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JCT updates list of expiring provisions to reflect year-end extenders legislation

Joint Committee on Taxation,List of Expiring Federal Tax Provisions 2016-2025(JCX-1-16), January 8, 2016.

The Protecting Americans from Tax Hikes (PATH) Act and Consolidated Appropriations Act, 2016, went well beyond what many expected would be another short-term, blanket extension of the temporary “extender” tax provisions that had been expired for most of a year. Some provisions were retroactively extended for two years, others for longer, some were modified, some are now subject to a gradual phaseout, and some were made permanent. This article, based on the Joint Committee on Taxation’s periodically updated list of expiring provisions, provides a status update for those provisions that still carry expiration dates.

Extenders in effect through Dec. 31, 2016.The following provisions are in effect through Dec. 31, 2016.

Individual provisions.

…Exclusion for discharge of indebtedness on a principal residence under Code Sec. 108(a)(1)(E).
…Treatment of mortgage insurance premiums as deductible qualified residence interest under Code Sec. 163(h)(3).
…Medical expense deduction: adjusted gross income (AGI) floor for individuals age 65 and older (and their spouses) remains at 7.5% under Code Sec. 213(f).
…Deduction for qualified tuition and related expenses under Code Sec. 222(e).

Business provisions.

…Indian employment tax credit under Code Sec. 45A(f).
…Railroad track maintenance credit under Code Sec. 45G(f).
…Mine rescue team training credit under Code Sec. 45N.
…3-year depreciation for race horses two years old or younger under Code Sec. 168(e)(3)(A).
…5-year cost recovery for certain energy property under Code Sec. 168(e)(3)(B)(vi)(I) and Code Sec. 48(a)(3)(A).
…7-year recovery period for motorsports entertainment complexes under Code Sec. 168(i)(15) and Code Sec. 168(e)(3)(C)(ii).
…Accelerated depreciation for business property on an Indian reservation under Code Sec. 168(j)(8).
…Election to expense advanced mine safety equipment under Code Sec. 179E(g).
…Special expensing rules for certain film, television, and live theatrical productions under Code Sec. 181.
…Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico under Code Sec. 199(d)(8).

Energy-related provisions.

…Credit for certain nonbusiness energy property under Code Sec. 25C(g).
…Credit for residential energy property under Code Sec. 26D(g).
…Qualified fuel cell motor vehicle credit under Code Sec. 30B(k)(1).
…Alternative fuel vehicle refueling property credit under Code Sec. 30C(g).
…Credit for 2-wheeled plug-in electric vehicles under Code Sec. 30D(g)(3)(E)(ii).
…Second generation biofuel producer credit under Code Sec. 40(b)(6)(J).
…Income tax credits for biodiesel fuel, biodiesel used to produce a qualified mixture, small agri-biodiesel producers, renewable diesel fuelrenewable diesel used to produce a qualified mixture under Code Sec. 40A.
…Beginning-of-construction date for nonwind renewable power facilities eligible to claim the electricity production credit or investment credit in lieu of the production credit under Code Sec. 45(d) and Code Sec. 48(a)(5).
…Credit for production of Indian coal under Code Sec. 45(e)(10)(A).
…Credit for construction of new energy efficient homes under Code Sec. 45L(g).
…Credit for hybrid solar lighting system property under Code Sec. 48(a)(3)(A)(ii).
…Credit for geothermal heat pump property, small wind property, and combined heat and power property under Code Sec. 48(a)(3)(A)(vii), Code Sec. 48(c)(4), and Code Sec. 48(c)(3)(A)(iv).
…Credit for qualified fuel cell and stationary microturbine power plant property under Code Sec. 48(c)(1)(D) and Code Sec. 48(c)(2)(D).
…Special depreciation allowance for second generation biofuel plan property under Code Sec. 168(l).
…Energy efficient commercial buildings deduction under Code Sec. 179D(h).
…Excise tax credits and outlay payments for biodiesel fuel mixtures and renewable diesel fuel mixtures under Code Sec. 6426(c)(6) and Code Sec. 6427(e)(6)(B).
…Excise tax credits and outlay payments for alternative fuel under Code Sec. 6426(d)(5) and Code Sec. 6427(e)(6)(C).
…Excise tax credits for alternative fuel mixtures under Code Sec. 6426(e)(3).

Community assistance provisions.

…Qualified zone academy bonds; allocation of bond limitation under Code Sec. 54E(c)(1).
…Empowerment zone tax incentives under Code Sec. 1391, Code Sec. 1394, and Code Sec. 1397B.
…American Samoa economic development credit.

Expiring after 2016.The following provisions are in effect through the dates reflected below.

Expiring Sept. 30, 2019.The following provisions are in effect through Sept. 30, 2019:

…Specified health insurance policy fee under Code Sec. 4375(e).
…Self-insured health plan fee under Code Sec. 4376(e).

