The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act)

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Thu, Jan 07, 2016
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big-tax[1].jpgPresident Signs Extenders And Omnibus Acts, Impacting Broad Range Of Provisions provides a summary of The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that was signed into law on December 18, 2015.  The legislation permanently extended provisions that previously had to rely on “extenders” to apply retroactively to the past year and also extended other provisions.  Here are some relevant highlights:

  • The personal income itemized tax deduction of state and local sales taxes was made permanent.
  • The ability to make qualified charitable distributions (QCDs) that provide for tax-free distributions from IRAs of up to $100,000 per year to qualified charitable organizations, was made permanent.

  • The IRC Section 179 depreciation deduction is permanently set at $500,000 with a $2 million limit.  Limits will now be indexed to inflation rather than being extended.

  • The reduced 5-year recognition period for S Corporation Built-In Gains Tax following a conversion from a C Corporation to an S Corporation was made permanent. 

  • The bonus depreciation that provides for additional first-year depreciation deductions have been extended until 2019.  The bonus deduction will permit the 50% expensing until 2017 and then phase down in 2018 and 2019.

  • Bonus Depreciation: Congress extended the immediate deductibility of a portion of asset acquisition until the end of 2019.  However, the bonus deduction will only permit the usual 50% expensing of asset acquisitions until the end of 2017.  After that, the deductible percentage will be 40% in 2018 and 30% in 2019.
Here is a summary sheet of the permanent provisions, five-year provisions, two-year provisions, excise taxes, program integrity, miscellaneous provisions, and tax administration: Overview of the Provisions in the "Protecting Americans from Tax Hikes Act of 2015".

Following a review of the tax extenders legislation, the IRS announced that the 2016 tax season will begin as scheduled on January 19, 2016.

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Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

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