The Impact of the New Spending Bill

A spending bill currently working its way through Congress is expected to be signed by President Trump this week to avoid a government shutdown. The bill includes certain “tax extenders” as well as other tax provisions.

Some of the provisions (not a complete list) are below. Additional information will be provided after the bill is signed.

1. Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness through 2020
2. Mortgage insurance premiums as qualified residence interest through 2020
3. Reduction in Medical Expense deduction floor to 7.5% through 2020
4. Deduction for Qualified Tuition and Related Expenses through 2020
5. Classification of certain Race Horses as 3 year property for depreciation purposes through 2020
6. 7 year recovery period for Motorsports entertainment complexes through 2020
7. Expensing rules for certain film productions through 2020
8. Empowerment zones credits through 2020
9. Nonbusiness energy property credits through 2020
10. Work Opportunity tax credit extended through 2020
11. Excise tax on Foundations drops from 2% tax rate to 1.39% tax rate in 2020
12. Section 179D related to expensing of certain leasehold improvements if energy efficient extended through 2020
13. UBTI issue regarding fringe benefits repealed as of date of enactment of TCJA (December, 2017)
14. The ”Cadillac” tax (40% excise tax on certain health plans) would be blocked from becoming law.
15. The SECURE Act will pass, which makes retirement savings easier for employees and employers, including delaying ‘required minimum distributions’ to age 72, but also eliminates a wealth transfer technique, referred to as the “Stretch IRA”.
16. The “kiddie tax” will revert to pre TCJA rules (December, 2017).

NOT included was the “depreciation fix” regarding Qualified Leasehold Improvements, dropping the life from 39 years to 15 years.

Anchin is evaluating these provisions and how they affect our clients so that we can update existing tax strategies. For more information, or to discuss any specific matters related to this alert, contact your Anchin Relationship Partner or Richard H. Stieglitz, a Tax Partner at Anchin, at 212.840.3456 or [email protected].