On Friday, February 9, Congress passed, and the President signed into law, H.R. 1892, the “Bipartisan Budget Act of 2018” (the Budget Act, P.L. 115-123). The major reason for the passage of this budget act was to provide a continuing resolution to fund the federal government through March 23; however, this two-year budget contains a host of tax law changes. The Budget Act retroactively extends through 2017 over 30 so-called “extender” provisions, provides a number of miscellaneous tax-related provisions, and includes tax relief to victims of the California wildfires and Hurricanes Harvey, Irma, and Maria.
Below we list out many of these tax related extender provisions that may affect your 2017 returns.
Individual Extender Provisions
The Budget Act extended the following individual provisions for one year:
- . . . 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)
- . . . The Deduction for qualified tuition and related expenses under Code Sec. 222(e) .
Business Extender Provisions
The Budget Act extended the following business provisions for one year (except as noted below) :
- . . . 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)
- . . . 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)
- . . . 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)
- . . . The alternative 23.8% maximum tax rate for qualified timber gains of C corporations under Code Sec. 1201(b) )
- . . . Empowerment zone tax incentives under Code Sec. 1391 , Code Sec. 1394 , and Code Sec. 1397B
- . . . American Samoa economic development credit
- . . . Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands, extended for five years.
Energy Extender Provisions
The Budget Act extended the following energy provisions for one year (except as noted below):
- . . . Credit for certain nonbusiness energy property under Code Sec. 25C(g)
- . . . Credit for residential energy property (as modified) 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 fuel and renewable diesel used to produce a qualified mixture under Code Sec. 40A
- . . . Credit for production of Indian coal under Code Sec. 45(e)(10)(A)
- . . . Beginning-of-construction date for non-wind 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 construction of new energy efficient homes under Code Sec. 45L(g)
- . . . Five year extension and phase-out of energy investment credits under Code Sec. 48
- . . . Special depreciation allowance for second generation biofuel plant property under Code Sec. 168(l)
- . . . Energy efficient commercial buildings deduction under Code Sec. 179D(h)
- . . . Extension of special rule for sales or dispositions to implement Federal Energy Regulatory Commission (“FERC”) or State electric restructuring policy for qualified electric utilities under Code Sec. 451(k)
- . . . Extension of excise tax credits and outlay payments for alternative fuel, and excise tax credits for alternative fuel mixture under Code Sec. 6426(d)(5) and Code Sec. 6427(e)(6)(C)
- . . . Extension of Oil Spill Liability Trust Fund financing rate under Code Sec. 4611
If you have questions about this act and how it applies to you, please don’t hesitate to contact your local Blue & Co. tax advisor.