US Tax Law Changes Take Hold in 2016

By Adam N. Marinelli on February 18, 2016Posted in Tax & Estate Planning

With #tax season now in full swing, businesses of all shapes and sizes are in the process of ensuring their books are in order and consulting their tax accountants and attorneys to be certain their practices and policies are in line with the law. This year, they also have a number of new legal changes to take into account as far as their taxes are concerned.

A number of business tax changes are now in effect across the United States and its territories. Many of these changes were signed into law as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015, but others were outlined in other legislation of recent years or established by the Internal Revenue Service. Here’s a look at some of the big changes that have gone into effect this year:

• Section 179: Under Section 179, businesses may deduct up to $500,000 worth of equipment and software purchases. They may deduct the entire purchase price, even if the equipment has not yet been paid for in full. Although the maximum deduction was to be substantially reduced, the PATH Act made the $500,000 figure permanent.
• Building improvements: Again as a result of the PATH Act, there are some positive changes involving the ways in which building improvements can become eligible for bonus depreciation. For starters, it no longer matters whether the building in question is a leased space. Improvements that benefit common areas are now eligible as well, and upgrades in general no longer require a three-year waiting period after the property was placed in service.
• De minimis safe harbor election: The threshold for the de minimis safe harbor election has been increased from $500 to $2,500 per item or invoice. This applies to businesses without applicable financial statements.
• Other changes: A number of additional changes have been made that impact business taxes in perhaps surprising ways. For example, some small businesses will now be able to claim tax credits for research to offset the alternative minimum tax, payroll tax and regular taxes. In addition, a tax deduction for donations of wholesome food has been extended. There’s even a new policy that allows for deductions of expenses related to putting on smaller theatrical productions.

With these changes and many others going into effect in 2016, your company’s tax situation may be impacted in ways that can be very advantageous—or, if you aren’t aware of them, somewhat damaging. To learn more, consult a dedicated business and corporate law attorney today.

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