On Friday, February 9th of 2018, President Donald J. Trump signed into law H.R. 1892 entitled the Bipartisan Budget Act of 2018 (hereinafter “BBA”) just hours after the Senate passed the bill by a vote of 71-28 and the House of Representatives passed the bill by a vote of 240-186. The BBA resolved numerous non-tax law related issues for the federal government on a bipartisan basis including but not limited to raising the debt ceiling; domestic and military spending; community healthcare; and disaster relief. In addition, the BBA includes tax relief for certain disasters, a retroactive one-year tax extenders package for statutory tax incentives that previously expired on December 31, 2016 including several highly prevalent energy tax incentive programs pursuant to I.R.C. § 179D and I.R.C. § 45L, amongst a highly diverse array of other statutory tax provisions.

Individual And Business-Entity Tax Relief For Certain Disasters

The BBA provides disaster relief tax benefits for individuals and business entities affected by the California wildfires, including but not limited to access to their retirement funds, the temporary suspension of limits on deductions for charitable contributions, and the allowance of deductions for personal casualty disaster losses. The BBA further extends tax relief previously provided for hurricanes Harvey, Irma and Maria to include disaster areas that were declared between the periods of September 21, 2017 through October 17, 2017.

The Tax Impact On Individuals And Business-Entities

The BBA affords an extension for many previously expired statutory tax provisions for individuals and business entities, and the extension and phasedown of many energy tax incentive programs.

The subsequent synopsis will outline just some of the primary statutory tax provisions affecting Individuals that previously expired on December 31, 2016 but were retroactively reinstated, but only through December 31, 2017, including but not limited to:

I.R.C. § 108(a)(1)(E), which excludes from gross income the discharge of qualified principal residence indebtedness income;
I.R.C. § 163(h)(3) treatment of mortgage insurance premiums as qualified residence interest, which permits a taxpayer whose income is below certain thresholds to deduct the cost of premiums on mortgage insurance purchased in connection with acquisition indebtedness on the taxpayer’s principal residence; and
I.R.C. § 222, which provides an above-the-line deduction for qualified tuition and related expenses.

The subsequent synopsis will outline just some of the primary statutory tax provisions affecting Business-Entities that previously expired on December 31, 2016 but were retroactively reinstated, but only through December 31, 2017, including but not limited to:

I.R.C. § 45G railroad track maintenance credit, equal to 50% of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer;
I.R.C. § 168(e)(3)(A), which allows certain racehorses to be depreciated as three-year property instead of seven-year property;
I.R.C. § 168(i)(15), which allows a seven-year recovery period for motorsports entertainment complexes;
I.R.C. § 181 special expensing rules for certain film and television productions, which allows taxpayers to treat costs of any qualified film or television production as a deductible expense. This provision also applies to live theatrical productions such as Broadway Shows;
I.R.C. § 199(d)(8), which permits a deduction for income attributable to domestic production activities in Puerto Rico; and
I.R.C. § 1391 empowerment zone tax incentives.

The subsequent synopsis will outline just some of the primary statutory tax provisions in connection to many of the most popular energy tax incentive programs that previously expired on December 31, 2016 but were retroactively reinstated, but only through December 31, 2017 unless otherwise noted, including but not limited to:

I.R.C. § 25C, which provides a 10% credit for qualified nonbusiness energy property;
I.R.C. § 25D credit for residential energy property for qualified fuel cell property, small wind energy property, geothermal heat pump property, qualified solar electric property, and solar water heating property. It should be duly noted that this incentive was extended through 2021;
I.R.C. § 30B, which provides a credit for qualified fuel cell motor vehicles;
I.R.C. § 30C, which provides a 30% credit for the cost of alternative (non-hydrogen) fuel vehicle refueling property;
I.R.C. § 40(b)(6), which provides a credit for each gallon of qualified second-generation biofuel produced;
I.R.C. § 40A credit for biodiesel and renewable diesel, which includes the biodiesel mixture credit, the biodiesel credit, and the small agri-biodiesel producer credit;
I.R.C. § 45 credits for facilities producing energy from certain renewable resources;
I.R.C. § 45L, which provides a credit for each qualified new energy-efficient home constructed by an eligible contractor and acquired by a person from the eligible contractor for use as a residence during the tax year;
I.R.C. § 48 credits for fiber-optic solar lighting system, geothermal heat pump, small wind energy, and combined heat and power properties and the credit for qualified fuel cell and micro-turbine plant property. It should be duly noted that these credits were extended through 2021, subject to phase-out requirements;
I.R.C. § 168(l), which provides a depreciation allowance equal to 50% of the adjusted basis of qualified second-generation biofuel plant property; and
I.R.C. § 179D energy tax deduction for building envelope efficiency in connection to energy efficient lighting systems, energy efficient HVAC systems; and / or an energy efficient building envelope (e.g., windows, doors, roofs, insulation, etc.).

For further coverage of the BBA, please consult my published article entitled "Tax Aspects of the Bipartisan Act of 2018" on TaxConnections @ www.taxconnections.com/taxblog/tax-aspects-of-the-bipartisan-budget-act-of-2018/#.WodsQujwa73