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 Tis the Season ...to sneak in Tax Code

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PostSubject: Tis the Season ...to sneak in Tax Code   Fri Dec 25, 2015 4:17 pm

12/18/2015


Congress Permanently Extends Several Tax Provisions (article)





On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes Act of 2015 (PATHA), which for the first time permanently enacts a number of the tax breaks generally dubbed the “Extenders” because of the need to extend them repeatedly year after year.
The House of Representatives passed the bill on December 17 and the Senate followed suit the next day. This represents the opportunity for an extended period of certainty for taxpayers who rely on these tax incentives but have to wait until December of each year to make business and personal decisions affected by them.

Business Provisions

Permanently Extended

Several prominent business provisions that had expired at the end of 2014 not only were reinstated, but were also extended permanently. And some provisions have been significantly enhanced from their previous incarnations.
R&D Tax Credit – The research and development tax credit (R&D tax credit) encourages domestic research and experimentation by providing a tax credit for amounts incurred for qualified research expenses. Originally enacted in 1981, the research tax credit has been extended by Congress more than a dozen times. PATHA finally extends the research tax credit permanently, which should help empower companies to make long-term commitments to research activities.
Not only has the R&D credit been permanently extended, it has also been enhanced. Beginning in 2016 tax years, eligible small businesses (those with average annual gross receipts of $50 million or less) may claim the R&D credit against alternative minimum tax (AMT) liabilities, expanding the benefits first introduced in 2010. This is especially important to individuals who are partners or shareholders in S corporations that qualify as eligible small businesses, as they also benefit from the favorable AMT treatment.
Also beginning with 2016 tax years, start-up companies with gross receipts of less than $5 million may elect to claim the R&D credit against payroll tax liabilities.
Increased Section 179 Expensing Election – The Section 179 immediate expensing election had plummeted from $500,000 in 2014 to $25,000 in 2015. With PATHA, businesses with adequate taxable income can immediately deduct in 2015 and all subsequent tax years up to $500,000 of qualified tangible property (including off-the-shelf computer software). The Section 179 deduction begins to phase out when total qualified purchases for the year exceed $2 million.
Several enhancements to the Section 179 deduction take effect in 2016:

  • The $250,000 cap on qualified real property (consisting of qualified leasehold improvements, qualified restaurant property and qualified retail improvement property) no longer applies,
  • Air conditioning and heating units will be eligible property, and
  • The $500,000 and $2 million limits both are indexed for inflation.

15-year Straight Line Cost Recovery – Traditionally depreciated over 39 years, qualified leasehold improvements, qualified restaurant property and qualified retail improvement now permanently can be depreciated over 15 years on a straight-line basis. Improvements must be made to the interior of non-residential real property more than three years after the building was placed in service. Qualifying restaurant and retail improvements can include improvements to owner-occupied or leased space while qualifying leasehold improvements may only include leased space (related party leases do not qualify).
Other permanently extended business provisions include the:

  • 100 percent exclusion of gain from the sale of qualified small business stock held by non-corporate taxpayers for more than 5 years, and the gain will no longer be treated as an AMT preference item;
  • Reduction of the recognition period for built-in gains of S corporations from 10 to 5 years;
  • Basis adjustment to stock of S corporations making charitable contributions of appreciated property;
  • Enhanced charitable deduction for contributions of food inventory; and
  • Subpart F exception for active financing income.

