Late last year, Congress finally passed various tax law extensions. That did not give much time for individuals and business owners to react. By waiting until the last few days of the year, it did show Congress does not understand the importance of having tax laws that are consistent and easily understood.
Here are a few of the items for individuals that expired Dec. 31, 2014, that should be extended now for 2015 and later years:
Deduction for state and local sales taxes as an itemized deduction
$250 above-the-line deduction for certain expenses of teachers
Above-the-line deduction for qualified tuition and related expenses
Deduction for mortgage insurance premiums as qualified interest expense
Exclusion from taxable income of up to $2,000,000 of discharged principal residence indebtedness (regarding cancellation of debt as income or not)
There are many business items that expired Dec. 31, 2014 that will probably be extended:
Research and experimentation tax credit
Work opportunity tax credit
Section 179 depreciation election to claim cost of equipment all in the year bought and placed in service (instead of claiming the cost over several years)
Employer wage tax credit for activated military reservists
Special expensing rules for film and television production
Special 100 percent gain exclusion for qualified small business stock
15-year straight-line cost recovery for qualified leasehold property, qualified restaurant property, and qualified retail improvements
Reduced recognition period for built-in gains of S corporations
Others that relate to Indian and other special groups
Some charitable items that should be and probably will be extended:
Tax-free distributions for charitable purposes from individual retirement accounts (IRAs) of taxpayers age 70 1/2 or older
Special rules for contributions of capital gain real property for conservation purposes
Tax provisions that try to help solve our energy problem that could be extended include:
Credit for construction of energy efficient new homes
Credit for nonbusiness energy property
Incentives for biodiesel and renewable diesel fuel
Energy-efficient commercial building deduction
Congress tries to influence behavior and actions by special tax benefits. It does not seem to work, but they continue to make the tax laws too complex. What a shame!
The goal should be to give taxpayers greater certainty of what the tax rules and laws are. Maybe Congress will work a few more days each week in the future and take care of the regular business items, including an annual budget?
Did you hear? “If a nation expects to be ignorant and free ... it expects what never was and never will be,” Thomas Jefferson.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.
