Take Advantage of the 2015 PATH Act!
21 December 2015
On Friday, December 18, the U.S. Senate approved the “Protecting Americans from Tax Hikes (PATH) Act of 2015,” which was passed by the House of Representatives the previous day. President Obama is expected to sign the legislation.
The PATH Act extends (and in many cases, makes permanent) numerous “tax extenders” which had expired for the tax year ending December 31, 2015. Contact us to find out how to best take advantage of this historical legislation as it applies to your individual situation.
Two of the PATH Act’s highlights are:
1. IRS Code Section 179
Code Section 179 provides that a taxpayer (other than an estate, trust, or certain noncorporate lessors) may elect to deduct the cost of tangible personal property placed in service during the tax year as an expense, rather than depreciating the property (subject to certain limits and conditions). The amount deducted cannot represent a greater amount than the income of the trade or business for which the property was purchased, but any otherwise deducible amount in excess of the business income can be carried forward to subsequent tax years.
Prior to the PATH Act, for tax years beginning after 2014, the maximum expense limit under Code Section 179 had dropped from $500,000 (with a $2 million phaseout threshold) to $25,000 (with a $200,000 phaseout threshold). The PATH Act restores the $500,000 limit and $2 million phaseout retroactively and makes them permanent, with the amounts to be indexed for inflation beginning in 2016.
Code Section 179, as revised by the PATH Act, will treat air conditioning and heating units placed in service after 2015 as eligible for expensing.
Call us today to find out how these changes may reduce your income tax liability for 2015!
2. IRS Code Section 168(k)
Code Section 168 provides an additional depreciation deduction equal to 50% of the adjusted cost basis during the first year qualified property is placed in service.
Prior to the PATH Act, this “bonus” depreciation provision would not apply to property placed in service after December 31, 2015 (December 31, 2016, for certain longer-lived property). The PATH Act retroactively extends the 50% first-year “bonus” depreciation for two years, so that it applies to qualified property acquired and placed in service before January 1, 2017. For qualified property acquired and placed in service during 2018, the “bonus” depreciation will drop to 40%, and for qualified property during 2019 will decrease to 30%. Contact us to determine the best tax strategy for your business!
There are approximately 50 separate “tax extenders” impacted by the PATH Act!
How do they impact your personal tax situation? Call us and find out!
The above represents general advice. When it comes to tax planning, one size does not fit all. Rigby Financial Group provides highly individualized, specifically tailored tax plans for individuals and businesses. Please contact us for advice and assistance in creating a specialized plan that suits your unique situation.
The information presented here is not specific to any individual’s personal circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.