December 2014

Tax Increase Prevention Act of 2014 Revives Tax Breaks, But Only for 2014.

The year has concluded with much debate and discussion regarding the future of several tax breaks upon which small businesses have come to depend. After several permanent provisions were floated and rejected, the Tax Increase Prevention Act of 2014 (H.R. 5771) was finally signed into law on December 19, 2014. For the most part, this highly anticipated legislation merely extends the expiration of numerous 2013 provisions through the end of 2014, and is hardly the certainty for which taxpayers were hoping.  Nonetheless, H.R. 5771 did revive several important provisions for the upcoming tax filing season. This article highlights several provisions of particular interest to farm producers.

Among a number of key tax breaks that expired at the end of 2013 was the enhanced I.R.C. §179 deduction, which in 2013 allowed farmers and small businesses to currently deduct up to $500,000 of the tax basis of certain business property or equipment during the year in which the property was placed in service. For 2014, the amount of the §179 deduction decreased to $25,000 with the investment ceiling set at $200,000. H.R. 5771 retroactively restored the enhanced I.R.C. §179 to the beginning of 2014, but the law again expires at the end of 2014. In other words, the deduction was restored a mere 12 days before it again expires. As was the case in 2013, the overall investment limit for I.R.C. §179 eligibility is $2 million. This means that the available deduction is decreased dollar-for-dollar for each investment dollar in qualified property exceeding $2 million.

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TaxPlace: The New Repair Regulations and Form 3115

In 2006, the IRS announced that it was undertaking a “repair regulation project.”  As a result of that project, the IRS issued proposed regulations in 2006 which it later withdrew in 2008.   IRS again issued proposed regulations in 2011 and then final regulations in September of 2013.  Since that time, additional guidance has been provided concerning accounting method changes.

The regulations are generally effective for tax years beginning on or after January 1, 2014, but a taxpayer can elect an early application of the regulations so that they apply beginning on or after January 1, 2012. Taxpayers must now comply with the final regulations.  But, will compliance require an adaptation of the taxpayer’s existing accounting policies to conform to the final regulations?  Will an IRS Form 3115 (or multiple Forms 3115) be required to be filed for the 2014 tax year?  What if no I.R.C. §481(a) adjustment is involved?  These are the big questions that exist at the present time.

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Registered Tax Preparers: Review Your CPE Requirements for 2015

In January, the IRS plans to launch a new Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on the IRS website to help taxpayers verify credentials and qualifications of tax professionals.

The Directory will be a searchable, sortable database with the name, city, state and zip code of credentialed return preparers as well as those who have completed the requirements for the new IRS Annual Filing Season Program (AFSP) which includes having a valid 2015 Preparer Tax Identification Number (PTIN).

This new program aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Meet the requirements by obtaining 18 hours of continuing education, including a six hour federal tax law refresher course with test, and you will receive an Annual Filing Season Program – Record of Completion from the IRS.

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