Congress Forges PATH in Tax Laws for Business, Individuals

Lewitt Hackman

Congress has avoided a government shutdown by agreeing to a new budget in its Consolidated Appropriations Act, and the adopted legislation [cynically named the Protecting Americans From Tax Hikes (PATH)], includes some significant tax changes. 

Some of these changes are “permanent” – which even though they’ll be subject to future legislation, at least end the government practice of allowing a provision to expire and then retroactively extend it in late December for the year about to end – but leave uncertainty for future years.

Among the provisions are:

A. Reinstating and making permanent the ability of a taxpayer who has reached age 70 ½ to make a charitable contribution of up to $100,000 from an IRA. These distributions to charity can be part of a Required Minimum Distribution (RMD). This provision has been around since 2006, but lately it has not applied to the current year until revived in late December.  

B. Making permanent the five-year period in which an S corporation is subject to a built-in gains tax (essentially a double tax) when an S corporation sells assets. Initially a 10-year period, and then a seven-year period, the extra tax won’t apply if five years from conversion to an S corporation has elapsed before the start of a year of sale.

C. Eliminating the tax when up to $2 million of mortgage indebtedness obtained to acquire the principal residence is cancelled. This temporary rule starting in 2007 is now in effect through the end of 2016.

There are many other tax provisions in the legislation, some of which will be the subject of a future blog.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Lewitt Hackman | Attorney Advertising

Written by:

Lewitt Hackman

Lewitt Hackman on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.