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Post Date:  12/17/2014
Last Updated:  12/17/2014

Summary
Cross References
- H.R. 5771

On December 16, 2014, the Senate passed the Tax Increase Prevention Act of 2014 by a vote of 76 to 16. The House had passed the legislation on December 3, 2014 by a vote of 378 to 46. The President is expected to sign the bill into law. The following information provides summaries of the tax provisions contained in the legislation.

Extension of Expiring Provisions
The law extends the following tax provisions that had expired on December 31, 2013. Page references are to TheTaxBook 1040 Edition/Deluxe Edition pages that were printed prior to the passage of this legislation.

State and local general sales taxes (page 4-9). A taxpayer can elect to deduct state and local income taxes or state and local general sales taxes as an itemized deduction, but not both. This election was set to expire for sales taxes paid after December 31, 2013. The new law extends this election for the 2014 tax year and expires for sales taxes paid after December 31, 2014. For state and local general sales tax tables, see TheTaxBook Updates Page at www.thetaxbook.com.

Tuition and fees deduction (page 12-5). A taxpayer can deduct as an above-the-line deduction certain qualified education expenses paid for eligible students. The deduction is claimed on Form 8917, Tuition and Fees Deduction, and Form 1040, line 34. This deduction was set to expire for tuition and fees paid after December 31, 2013. The new law extends this deduction for the 2014 tax year and expires for tuition and fees paid after December 31, 2014.

Section 179 expense deduction (page 9-6). Taxpayers can elect to expense the cost of property placed in service during the year rather than depreciate the cost over the property’s class life. The expense limit was $500,000 for property placed in service during tax years 2010 through 2013 with an investment limitation that began to phaseout the deduction when the cost of Section 179 property placed in service during the year exceeded $2 million. This $500,000/$2,000,000 limitation was set to go back to $25,000/$200,000 for tax year 2014. The new law extends the $500,000/$2,000,000 limitations for the 2014 tax year, with the $25,000/$200,000 limitations to apply after December 31, 2014.

The new law also extends the provision that treats the cost of off-the-shelf computer software as eligible Section 179 property for the 2014 tax year.

The new law also extends the provision that allows a taxpayer to revoke the Section 179 expense deduction for the 2014 tax year.

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