Let’s face it Congress hasn’t agreed on anything for the last couple of years and this is an election year so I wouldn’t look for any decision to be made on the expiring tax provisions in 2012 until the 11th hour sometime in late December. Making it yet another difficult year for tax planning. I thought I would take some time this week to remind you which provisions have already expired for 2012 and then next week I’ll remind you what is going to expire unless changes are made.
Let’s look at the business provisions that have expired first.
- 15-year write-off for qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. Thus, for property placed in service after 2011, a 39-year write-off generally applies.
- 100% bonus first-year depreciation allowance for qualified property.
- Increased $500,000 expensing election under Code Sec. 179, with $2 million investment ceiling
- Credit for construction of new energy efficient homes
- Energy efficient appliance credit
Now let’s look at the individual provisions that have expired.
- Election to deduct State and local general sales taxes in lieu of a state and local income tax deduction
- Above-the-line deduction for qualified tuition and related expenses
- Treatment of mortgage insurance premiums as deductible qualified residence interest
- Refund ability of the adoption credit
- Exclusion of 100% of gain on certain small business stock. After 2011, exclusion applies for only 50% of gain
- Exclusion from income for employer-provided mass transit and parking benefits
- Tax-free distributions (up to $100,000 annually for taxpayers 70- 1/2 and older) from individual retirement plans for charitable purposes
- Special rules to encourage contributions of capital gain real property for conservation purposes
- Above-the-line deduction for up to $250 of certain expenses of elementary and secondary school teachers
Not to mention if there is no retroactive patch to the AMT rules more individuals will find themselves subject to AMT rules. The AMT exemption amount is currently at $45,000 for married filing joint, $33,750 for unmarried individuals and $22,500 for married filing separate individuals. Compare that to $74,450, $48,450 and $37,225 in 2011 and you can see that unless Congress passes a patch (a retroactive patch) like they have for the past several years many more individuals will find themselves subject to AMT.
Next week I’ll show you what 2013 will look like unless Congress makes some changes.