Late on New Years Eve the United States Senate passed, on an 89-8 vote, the American Taxpayer Relief Act of 2012 (HR 8). The bill awaits action in the House of Representatives and it’s not clear what its fate will be there. But given the late hour of passage and the need to do what can be done from tax planning, the text of Senate bill can be downloaded here:
My initial read of the bill indicates some interesting highlights that aren’t in the popular press:
- Direct transfers from IRAs to charities for those already receiving minimum distributions is again restored late in the year, as it was in 2010. However, this time Congress recognized the issues with a late extension and so provided two special rules:
- A taxpayer who is eligible to make a direct transfer can do so before February 1, 2013 and the contribution will be treated as made in 2012 and
- A taxpayer who took a distribution from the IRA after November 30, 2012 may make a contribution prior to February 1, 2013 and treat that as a direct transfer under IRC §408(d)(8)
- The special 5 year built in gain rule for S corporations is extended to cover both 2012 and 2013. A special additional rule is added that provides that installment sale income will be recognized under the rule in place when the sale was made.
- Both the increased 2012 §179 and bonus depreciation provisions were extended.
- The §179 limit for 2012 was retroactively restored to $500,000 (with conforming change to the start of the reduction) and was extended through 2013
- The 50% bonus depreciation is extended through the end of 2013
Note that, as of the time this was written, the bill had not passed the House and had not been signed by the President, both of which must happen before it can be effective. But given that clients expect us to know details, I’m providing the bill as is right now.
I hope to write up a more complete analysis if and when the bill actually is passed by House.