Bipartisan Budget Act of 2018 Revives Many Expired Tax Breaks Retroactively
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.
Tax Relief for Families and Individuals
Sec. 40201. Extension of exclusion from gross income of discharge of qualified principal residence indebtedness.
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.
Sec. 40202. Extension of mortgage insurance premiums treated as qualified residence interest.
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.
Sec. 40203. Extension of above-the-line deduction for qualified tuition and related expenses.
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.
Incentives for Energy Production and Conservation
Sec. 40401. Extension of credit for nonbusiness energy property.
The Act extends the IRC § 25C credit for nonbusiness energy property to apply to property placed in service by December 31, 2017.
Sec. 40402. Extension and modification of credit for residential energy property.
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.
Sec. 40403. Extension of credit for new qualified fuel cell motor vehicles.
The Act extends the IRC § 30B credit for new qualified fuel cell motor vehicles to apply to those vehicles purchased through December 31, 2017.
Sec. 40404. Extension of credit for alternative fuel vehicle refueling property.
The Act extends the IRC § 30C credit for alternative fuel vehicle refueling property to apply to property placed into service through December 31, 2017.
Sec. 40405. Extension of credit for 2-wheeled plug-in electric vehicles.
The Act extends the IRC § 30D credit for 2-wheeled plug-in electric vehicles to apply to vehicles acquired before January 1, 2018.
Sec. 40406. Extension of second generation biofuel producer credit.
The Act extends the IRC §40 second generation biofuel producer credit to apply before January 1, 2018.
Sec. 40407. Extension of biodiesel and renewable diesel incentives.
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.
Sec. 40408. Extension of production credit for Indian coal facilities.
The Act extends the IRC § 45(e)(10)(A) credit for Indian coal facilities to apply for an additional year (through 2017).
Sec. 40409. Extension of credits with respect to facilities producing energy from certain renewable resources.
The Act extends, through 2017, IRC § 45(d) credits with respect to the following:
- Closed-loop biomass facility
- Open-loop biomass facility
- Geothermal energy facilities
- Landfill gas facilities
- Trash facilities
- Marine and hydrokinetic renewable energy facilities
These facilities will be considered energy property under IRC § 48(a)(5)(C)(ii) through 2017.
Sec. 40410. Extension of credit for energy-efficient new homes.
The Act extends the IRC § 45L credit for energy-efficient new homes to apply to homes acquired through 2017.
Sec. 40411. Extension and phase-out of energy credit.
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.
Sec. 40412. Extension of special allowance for second generation biofuel plant property.
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.
Sec. 40413. Extension of energy efficient commercial buildings deduction.
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.
Sec. 40414. Extension of special rule for sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy for qualified electric utilities.
The Act extends the IRC § 451(k)(3) special rule to apply through 2017.
Sec. 40415. Extension of excise tax credits relating to alternative fuels.
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.
Sec. 40416. Extension of Oil Spill Liability Trust Fund financing rate.
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.
Incentives for Growth, Jobs, Investment, and Innovation
- Sec. 40301. Extension of Indian employment tax credit.
- Sec. 40302. Extension of railroad track maintenance credit.
- Sec. 40303. Extension of mine rescue team training credit.
- Sec. 40304. Extension of classification of certain race horses as 3-year property.
- Sec. 40305. Extension of 7-year recovery period for motorsports entertainment complexes.
- Sec. 40306. Extension of accelerated depreciation for business property on an Indian reservation.
- Sec. 40307. Extension of election to expense mine safety equipment.
- Sec. 40308. Extension of special expensing rules for certain productions.
- Sec. 40309. Extension of deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
- Sec. 40310. Extension of special rule relating to qualified timber gain.
- Sec. 40311. Extension of empowerment zone tax incentives.
- Sec. 40312. Extension of American Samoa economic development credit.
Miscellaneous Internal Revenue Code Provisions
- Sec. 41102. Modifications to rum cover over.
- Sec. 41103. Extension of waiver of limitations with respect to excluding from gross income amounts received by wrongfully incarcerated individuals.
- Sec. 41104. Individuals held harmless on improper levy on retirement plans.
- Sec. 41105. Modification of user fee requirements for installment agreements.
- Sec. 41106. Form 1040SR for seniors.
- Sec. 41107. Attorneys fees relating to awards to whistleblowers.
- Sec. 41108. Clarification of whistleblower awards.
- Sec. 41109. Clarification regarding excise tax based on investment income of private colleges and universities.
- Sec. 41110. Exception from private foundation excess business holding tax for independently-operated philanthropic business holdings.
- Sec. 41111. Rule of construction for Craft Beverage Modernization and Tax Reform.
- Sec. 41112. Simplification of rules regarding records, statements, and returns.
- Sec. 41113. Modification of rules governing hardship distributions.
- Sec. 41114. Modification of rules relating to hardship withdrawals from cash or deferred arrangements.
- Sec. 41115. Opportunity Zones rule for Puerto Rico.
- Sec. 41116. Tax home of certain citizens or residents of the United States living abroad.
- Sec. 41117. Treatment of foreign persons for returns relating to payments made in settlement of payment card and third party network transactions.
- Sec. 41118. Repeal of shift in time of payment of corporate estimated taxes.
- Sec. 41119. Enhancement of carbon dioxide sequestration credit.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.