SMALL BUSINESS TAX COVERAGE

Current Business Taxes and Extensions• There were 58 Extensions to the tax code from 2013 to 2014• 7 Individual• 30 Business• 21 Energy

Not all of these Extensions or Taxes are covered herein, as some relate to very small numbers of businesses or individuals.

Extended 50 percent bonus depreciation to property acquired and placed in service during 2014 (2015 for certain property with a longer production period).

Allow taxpayers to elect to accelerate the use of AMT credits in lieu of bonus depreciation under special rules for property placed in service during 2014.

Bonus Depreciation Deduction

Extend the small business expensing limitation and phase-out amounts in effect from 2010 to 2013 ($500,000 and $2 million) to property placed in service during 2014. Without the extension these amounts were $25,000 and $200,000, respectively.

Extended the special rules that allow expensing for computer software, qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property through 2014.

Section 179 Expense

Part of a business owner’s personal residence if used regularly and exclusively as either the principal place of business or as a place to meet with patients, customers or clients.

Using an optional, safe-harbor method (effective for tax years beginning in 2013),taxpayers can deduct $5 per square foot of home office space (up to 300 square feet or 17 X 17).

Home Office Deduction

Extend the 15-year straight-line recovery period for qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property to property placed in service during 2014.

Cost recovery for qualified leaseholdimprovements, qualified restaurant buildings

Extended the temporary exclusion of 100 percent of the gain on certain small business stock for non-corporate taxpayers to stock acquired before January 1, 2015, and held for more than five years. This provision also extended the rule that eliminates such gain as an AMT preference item.

Temporary exclusion of 100 percent of gain on certain small stock

Changes in the Transportation Amounts

Item 2014 2015

Business Mileage, Per Mile (reimburse an employee for business use of a personal vehicle)

56 Cents 57.5 Cents

Charitable Mileage, Per Mile 14 Cents 14 Cents

Medical and Moving, Per Mile 23.5 Cents 23 Cents

Qualified Bicycle Commuting Per Month $20

Basis adjustment to stock of S corporations making charitable

contributions of property

Extend through 2014 the rule providing that a shareholder’s basis in the stock of an S corporation is reduced by the shareholder’s pro rata share of the adjusted basis of property contributed by the S corporation for charitable purposes.

Extension of research credit

Extended through 2014 the research and development (R&D) tax credit. The R&D credit generally allows taxpayers a 20 percent credit for qualified research expenses or a 14 percent alternative simplified credit.

Extension of new markets tax credit

The credit encourages taxpayers to make loans to, or invest in, businesses in low-income communities. $3.5 billion was the authorized allocation for the new markets tax credits for 2014.

Extension of qualified zone academy bonds

The provision authorized the issuance of $400 million of qualified zone academy bonds during 2014. The bond proceeds are used for school renovations, equipment, teacher training, and course materials at a qualified zone academy, provided that private entities have promised to donate certain property and services to the academy with a value equal to at least 10 percent of the bond proceeds.

Deduction for certain expenses of elementary and secondary school teachers

Extend through 2014 the above-the-line deduction for the eligible expenses of elementary and secondary school teachers. The deduction is capped at $250 and covers expenses that otherwise would have to be itemized.

Small businesses can qualify for a credit basedon health insurance premiums paid if they:◦ Have fewer than 25 FTE employees◦ Pay an average annual wage of less than $50,000◦ Contribute 50% or more to employee health insurance

premiums ◦ You offer coverage to your full-time employees through

the SHOP Marketplace◦ The tax credit is worth up to 50% of your contribution

toward your employees' premium costs (up to 35% for tax-exempt employers).

Small Business Health Care Tax Credit

Extended for 2014: For the sales of assets occurring during 2014, the rule reducing to five years (rather than ten years) the period for which an S corporation must hold its assets following conversion from a C corporation to avoid the tax on built-in gains.

Reduction in S-corporation recognition period for built-in gains

Applies to individuals with modified AGI above certain thresholds: ◦ $250,000 for married couples filing jointly◦ $200,000 for single taxpayers

Includes capital gains, interest and dividend income from investment assets

May also apply to rental and royalty income Estate and Trust Threshold Amounts are

$12,150 fir 2014 and $12,300 for 2015

New 3.8% Surtax on Net Investment Income

Extended through 2015 the above-the-line deduction for energy efficiency improvements to lighting, heating, cooling, ventilation, and hot water systems of commercial buildings.

Energy efficient commercial buildings deduction

Extended through 2015: The ability of multiemployer pension (ME) plans to take an additional five years to amortize funding shortfalls. The proposal was enacted in the Pension Protection Act of 2006 (PPA), but expired at the end of 2014. ME plans generally have 15 years to amortize shortfalls and can seek Treasury approval for an additional ten years. A plan receiving such Treasury approval may not combine the two extensions.

Automatic extension of amortization periods for Multi Employer Pension Plans