Monthly Archives:' December 2014

S Corporations & Charitable Donations

The principal limitations on S corporations generally relate to the types of entities that can elect Subchapter S treatment and the number and types of shareholders that can own stock in such an entity. These limitations have evolved in a myriad of ways over the last twenty years to significantly expand the versatility of the S corporation as a choice of entity. This article will focus on the expansion of eligible shareholders to include charitable organizations, and the implications this change has on both shareholders who wish to make charitable contributions of S corporation stock and organizations that wish to accept such gifts. Importantly, shareholders seeking to contribute S corporation stock to a charity and organizations seeking to accept such contributions should be fully aware of the tax consequences to both parties that may result from such a gift.

Prior to 1998, Internal Revenue Code (“Code”) Section 1361 provided that only individuals, estates, and certain trusts could own stock in a Subchapter S corporation. A transfer of stock to an ineligible person (such as a non-U.S. resident) or entity would trigger a termination of the S election and tax treatment under general corporate income tax laws, including double taxation and other unfavorable provisions avoided via passthrough tax treatment. Depending on when such a transfer was discovered by the corporation or the Internal Revenue Service (“IRS”) the result could be substantial back taxes and penalties. At that time, S corporations were also limited to 35 shareholders and members of a family could not be treated as a single shareholder. In 1997, Congress enacted The Small Business Job Protection Act of 1996 (P.L. 104-88), a wide-ranging piece of legislation that contained a number of S corporation tax reforms. For example, the shareholder limit was increased to 75, the definition of trusts eligible to hold S corporation stock was expanded, and, importantly, banks were added to the list of organizations eligible to elect passthrough tax treatment under Subchapter S. In addition to these and other changes, however, the strict limitation on owners of S corporation stock was expanded to include an entirely new entity type – exempt organizations.

The Small Business Job Protection Act of 1996 amended Code Section 1361(b)(1)(B) to provide that an S corporation includes any eligible corporation which does not “have as a shareholder a person (other than an estate, a trust described in subsection (c)(2), or an organization described in subsection (c)(6)) who is not an individual…” Further, Section 1361(c)(6) permits organizations which are “(A) described in section 401(a) or 501(c)(3), and (B) exempt from taxation under section 501(a)” to hold S corporation stock. The result of these provisions was to allow tax-exempt charities and tax-exempt retirement plans (including employee stock ownership plans “ESOPs” but not individual retirement accounts “IRAs”) to own S corporation stock. Beginning in 1998, S corporation shareholders could now make gifts of their S corporation stock to charitable organizations. Due to the nature of S corporations as closely-held businesses, S corporation stock may be, by far, the most valuable asset held by these potential donors – and the only means they have of making a substantial charitable donation. Conversely, charitable organizations now have access to a new, potentially large, source of giving – shares of closely-held, S corporation stock. While this increased flexibility with respect to S corporation stock and charitable giving may be welcome by both shareholders and charities, alike, there are important potential tax consequences from both the donor’s and charity’s perspective that must be fully appreciated.


Three of the major issues associated with making a donation of S corporation stock to a charity are: (1) whether the stock is subject to any transfer restrictions; (2) whether the donor or S corporation are comfortable with giving a charitable organization legal rights in the S corporation; and (3) whether the donor will be able to deduct the full, appreciated value of the stock for income tax purposes.

Transfer Restrictions

An important component of the organization and management of an S corporation is the shareholder agreement. Because of the closely-held nature of S corporations, many shareholder agreements impose restrictions on the transfer of stock among individuals. For example, transfers of stock may require notice to and approval by the board of directors of the S corporation or independent legal opinions that the transfer will not cause an inadvertent termination of the corporation’s S election. These transfer restrictions are utilized both to protect the S corporation from a termination and the associated tax liability and to guide the trajectory and management of the corporation. In fact, some shareholder agreements impose an outright prohibition on ownership of stock by 501(c)(3) organizations. Comprehensive shareholder agreements and transfer restrictions are especially important in the case of Subchapter S banks, which tend to have larger and more diverse shareholder groups. Finally, transfer restrictions could also prevent the charity from selling the stock after the gift has been made. Before deciding to gift S corporation stock to a charity, a donor must ensure that such a transfer is permissible under the S corporation’s shareholder agreement and that any preconditions to transfer, such as notice and approval by the board are strictly followed.

