Fiscal Cliff
Exclusion Of Cancellation Of Indebtedness On Principal Residence- Cancellation of indebtedness income is includible in income, unless a particular
exclusion applies. This provision excludes from income cancellation of mortgage
debt on a principal residence of up $2 million. The American Taxpayer Relief
Act extends the provision for one year, through 2013.
Mortgage Insurance Premiums-This provision treats mortgage insurance
premiums as deductible interest that is qualified residence interest. The
American Taxpayer Relief Act extends this provision through December 31,
2013. The provision originally expired after 2011. This provision provides an
additional itemized deduction by treating mortgage insurance premiums as
deductible qualified residence interest.
Business Tax Provisions
There are some popular but temporary tax extenders relating to businesses
included in the American Taxpayer Relief Act. Among them are Code Sec. 179
small business expensing and bonus depreciation.
Code Sec. 179 Small Business Expensing- The Act extends through 2013
enhanced Code Sec. 179 small business expensing. The Code Sec. 179 dollar
limit for tax years 2012 and 2013 is $500,000 with a $2 million investment limit.
Without the American Taxpayer Relief Act, the Code Sec. 179 dollar dollar limit
for tax years beginning in 2012 would have been $125,000 (subject to inflation
adjustment) with a $500,000 investment limit (again, subject to inflation
adjustment).
Bonus Depreciation-
2013. Some transportation and longer period production property is eligible for
50 percent bonus depreciation through 2014.
Bonus depreciation has been used as an economic stimulus in many tax bills in
recent years. One Hundred percent bonus depreciation generally expired at the
end of 2011.
To be eligible for bonus depreciation, qualified property must be “Brand New” or
“First Use”
The information in this article is for general information purposes. This does not
constitute legal, accounting, tax or other professional advice or services and is
presented without any representation or warranty.
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