Extended Through 2019

While not extended permanently, some business provisions received a healthy five-year extension through 2019:
Bonus Depreciation – Taxpayers can once again elect to take additional first-year (bonus) depreciation on qualifying asset purchases through December 31, 2019. The bonus depreciation percentage, however, decreases in the later years as follows:
[th]Placed in Service During[/th][th]Bonus Depreciation Percentage[/th]
201550%
201650%
201750%
201840%
201930%

As in previous iterations of the provision, qualifying assets generally include new tangible personal property, off-the-shelf computer software and qualified leasehold improvements. Qualified restaurant or retail property do not qualify for bonus depreciation unless the property also meets the definition of qualified leasehold improvements. PATHA also reinstates the corresponding election to accelerate AMT credits in lieu of claiming bonus depreciation, increasing the amount of AMT credits that can be claimed beginning in 2016.
Work Opportunity Tax Credit (WOTC) – The WOTC gives employers incentive to hire workers in certain targeted groups that have a high rate of unemployment. While it can vary by targeted group and number of hours worked, the credit generally is equal to 40 percent of the eligible employee’s wages up to $6,000 (a $2,400 credit).
In addition to extending the WOTC through 2019, PATHA also expands the targeted groups by adding qualified individuals who have been unemployed for 27 weeks or more.
Other business provisions extended through 2019 include the new markets tax credit and the look-through treatment for certain payments between related controlled foreign corporations (CFCs).

Extended Through 2016

Not to be left out, some of the narrower or less popular business provisions were extended through 2016. Though the long-term prospects for these provisions are unclear, the multi-year extension at least gives taxpayers that can benefit from the provisions the opportunity to do so. Business provisions extended through 2016 include the energy efficient commercial buildings deduction, several other energy incentives, and several incentives targeted at specific industries, such as the railroad, mining, horse racing, motorsports entertainment and film and television industries.

Individual Provisions

Businesses weren’t the only taxpayers to benefit from PATHA. Provisions benefiting individuals and families were extended as well. As with the business provisions, some individual provisions were extended permanently while others only extended through 2016. Refer to the chart below for a list of the more common individual provisions and whether they were extended permanently or through 2016.
[th]Provision[/th][th]Extension[/th]
Up to $100,000 tax-free distribution from IRAs for charitable purposes by taxpayers age 70 ½ or olderPermanent
Deduction for state and local sales taxesPermanent
Enhanced American opportunity tax credit for higher education expensesPermanent
$250 above-the-line deduction for teacher classroom expensesPermanent
Exclusion for employer provided mass transit and parking benefitsPermanent
Enhanced refundable child tax credit (not indexed for inflation)Permanent
Enhanced earned income tax creditPermanent
Charitable deduction for contributions of real property for conservation purposesPermanent
Above-the-line deduction for tuition and feesThrough 2016
Exclusion of cancellation of indebtedness (COD) income from the discharge of qualified personal residence indebtednessThrough 2016
Deduction for qualified mortgage insurance premiumsThrough 2016