Legal Rights

Once a review of the shareholder agreement has confirmed no legal restrictions on a gift of stock to a charity, a donor must determine whether he or she is willing to grant the charitable organizations legal rights in the S corporation that are associated with being a shareholder. While this may not be a serious issue for an S corporation with a large shareholder group, any gift of stock to a charity will confer ownership rights (albeit minority ownership rights) to that charity. In the case of an individual who owns all or substantially all of the stock of an S corporation, they will be ceding some control of that entity to the charitable organization and should appreciate that before making such a gift. Additionally, depending on the transfer restrictions set forth in the shareholder agreement, a donor must be comfortable with a potential sale of the stock by the charity to a third party.

Charitable Deduction

A donor of S corporation stock must also be aware of the rules regarding charitable deductions. First, under Code Section 170(f)(8), gifts in excess of $250 require proof of the donation in the form of a “contemporaneous written acknowledgement” from the charity. This acknowledgement must list the amount of any cash and description of any property contributed, state whether the charity provided any goods or services in consideration for the property received, and provide an estimate of the value of such goods or property provided to the donor. Second, to the extent the value of the stock exceeds $5,000 the donor must complete all or a part of IRS Form 8283 and file with his or her income tax return in the year of the gift. If the value of the stock exceeds $10,000 the donor is required to obtain a “qualified appraisal” from a “qualified appraiser” that includes specific information required by the Code and Treasury Regulations. An appraisal summary and Form 8283 signed by both the donor and appraisal must be included with the donor’s tax return. Finally, a donor must be aware that the income tax deduction associated with the gift of the stock will often be less than the appraised value of the stock.

Contributions of appreciated stock are generally a favorable vehicle for making large charitable contributions. Such a contribution produces tax benefits for both the donor and the donee. Not only will the donor receive a tax deduction for the full appraised value of the stock, but the donor also avoids recognizing any gain related to the appreciation of the stock. The charity will also not be subject to tax on the dividends or passive income realized from holding the stock as an investment, nor will it be taxed on the gain on sale of the stock. The rules change, however, in the case of an S corporation.

For purposes of calculating the corresponding charitable tax deduction, a gift of S corporation stock is treated like a gift of a partnership interest. Code Section 170(e)(1), which sets forth the rules governing charitable deductions for contributions of ordinary income and capital gain property states in part that:

“For purposes of applying this paragraph in the case of a charitable contribution of stock in an S corporation, rules similar to the rules of section 751 shall apply in determining whether gain on such stock would have been long-term capital gain if such stock were sold by the taxpayer.”

Under these rules, the charitable deduction allowed is equal to the appraised value of the stock less the proportionate share of ordinary income the donor would have recognized upon liquidation of the S corporation. Essentially, a hypothetical liquidation of the S corporation takes place and all proceeds are distributed to its shareholders. To the extent the shareholders proportionate share of the distribution would produce ordinary income (e.g. inventory or depreciation recapture) versus a capital gain, the donor’s charitable deduction would be reduced by that amount. As such, donors may lose some of the value that would be associated with a gift of appreciated stock of a C corporation. Donors relying on the charitable deduction from a gift of S corporation stock to reduce tax liability must take care to calculate the appropriate amount of the deduction.


A charitable donation of S corporation stock can also present tax challenges for the charitable organization receiving the gift. As previously mentioned a gift of C corporation stock to a charitable organization generally does not result in any tax liability to the charity either while the charity holds the investment and receives dividends on the stock or when the charity later disposes of the stock. Conversely, in the hands of a tax-exempt organization, S corporation stock would subject the entity to unrelated business income tax (“UBIT”) on both distributions made  to the charity while it held the stock, as well as on the gain on sale of the S corporation stock. UBIT seeks to prevent the shifting of business assets from a taxable corporation to tax-exempt entities. In furtherance of this purpose, Code section 512(e) imposes UBIT on 501(c)(3) charitable organizations, and 401(a) qualified plans such as 401Ks that hold S corporation stock.  Such entities are subject to UBIT on all items of income, loss, or deduction that flow through to the entity as an owner of S corporation stock and also on any gain or loss from the disposition of that S corporation stock. Depending on the organizational structure of the entity (e.g. corporation or trust) the UBIT rate is equal to the top tax rate for that entity.

