American Taxpayer Relief Act Has Extenders

 

Fiscal Cliff

American Taxpayer Relief Act Has Extenders

 

This article highlights some interesting parts of the recent legislation. We hope the commentary below

 

is helpful and easy-to-understand.

 

Individual Tax Provisions

 

Exclusion Of Cancellation Of Indebtedness On Principal Residence- Cancellation of indebtedness income

 

is includible in income, unless a particular exclusion applies. This provision excludes from income

 

cancellation of mortgage debt on a principal  residence of up $2 million. The American Taxpayer Relief

 

Act extends the provision for one year, through 2013.

 

 

 

Mortgage Insurance Premiums-This provision treats mortgage insurance premiums as deductible

 

interest that is qualified residence interest. The American Taxpayer Relief Act extends this provision

 

through December 31, 2013. The provision originally expired after 2011.  This provision provides an

 

additional itemized deduction by treating mortgage insurance premiums as deductible qualified

 

residence interest.

 

 

 

Business Tax Provisions

 

There are some popular but temporary tax extenders relating to businesses included in the American

 

Taxpayer Relief Act. Among them are Code Sec. 179 small business expensing and bonus depreciation.

 

 

 

Code Sec. 179 Small Business Expensing- The Act extends through 2013 enhanced Code Sec. 179  small

 

business expensing. The Code Sec. 179 dollar limit for tax years 2012 and 2013 is $500,000 with a $2

 

million investment limit. Without the American Taxpayer Relief Act, the Code Sec. 179 dollar

 

dollar limit for tax years beginning in 2012 would have been $125,000 (subject to  inflation adjustment)

 

with a $500,000 investment limit (again, subject to inflation adjustment).

 

 

 

Bonus Depreciation- The Act extends 50 percent bonus depreciation through  2013.  Some

 

transportation and longer period production property is eligible for 50 percent bonus depreciation

 

through 2014.

 

Bonus depreciation has been used as an economic stimulus in many tax bills in recent years. One

 

Hundred percent bonus depreciation generally expired at the end of 2011.

 

To be eligible for bonus depreciation, qualified property must be “Brand New” or “First Use”

 

 

 

The information in this article is for general information purposes. This does not constitute legal, accounting, tax or other professional advice or services and is presented without any representation or warranty.

 

Please contact us. We offer affordable tax accounting services.

 

CPA Deerfield Beach

 

 

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