Omnibus Tax and Spending Bill Passed, Includes Important Business Deducations

The President signed Public Law No. 114-113, which is the Consolidated Appropriations Act of 2016.

The Bill passed in the House on a vote of 316-113 and in the Senate on a vote of 65-33.  It was then signed into law by the President.

The final law included a number of tax provisions that are important to ASA members:

  • Extension and modification of research credit
    • The research tax credit is made permanent (distributors may be able to use this when developing new ways to more efficiently engage in distribution, for example)
    • This can be used as a credit against AMT in the case of eligible small busiensses
  • Extension and modification of employer wage credit for employees who are active duty members of the uniformed services
    • The termination provision has been struck, which makes this provision permanent
    • The wage differential provision, which only applied to small businesses, will start to apply to all businesses in 2016
  • Extension and modification of increased expensing limitations under section 179
    • As expected, the $500,000 limit on expensing was made permanent
    • An inflation adjustment was added to increase the section 179 expensing limit in increments of $10,000 to keep up with inflation
  • Extension and modification of bonus depreciation
    • This was extended generally for 2015 only
    • An additional provision extends it for 2016-19 but only for certain software, water utility property and qualified improvement property
    • This bonus depreciation may also apply to certain transportation property (tangible personal property used in the trade or business of transporting persons or property) that has a recovery period of at least 10 years

As always, consult with your tax advisor to see how these provisions may affect your business.

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About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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