Careful planning on the part of the exempt organization is crucial to ensure that distributions from the S corporation are sufficient to cover any UBIT liability during the time period that the organization plans to hold the stock. This may include reviewing the S corporation’s distribution policies and financial projections and specifically addressing the issue of distributions to cover taxes with the S corporation prior to accepting any gifts of stock. This issue may be of particular concern to charities reviewing a potential gift of stock of an S corporation bank – where federal banking agency regulations may limit or prohibit shareholder distributions based on bank capital requirements. Tax-exempt organizations must also be aware of the donor’s basis in the stock. When the stock is transferred to the charity, the charity assumes the donor’s basis. Upon disposition, the charity will be liable for UBIT on the difference between the sale price of the stock and the basis transferred from the donor. Charities that receive gifts of stock with a very low basis will be subject to a larger tax liability when they later dispose of the stock. Whether a charity plans to hold the S corporation stock for a long time, or dispose of it quickly, they must factor in the ability to satisfy this tax liability.


The ability for tax exempt charitable organizations to own S corporation stock opened up an avenue for charitable giving to individuals who own closely-held S corporations and whose largest asset is often the stock in that corporation. It also gave these charities access to a new form of corporate giving. Charitable donations of S corporation stock, however, require detailed review and analysis of both the practical and economic consequences of the gift as well as the tax consequences to both the donor and the charity. By gifting appreciated S corporation stock, donors potentially risk a part of their charitable deduction depending on the amount of ordinary income they would be deemed to receive in a hypothetical liquidation of the S corporation. From a charity’s perspective, assurance of sufficient distributions is essential to ensure the tax-exempt organization has cash to cover UBIT liability associated with income earned on the S corporation stock. The charity also must know the basis in the stock to calculate the tax liability on its eventual disposition and be able to properly value the charitable contribution. Both parties should carefully determine whether the responsibilities and restrictions associated with holding S corporation stock make a charitable donation of that stock a worthwhile endeavor for each party.

For more information or questions regarding Charitable Donations of S Corporation Stock and Charities as S Corporation Shareholders contact Patrick J. Kennedy, Jr.

Shareholder Divorce for S Corps

One of the most important aspects of managing an S corporation shareholder group is knowing when and how the family attribution rules apply to treat multiple shareholders within the same family as a single shareholder for purposes of the 100 shareholder limit. Due to apparently conflicting provisions in the Internal Revenue Code (the “Code”) and Treasury Regulations (the “Regulations”) there is often confusion regarding how to treat a married couple that later divorces. Originally, the Code and Regulations treated spouses as a single shareholder and upon divorce, as separate shareholders. The enactment of the family attribution rules in 2004, however, changed this rule so that both spouses and former spouses would always be treated as a single shareholder. While seemingly a minor distinction, noting this rule may be important for S corporations that are approaching the 100 shareholder limit.

The general rule applying to married couples and family is found in Code Section 1361(c)(1)(A):

For purposes of subsection (b)(1)(A) [referring to the shareholder limit], there shall be treated as one shareholder –
(i) a husband and wife (and their estates), and
(ii) all members of a family (and their estates).

The Regulations go on to state that this treatment “will cease upon dissolution of the marriage for any reason other than death.”  Reading these two provisions alone, it appears clear that spouses are treated as a single shareholder, but on divorce they are treated as separate shareholders. The later enacted provisions describing the family attribution rules, however, contradict this clear cut rule.

Code Section 1361(c)(1)(B)(i) provides that for purposes of the family attribution rules “the term ‘members of a family’ means a common ancestor, any lineal descendant of such common ancestor, and any spouse or former spouse of such common ancestor or any such lineal descendant.” (emphasis added). The Regulations go on to reiterate this family attribution rule that both a spouse and a former spouse will continue to be treated as a member of the family. The result is a contradiction between Regulation Section 1.1361-1(e)(2) and Regulation Section 1.1361-1(e)(3), stating first that upon divorce spouses are treated as separate shareholders and later that spouses and former spouses are treated as members of a family, and thus, as a single shareholder.

