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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