Fed Tax update.

AuthorJosephs, Stuart R.

This month's FedTax column (Page 23) discusses selected highlights of the tax provisions contained in the 2016 Consolidated Appropriations Act (the Act), enacted Dec. 18, 2015, as P.L. 114-113. Some additional provisions not included in the column are highlighted below.

Information Returns and Statements

Effective for returns required to be filed with the IRS, and payee statements required to be provided, after 2016, there is a new safe harbor from penalties for failure to file correct returns or provide correct payee statements--if the error does not exceed $100 or $25 for tax withholding errors.

Gain from Sale or Exchange of Qualified Small Business Stock Held More Than 5 Years

The Act retroactively and permanently extends under IRC Sec. 1202(a)(4), the 100 percent exclusion from regular taxable income and the exception from the alternative minimum tax (AMT).

15-Year Straight Line Depreciation

The Act makes permanent 15-year straight-line cost recovery for qualified:

* Leasehold improvement property,

* Restaurant property, and

* Retail improvement property.

Corporate Election to Accelerate AMT Credits in Lieu of Bonus Depreciation

The Act modifies and retroactively extends this election through 2016.

Shareholder's Basis Adjustment for S Corp's Charitable Contributions

The Act retroactively and permanently allows shareholders to reduce their basis in the corporation's stock by their pro rata share of the contributed property's adjusted basis.

Information Returns' Due Dates

Effective for 2016 and thereafter, forms W-2, W-3 and 1099-MISC reporting non-employee compensation must be submitted by Feb. 28 of the following year and are no longer eligible for the extended due date for e- filed returns.

Delayed Excise Taxes

The Act delays for two years the effective dates of the following taxes:

* The 40 percent "Cadillac" excise tax on high cost employer-sponsored health coverage, now to be effective for tax years...

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