Pub. 14 2015-2016 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 25 new jersey auto retailer W W W . N J C A R . O R G 5. Teachers’ Classroom Expense Deduction of $250 to be indexed for inf lation; 6. Charitable distributions for IRAs allowing individuals age 70 ½ and older to make charitable donations with tax-free IRA distributions up to $100,000. Extenders for Business. The PATH Act makes many business tax incentives permanent, while extending the applicable time period for others: 1. Section 179 Expensing- permanently set at a maximum of $500,000 with a $2 million overall investment limit, both amounts indexed for inf lation beginning in 2016; 2. 100% Gain Exclusion on the sale of Qualified Small Busi- ness Stock held for more than five years by shareholders is made permanent; 3. Reduced Recognition Period of five years for S Corporation Built-in Gains Tax is made permanent. A corporate-level tax, at the highest marginal rate applicable to corporations (35%), is imposed on an S corporation’s recognized built- in gain following conversion from a C to an S corporation on the gain that arose prior to the conversion from the C corporation to an S corporation; 4. 15-year cost recovery for qualified leasehold improve- ments, restaurant property, and retail improvements made permanent; 5. Bonus Depreciation is extended through 2019 as follows: 50% for 2015-2017, 40% in 2018, and 30% in 2019; 6. Work Opportunity Tax Credit for employers that hire long- term unemployed workers is extended through 2019. Affordable Care Act Modifiers “Cadillac” plans. The PATH Act delays for two years (until tax years beginning after December 31, 2019) the ACA excise tax on high-dollar health care plans, known as “Cadillac” plans and also provides that payments of the tax will be tax-deductible. Health Insurance Provider Fee. The 2016 Omnibus bill im- poses a moratorium for one year, until 2017, on the ACA’s health insurance provider fee. Rochelle Kimmins, CPA, CFP is Tax Director at WithumSmith+Brown, PC in Edison, New Jersey (formerly The Mironov Group). She can be reached at 732.379.5200 or rkimmins@withum.com. A corporate-level tax, at the highest marginal rate applicable to corporations (35%), is imposed on an S corporation’s recognized built-in gain following conversion from a C to an S corporation on the gain that arose prior to the conversion from the C corporation to an S corporation.