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Obama’s 2016 Budget Proposal: Part 3 Business Provisions

President Obama's 2016 Budget ProposalIn Part 1 of our three part series, we presented President Obama’s 2016 Budget Proposal for individuals. This proposal was recently released. The tax proposal would increase the taxes on higher-income taxpayers. It would also provide tax breaks for low-to middle-income taxpayers. The provisions we posted on were:

  • Child Care
  • Second Earner Tax Credit
  • Earned Income Tax Credit (EITC)
  • Education Tax Benefits – The American Opportunity Tax Credit (AOTC)
  • Top Capital Gains Rate
  • Itemized Deductions
  • Limit Retirement Account Contributions
  • Buffett Rule

In Part 2, we brought up some highlights that would impact individuals and small businesses regarding gifts and inheritance tax provisions.

Our final post in our three-part series is about President Obama’s 2016 Budget Proposal provisions for businesses. We want to remind you, these are proposals only.

Business Provisions

Section 179 Expensing:

  • Would make the Sec. 179 expense cap $500,000 for 2015 (it is currently at $25,000, down from $500,000 in 2014).
  • Would raise the expense cap to $1 million in 2016. This would make the $1 million permanent with inflation adjustment for future years.

Cash Basis Accounting:

  • Would expand use of the cash method of accounting to small businesses with less than $25 million in average annual gross receipts.
  • Estimated to apply to 99% of all businesses.

Qualified Small Business Stock:

  • Would permanently extend the 100% exclusion on capital gains from sales of tax-qualified small business stock held by individuals for more than five years
  • Would eliminate the inclusion of excluded gain from the Alternative Minimum Tax

Start-Up & Organizational Expense:

  • Would increase and consolidate the deduction for start-up and organizational expenditures

Small Employer Health Insurance Credit:

  • Would expand the credit for small employers to provide health insurance to apply to up to 50 (rather than 25) full-time equivalent employees
  • Phaseout between 20 and 50 employees (rather than between 10 and 25)

Mandatory Employer IRA Payroll Deductions

  • Would require employers with 10 or more employees, who do not have a 401(k) plan, to automatically enroll full-time and part-time employees in an optional IRA payroll deduction plan

Questions About the President Obama’s 2016 Budget Proposal?

Do these provisions and rules confuse you? Are you concerned what the president’s 2016 budget has in store for you, if it is passed? If you have thoughts, questions or concerns regarding how your taxes are filed, contact us or visit any one of our locations. You may also leave your comments below or post on our FacebookGoogle+ or LinkedIn pages.

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Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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Obama’s 2016 Budget Proposal: Part 2 Gift and Inheritance Provisions

President Obama's 2016 Budget ProposalPresident Obama’s 2016 Budget Proposal for individuals which was recently released, and was presented in Part 1. The blog noted an increase to the taxes on higher-income taxpayers, as well as provide tax breaks for low-to middle-income taxpayers. This week we will discuss some highlights of the President Obama’s 2016 Budget Proposal that would impact individuals and small businesses regarding gifts and inheritance tax provisions. As we mentioned before, please remember, these are proposals only.

If you did not get the chance Part 1, you can click here.

Gift and Inheritance Tax Provisions

Inheritances and Gifts:

  • Would eliminate the current step-up in tax basis at death.
  • Require payment of capital gains tax on the increase in value of securities at the time they are inherited.
  • Generally, a $100,000-per-person, portable-between-spouses exclusion would apply for inherited appreciated assets. This would also have exceptions for surviving spouses, small businesses, charities, and residences, among others.
  • For couples, no tax would be due until the death of the second spouse.
  • No tax would be due on inherited small, family-owned-and-operated businesses unless and until the business was sold. Also, unless any closely held business would have the option to pay tax on gains over 15 years.
  • Couples would have an additional $500,000 exemption for personal residences ($250,000 per individual). This exemption would be automatically portable between spouses.
  • Tangible personal property, other than expensive art and similar collectibles, would be tax-exempt (e.g., bequests or gifts of clothing, furniture, and small family heirlooms).

Inheritance and Gift Tax:

  • Would reinstate the prior, 2009, estate and gift tax rates with lower exclusions (generally at 45% at $3.5 million for estates and $1 million for gifts).

A final reminder, that these are all proposals by the Obama administration and must be approved by Congress. The information is being passed along so you will have an idea of what might happen in the future.

In Part 3 we will put up Obama’s 2016 Budget Proposal for Business Provisions.

Do you have any questions about President Obama’s 2016 Budget Proposal?

Do you have thoughts, questions or concerns about your tax filing? Maybe you need help. Worthtax is not about gimmicks, we don’t waste our money and we wouldn’t waste yours either. WorthTax is a serious business that wants to help you get every penny back that belongs to you. WorthTax has ultra convenient services. Feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

Maybe you know someone who can benefit from this information, feel free to share:
Linkedin - Joseph Cahill / WorthTaxTwitter - Joseph Cahill / WorthTax / WorthTaxPrepFacebook - Joseph Cahill / WorthTaxGoogle+ - Joseph Cahill / WorthTaxalignable_logo - Joseph Cahill / WorthTax

 

Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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