Other Notable Tax Provisions

The extenders weren’t the only tax provisions addressed by either PATHA or the year-end omnibus spending package. Other notable provisions include:
Cadillac Tax Delayed – The excise tax on high-cost health benefit plans known as the “Cadillac Tax” is one of the primary revenue raisers from the Affordable Care Act. Originally scheduled to take effect in 2018, the Cadillac Tax has been delayed until 2020. The excise tax also is now a tax-deductible expenditure.
Medical Device Tax Suspended – Another revenue generating provision from the Affordable Care Act, the 2.3 percent excise tax imposed on manufacturers of medical devices has been suspended for sales between January 1, 2016 and December 31, 2017.
529 Plans Enhanced – The definition of qualified higher education expenses that may be paid with tax-free distributions from Section 529 plans has been expanded to include computer equipment and technology.
Information Form Due Date Changes – While employers always had to provide employees or independent contractors with copies of the Form W-2s or Form 1099s by January 31, the copies filed with the federal government weren’t due until February 28, or March 31 if filing electronically. Beginning with statements issued for 2016 (filed in 2017), the government copies of these forms also must be filed by January 31. Congress hopes that by requiring these statements to be filed earlier, the IRS will be able to detect fraudulent tax refund claims more effectively.
Changes to Form W-2 Reporting – To help protect taxpayers from identify theft, the IRS permits the use of truncated taxpayer identification numbers on many information reporting forms, such as Form 1099 and Schedule K-1. The use of truncated ID numbers on Form W-2, however, was prohibited under the Internal Revenue Code. The new provision requires the employer to merely include an identifying number on Form W-2 rather than the Social Security number. This will give the IRS the ability to issue regulations permitting or requiring the use of truncated Social Security numbers on Form W-2, further protecting taxpayers from having their Social Security numbers fall into the wrong hands.
We’ve only discussed the more common tax provisions here. For more information about this legislation, contact your local CBIZ MHM tax professional. See below for a chart summarizing the major provisions, their extension periods, and whether they’ve been otherwise modified by the new legislation.
[th]Select Provisions Extended or Made Permanent By the Protecting Americans from Tax Hikes Act of 2015[/th][th]BUSINESS & ENERGY PROVISIONS [/th][th]INDIVIDUAL PROVISIONS [/th]
Tax ProvisionExtensionModified?
R&D Tax CreditPermanentYes
$500,000 Section 179 Expensing ElectionPermanentYes
15-Year Depreciation for Qualified Leasehold, Retail Improvement and Restaurant PropertyPermanentNo
100% Exclusion of Gain from Sale of Qualified Small Business StockPermanentNo
Reduction from 10 to 5 years the recognition period for built-in gains of S corporationsPermanentNo
Basis adjustment to stock of S corporations making charitable contributions of appreciated propertyPermanentNo
Enhanced charitable deduction for contributions of food inventoryPermanentYes
Subpart F exception for active financing incomePermanentNo
Bonus DepreciationThrough 2019Yes
Work Opportunity Tax CreditThrough 2019Yes
New Markets Tax CreditThrough 2019No
Look-through Treatment for Certain Payments between Related CFCsThrough 2019No
Energy Efficient Commercial Buildings DeductionThrough 2016No
$500 Credit for Nonbusiness Energy PropertyThrough 2016Yes
Credit for Energy Efficient New HomesThrough 2016No
Tax-free Distribution from IRAs for Charitable PurposesPermanentNo
Deduction for State and Local Sales TaxesPermanentNo
Enhanced American Opportunity Tax CreditPermanentNo
$250 Above-the-line Deduction for Teacher Classroom ExpensesPermanentYes
Exclusion for Employer Provided Mass Transit and Parking BenefitsPermanentNo
Enhanced Refundable Child Tax CreditPermanentNo
Charitable Deduction for Contributions of Real Property for Conservation PurposesPermanentYes
Above-the-line Deduction for Tuition and FeesThrough 2016No
Exclusion of COD Income from Discharge of Qualified Personal Residence IndebtednessThrough 2016Yes
Deduction for Qualified Mortgage Insurance PremiumsThrough 2016No

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PostSubject: Re: Tis the Season ...to sneak in Tax Code   Fri Dec 25, 2015 4:23 pm

Jewish Orgs that qualify for "charitable deductions:

All 4 Israel

American Associates, Ben Gurion University of the Negev, Inc.

American Committee for Tel Aviv Foundation

American Friends of AACI

American Friends of Beit Hatfutsot

American Friends of Leket Israel

American Friends of Magen David Adom

American Friends of Migdal Ohr

American Friends of Nishmat

American Friends of The Israel Philharmonic Orchestra

American Jewish Joint Distribution Committee Inc.

American Society for the Protection of Nature Israel

AVODAH: The Jewish Service Corps

B'nai B'rith International

Blue Card, Inc.

Breast Cancer and Ovarian Cancer in Jewish Families

ELEM Youth in Distress

Foundation for Jewish Camp

Friends of Yemin Orde, Inc.

Hillel: The Foundation for Jewish Campus Life

International Sephardic Education Foundation

JBI International, Inc.

Jewish Charities of America

Jewish Community Centers Association of North America

Jewish Community Day School Network

Jewish Institute for National Security Affairs

Jewish National Fund (Keren Kayemeth LeIsrael), Inc.

