New tax legislation: HR 5771's TIPA and ABLE

On December 16th, President Obama signed into law The Consolidated and Further Continuing Appropriations Act, 2015 (HR 83). Among other things, this law extends the Internet Tax Freedom Act, which prohibits taxing access to the Internet, through October 1st, and eliminates the need for expatriates to maintain healthcare coverage under the Affordable Care Act. Subsequently, on December 19th, the President signed HR 5771, which contains the Tax Increase Prevention Act of 2014 (TIPA) and the Achieving a Better Life Experience Act of 2014 (ABLE). For individuals, TIPA retroactively extends several tax-savings provisions through 2014, including those concerning: * Charity distributions from IRA's, allowing tax-free distributions to charity from an IRA of up to $100,000 per taxpayer per tax year, by taxpayers age 70.5 or older. * "Above the line" deductions for qualified tuition and related expenses, allowing taxpayers to reduce their taxable income and overall tax burden, whether they itemize deductions or not. On the business side, TIPA's highlights include retroactively extending through 2014: * The 50% bonus depreciation provision, allowing businesses to write off and deduct capital investments more quickly. * The Research and Development Tax Credit, allowing companies deductions related to their 2014 R&D expenditures. * The Section 179 Deduction, allowing a business owner to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year the business places the property in service. ABLE authorizes the creation of accounts similar to section 529 College Savings Plan accounts to cover living expenses for certain disabled individuals. This opportunity fills a major gap, creating a tax-advantaged way for families with disabled individuals to save money and cover disability-related expenses. These are just a few of the tax opportunities for individuals and businesses under this legislation. For more info, please contact David Shuster at [email protected]. David Shuster is the director of tax controversy at Grassi & Co., Jericho, N.Y.