legislation will pass no earlier than mid-December. Several bills exist which could become law before the end of the year. As in prior years, the potential Tax Extender laws include special depreciation rules for qualified leasehold, restaurant and retail improvements, 50% bonus depreciation provisions, and first year expensing opportunities for certain capital expenditures. Also included is a reduction in S corporation recognition period for the built-in gains tax from ten years, to five years, but only for transactions closing in the year in which the Tax Extender legislation is in effect. Potential legislation also includes special incentives for conservation-oriented transactions and charitable donations from IRAs.
We remain hopeful another Tax Extenders bill will pass before December 31, 2015. In the best case, Congress would make some provisions permanent or extend provisions more than one year to give taxpayers a longer time horizon to plan.
If you have a 2015 transaction dependent on the legislation, be ready in advance, because you might have only a short time to act once the legislation passes. After that, you may be stuck hoping for another chance in 2016.
Here are links to our prior posts relating to Tax Extenders legislation: http://blog.williamsparker.com/businessandtax/2015/10/21/tax-extenders-redux-deja-vu-all-over-again/