Jewish Women International

Jews for Judaism

Maccabi USA/Sports for Israel

National Council of Jewish Women

New Israel Fund

North American Conference on Ethiopian Jewry

Pardes Institute of Jewish Studies North America

Society for Humanistic Judaism

T'ruah

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PostSubject: Re: Tis the Season ...to sneak in Tax Code   Thu Dec 31, 2015 12:51 pm

US NGOs sued over $280bn aid sent to Israel, deducted from taxes – report

Published time: 31 Dec, 2015 14:36Edited time: 31 Dec, 2015 14:52
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© Doron Keren / Reuters
178
A lawsuit has reportedly been filed against the US Treasury Department, alleging that some 150 NGOs sent as much as $280 billion worth of tax-deductible donations to Israel in the past 20 years.

According to a report by Al Jazeera, the donations were "pass-throughs" to support the Israeli army and settlements in the occupied Palestinian territories which had been ruled illegal by the UN. Susan Abulhawa, a prominent Palestinian-American writer and human rights activist, has reportedly put her name on the 73-page lawsuit.

The lawsuit reportedly claims that the grants sent over to Israel were filed as part of the US income tax regulations code 501(c)(3).
501(c)(3) stands for a nonprofit organization that has been recognized by the IRS (the US Internal Revenue Service) as being tax-exempt by virtue of its charitable programs. Twisted Evil


US billionaire Sheldon Adelson, 82, and several other pro-Israeli businessmen came to be named in the lawsuit as donors but not as defendants, Al Jazeera reported.

The Treasury Department has reportedly declined to comment on the suit, saying the judicial process is ongoing.
Israel is the “largest cumulative recipient of US foreign assistance since World War II,” according to the latest congressional report on aid to the country.
To date, the United States has provided Israel as much as $124.3 billion in bilateral assistance. Almost all US bilateral aid to Israel is said to be “in the form of military assistance.”
In 2007, the Bush administration and the Israeli government agreed to a $30 billion, 10-year military aid package for the period from fiscal year 2009 to fiscal year 2018.
Israel allegedly made a request for its annual defense aid from Washington to be raised to as much as $5 billion after its current package (worth about $3 billion a year) expires in 2017, congressional sources told Reuters last month. It means Tel Aviv could get a total of $50 billion in military aid over 10 years.
According to sources, Israel says it needs more money to counter threats that may allegedly arise as a result of the international agreement on Iran's nuclear program.
“It’s no secret the security environment in the Middle East has deteriorated in many areas and, as I’ve said repeatedly, the security of Israel is one of my top foreign policy priorities, and that has expressed itself not only in words but in deeds,” Barack Obama said during his meeting with Israeli Prime Minister Benjamin Netanyahu last month.
“I want to be very clear that we condemn in the strongest terms Palestinian violence against its and innocent Israeli citizens. And I want to repeat once again, it is my strong belief that Israel has not just the right, but the obligation to protect itself,” the US president added.
Benyamin Netanyahu thanked Obama for his “commitment to further bolstering Israel’s security.”
Israel has shouldered a tremendous defense burden over the years and we have done it with the generous assistance of the United States of America,” he noted.
Earlier this month United Nations experts called for an end to the harassment of human right defenders in the Occupied Palestinian Territory, calling the attacks - which include physical violence and death threats - “unacceptable.”
READ MORE: Arrests, assaults & death threats: UN experts slam treatment of human rights defenders in Palestine
“Amidst a charged and violent atmosphere over past months in the Occupied Palestinian Territory, Palestinian and international defenders are providing a ‘protective presence’ for Palestinians at risk of violence, and documenting human rights violations,” Michel Forst, the UN special rapporteur on the situation of human rights defenders, said.
In July 2014, in retaliation against Hamas rockets, Israel launched a military offensive in the Gaza Strip, dubbed “Operation Protective Edge.” It claimed the lives of some 2,251 Palestinians, mostly civilians, and 72 Israelis, according to the UN.

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