Expiring Dec. 31, 2019.The following provisions are in effect through Dec. 31, 2019, except where otherwise noted:

…Credit for health insurance costs of eligible individuals under Code Sec. 35(b).
…New markets tax credit under Code Sec. 45D(f).
…Work opportunity tax credit under Code Sec. 51(c)(4).
…Additional first-year depreciation with respect to qualified property under Code Sec. 168(k)(1) and Code Sec. 460(c)(6)(B), subject to a phaseout (Dec. 31, 2020 for certain longer-lived and transportation property).
…Election to accelerate AMT credits in lieu of additional first-year depreciation under Code Sec. 168(k)(4) (Dec. 31, 2020 for certain longer-lived and transportation property).
…Election of additional depreciation for certain plants bearing fruits and nuts under Code Sec. 168(k)(5), subject to a phaseout.
…Beginning-of-construction date for wind renewable power facilities eligible to claim the electricity production credit under Code Sec. 45(d) or investment credit in lieu of the production credit under Code Sec. 48(a)(5), subject to a phaseout (Dec. 31, 2021 for individual residential solar credit and business solar investment credit, and Dec. 31, 2016 for other renewable power and alternative energy credits).
…Look-through treatment of payments between controlled foreign corporations under Code Sec. 954(c)(6).

Expiring Dec. 31, 2021.The following provisions are in effect through Dec. 31, 2021:

…Credit for individuals for residential solar property under Code Sec. 25D(g), subject to a phaseout (Dec. 31, 2016 for other residential energy property).
…Beginning-of-construction date for increased credit for business solar energy property under Code Sec. 48(a)(2)(A)(i)(II).
…Special way of accounting for transportation costs of independent refiners under Code Sec. 199(c)(3)(C).

Former “extender” provisions now permanent.The PATH Act also made a number of provisions permanent (some with modifications), providing greater certainty to taxpayers and tax practitioners alike. These include:

Individual provisions.

…Enhanced child tax credit under Code Sec. 24(d).
…Enhanced American Opportunity Tax Credit under Code Sec. 25A.
…Enhanced earned income tax credit under Code Sec. 32(b).
…Above-the-line deduction for educator expenses under Code Sec. 62(a)(2)(D).
…Parity between employer-provided mass transit and parking benefits under Code Sec. 132(f).
…Option to claim an itemized deduction for State and local general sales taxes in lieu of State and local income taxes under Code Sec. 164(b)(5).
…Special rules to encourage contributions of capital gain real property for conservation purposes under Code Sec. 170(b)(1)(E) and Code Sec. 170(b)(2)(B).
…Tax-free distributions (up to $100,000 annually for taxpayers 70-1/2 and older) from individual retirement plans for charitable purposes under Code Sec. 408(d)(8).

Business provisions.

…Research credit under Code Sec. 41(h).
…Exemption from gross basis tax and withholding tax for interest-related dividends and short-term capital gains dividends received from a regulated investment company (RIC) under Code Sec. 871(k).
…Treatment of a RIC as a qualified investment entity under Code Sec. 897(h)(4).
…Reduced (5-year) S corporation recognition period for built-in gains tax under Code Sec. 1374(d)(7).
…Exclusion of 100% of gain on certain small business stock under Code Sec. 1202(a)(4).
…Lower shareholder basis adjustment for charitable contributions by S corporations under Code Sec. 1367(a)(2).
…Special rule for payments by a charity to a controlling entity under Code Sec. 512(b)(13)(E)(iv).
…Liberalized rules for corporate qualified conservation contributions under Code Sec. 170(b)(1)(E).
…Enhanced deduction for food inventory under Code Sec. 170(e)(3)(C)(iv).
…Subpart F exception for active financing income under Code Sec. 953(e)(10) and Code Sec. 954(h)(9).
…Differential wage payment credit for eligible employers under Code Sec. 45P(f).
…Low-income housing 9% credit rate freeze under Code Sec. 42(b)(2)(A).
…Exclusion from gross income of a military member’s basic housing allowance for purposes of determining qualification as a “low-income tenant” for purposes of the low-income housing tax credit.
RIA observation:The two prior deals on extenders (the Tax Increase Prevention Act of 2014 and the 2012 Taxpayer Relief Act) both provided short-term extensions of the expired provisions in a “package” format—i.e., all of the provisions were extended together as a group. These extensions were both rationalized in part as providing time for Congress to engage in substantive debate on the merits of each provision and determine its fate individually, rather than just dealing with them on an all-or-nothing basis. The legislation passed in 2015 reflected the judgment of lawmakers that certain provisions warrant permanency. However, none of the provisions were allowed to remain expired. Whether certain provisions are on their last breath remains to be seen.


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