This contradiction resulted from a drafting error when the family attribution rules were enacted in 2004. Congress should have repealed earlier-enacted provision dealing solely with a husband and wife, which were later subsumed within the broader family attribution rules. This was likely not done because the Code sections merely reveal a redundancy between Code subsections (c)(1)(A)(i) and (c)(1)(A)(ii) and the contradictory provision appears in the Regulations enacted thereunder.

In summary, spouses and former spouses (whether by divorce, death, or otherwise) should always be treated as a single shareholder due to the “family attribution rules.” In discussing this issue with a colleague, I discovered a useful analogy: “The family attribution rules are like the mob. Once you’re in the family, you’re always in the family.”

For questions or more information regarding Shareholder Divorce and the Family Attribution Rules for S Corps contact Patrick J. Kennedy, Jr.

CSBS Releases Virtual Currency Regulation Policy

This week, the Conference of State Bank Supervisors (CSBS) released a draft regulatory framework policy on virtual currency. During a year long assessment, the CSBS’s Emerging Payments Task Force examined the intersection between state supervision and payments developments to identify areas for consistent regulatory approaches among states. Focusing its assessment on consumer protection, market stability and law enforcement, the CSBS recommended that activities involving third party control of virtual currency, including for the purposes of transmitting, exchanging, holding, or otherwise controlling virtual currency, should be subject to state licensure and supervision. The policy is not intended to cover the merchants and consumers who
use virtual currencies solely for the purchase or sale of goods or services. Also, the policy is not intended to cover activities that are not financial in nature but utilize technologies similar to those used by digital currency (ie. cryptography-based
distributed ledger system for non-financial record keeping). The goal of the policy is to offer guidance, clarity, and consistency to state regulatory agencies and recognition of each state’s respective virtual currency licenses.

The CSBS is accepting public comments until February 16, 2015, electronically by PDF or by mail: Attn: Emerging Payments Task Force, Conference of State Bank Supervisors, 1129 20th Street NW, 9th Floor, Washington, DC 20036.

Click here to read the CSBS policy statement.

OCC Highlights Key Risks Facing Banking System

The Office of the Comptroller of Currency has released their semiannual report highlighting key risk areas affecting the federal banking system. The report presents data in five main areas: the operating environment; bank condition; key risk issues; the range of practice in interest rate risk modeling; and regulatory actions. It focuses on issues that pose threats to the safety and soundness of those financial institutions regulated by the OCC and is intended as a resource to the industry, examiners, and the public, reflecting data as of June 30, 2014. 

Specifically regarding community and midsize banks, the report identifies key risks facing community and midsize banks including:

  • High strategic risk as banks adapt their business models to respond to sluggish economic growth, low interest rates, and intense competitive pressures.
  • Properly planning for management succession and retention of key staff.
  • Erosion of underwriting standards in various loan products.
  • Expansion into loan products that require specialized risk management processes and skills, such as participations in syndicated leveraged loans.
  • Increasing exposure to IRR at banks with concentrations in long-term assets (including mortgagebacked securities [MBS] and loans) and uncertainties about the behavior of NMDs once interest rates increase.
  • Appropriate oversight of third parties vendors.
  • Increasing volume and sophistication of cyberthreats.
  • Increasing BSA/AML risk because of higher-risk services and customer relationships
  • Ensuring effective compliance management systems and staffing

The outlook for community and midsize banks includes

  • Moderate to strong loan growth, stabilizing NIM, and stronger capital ratios.
  • Suppressed mortgage-banking revenue and lower gain-on-sale margins
  • A continued search for higher-yielding assets and profitable strategic business niches.
  • Expansion into new products and services


Tax Extenders Pass the Senate

On December 16th, 2014 the tax extenders bill finally passed in the Senate by a 76-16 vote and is on its way to the President’s desk. As we mentioned in our update when it passed the House, their were 55 provisions included in the bill that will be extended for another two weeks. Unfortunately, the bill is a one year retroactive extension of the expired provisions through 2014, and will therefore expire at the end of 2014.

