President Trump signed the Bipartisan Budget Act of 2018 into law on February 9. The Act, which was passed to fund the federal government and avoid another shutdown, includes a number of changes to the Internal Revenue Code. Many of these changes retroactively extend--generally for one year--tax provisions which had expired at the end of 2016. Because this Act significantly impacts many 2017 returns, IRS announced on Friday that it was reviewing the legislation and would provide additional information as quickly as possible. Not in the Act was any change to the qualified cooperative dividend deduction implemented by the new tax law. Although earlier reports had suggested that a "fix" would be inserted into the budget bill, it now appears that lawmakers continue to work toward crafting an appropriate solution to the controversial problem. We will continue to keep you posted on that issue.
Below is a summary of key revenue provisions included in the Act. We will continue to watch for IRS guidance on these provisions.
IRC § 108(a)(1)(E)(ii) provided that a discharge of qualified principal residence indebtedness was excluded from income if it was discharged subject to an arrangement that was entered into and evidenced in writing before January 1, 2017. The Act extends this provision to apply to arrangements entered into and evidenced in writing before January 1, 2018.
IRC § 163(h)(3)(E) generally provided that premiums paid or accrued (through December 31, 2016) for qualified mortgage insurance by a taxpayer in connection with acquisition indebtedness for a qualified residence shall be treated as qualified residence interest. The Act extends this provision to apply to premiums paid or accrued through December 31, 2017.
IRC § 222 provided an above-the-line deduction for qualified tuition and related expenses incurred through December 31, 2016. The Act extends this provision to apply to expenses incurred through December 31, 2017.
The Act extends the IRC § 25C credit for nonbusiness energy property to apply to property placed in service by December 31, 2017.
The Act extends the IRC § 25D credit for residential energy property for qualified fuel cell property, small wind energy property, and geothermal heat pump property placed in service through December 31, 2021. The law already provided that the credit for qualified solar electric property and solar water heating property applied to property placed in service through December 31, 2021. The Act does not change these dates.
The Act extends the IRC § 30B credit for new qualified fuel cell motor vehicles to apply to those vehicles purchased through December 31, 2017.
The Act extends the IRC § 30C credit for alternative fuel vehicle refueling property to apply to property placed into service through December 31, 2017.
The Act extends the IRC § 30D credit for 2-wheeled plug-in electric vehicles to apply to vehicles acquired before January 1, 2018.
The Act extends the IRC §40 second generation biofuel producer credit to apply before January 1, 2018.
The Act generally extends IRC § 40A biodiesel and renewable diesel incentives through the 2017 tax year. It also provides that a special rule will apply for 2017 with respect to the biodiesel mixture credit properly determined under IRC § 6426(c) for 2017. The Act states that IRS will issue guidance within 30 days providing for a one-time submission of claims. The guidance will provide for a 180-day period for the submission, beginning once the guidance is issued.
The Act extends the IRC § 45(e)(10)(A) credit for Indian coal facilities to apply for an additional year (through 2017).
The Act extends, through 2017, IRC § 45(d) credits with respect to the following:
These facilities will be considered energy property under IRC § 48(a)(5)(C)(ii) through 2017.
The Act extends the IRC § 45L credit for energy-efficient new homes to apply to homes acquired through 2017.
The Act extends the IRC § 48 energy credit for fiber-optic solar, qualified fuel cell, small wind energy property, qualified micro-turbine, and combined heat and power system property through 2021. This credit is subject to a phase-out.
The Act extends the special depreciation allowance provided by IRC § 168(l) for qualified second generation biofuel plact property to include that property placed in service by December 31, 2017.
The Act extends the deduction provided by IRC § 179D for energy efficient commercial buildings to apply to property placed in service through December 31, 2017.
The Act extends the IRC § 451(k)(3) special rule to apply through 2017.
The Act extends alternative fuels excise tax credits available under IRC § 6426(d)(5) and IRC § 6426(e)(3) through 2017. The Act also extends the IRC § 6427(e) outlay payments for an additional year. The Act directs that IRS will issue guidance within 30 days providing for a one-time submission of claims. The guidance will provide for a 180-day period for the submission, beginning once the guidance is issued.
The Act provides that the Oil Spill Liability Trust Fund financing rate shall not apply after December 31, 2018. Prior to this amendment, it was scheduled to end December 31, 2017.
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