Interestingly, Senate Finance Chairman Ron Wyden (D-OR) voted against the bill, as did Sen. Rob Portman (R-OH), highlighting the ridiculous nature of a one-year retroactive extension for tax policy. (The 16 “no” votes were a bipartisan affair: 8 members of each party opposed the bill.) Speaking last night, Chairman Wyden said: “This tax bill doesn’t have the shelf life of a carton of eggs,” Wyden said in a floor statement ahead of the vote. “The only new effects of this legislation apply to the next two weeks.” He was not alone in his frustration. Sen. Portman also took to the floor to vent his frustration: “This is ridiculous because we’re not extending it beyond the tax year and by the time we get back here, it will already be expired for a week or two…it is a failure of Washington again to get its act together and do what should be done.” “I’d much rather have had a two-year bill so people had the certainty of planning for next year,” said Sen. Bill Nelson (D-Fla.). “But you have to take what you can get.”

General sentiments were that the $42 billion retroactive bill was better than nothing. Congress is now adjourned for the holidays and will start up again January 6th. That means the Senate Finance Committee will have to pick up negotiations again when they return in  but Hatch, the incoming chairman of the committee, wouldn’t commit to when that work would start. ”We’re going to have to work on it, there’s no question about it,” Hatch said. “I just wish we could get permanency.”

SBA Requests Remarks on Franchise Lending Program

The U.S. Small Business Administration (SBA) is requesting remarks from the public on all aspects of its franchise lending program.  The SBA issued its notice and request for comment December 8, 2014.  Comments must be submitted no later than February 6, 2015. Specifically the notice request comments on the following questions, some of which could require new statutory or regulatory authority:

(1) How can the review of franchise relationships be simplified and still ensure that SBA guaranteed loans are only provided to independent small businesses as required by law?
(2) Currently, when a small business loan applicant has or will have a franchise, license, dealer, jobber or similar relationship and such relationship (or product, service or trademark covered by such relationship) is critical to the applicant’s business operation, SBA requires a review of the agreement and any related documents governing the relationship (or product, service or trademark). Is it sufficiently clear what relationships are required to be reviewed under this standard?
(3) How does SBA’s process for determining affiliation (excessive control) of franchisors and franchisees affect small businesses during and upon termination of the franchise agreement?
(4) Should 13 CFR 121.103(i) be modified to specifically address the provisions SBA has determined evidence excessive control by the franchisor?
(5) Should 13 CFR 121.103(i) be modified to incorporate a reference to ‘‘Loan Program Requirements, as defined in 13 CFR 120.10,’’ because SBA’s policies in this area are explained in the Loan Program Requirements, and more particularly in SBA’s SOP 50 10?
(6) Should SBA develop a process to accept a certification of non-affiliation from a franchisor and/or its counsel, based on standards established by SBA, in lieu of SBA or lender review of the franchise agreement and related documents?
(7) If so, should that process be available only with respect to ‘‘renewal requests’’
(8) If an applicant is not a franchisee but has an affiliate that is a franchisee, should SBA continue to review the affiliate’s franchise agreement and related documents as part of the small business size determination of the applicant?
(9) Should SBA continue to list agreements on a central registry and, if so, where should that registry be maintained and by whom?
(10) If there is a cost associated with the maintenance of the registry or listing of agreements, who should bear that cost? SBA notes that there are statutory limitations on SBA’s current authority to charge, retain and use fees.
(11) In light of the fact that SBA lists approved franchises on its Web site, is there a need to continue to post the Franchise Findings List as well?
(12) Should the franchise agreement review process be streamlined and/or simplified and, if so, in what way?
(13) Should the franchise appeal process be changed and, if so, in what way?

Legislation Passes Easing Capital Formation for Community Banks

On December 11th, 2014, HR 3329 was passed with unanimous consent by the Senate and sent to President Obama’s desk for signature. HR 3329 enhances the ability of community financial institutions to foster economic growth and serve their communities, boost small businesses, increase individual savings, and for other purposes. Specifically, the legislation will double the Small Bank Holding Company Policy Statement asset threshold from $500 million to $1 billion. H.R. 3329 also will allow small savings and loan holding companies to be covered by the policy statement’s provisions. It is estimated that the change will reduce regulatory burdens for 89 percent of bank holding companies, up from 75 percent today. The bill, introduced by Rep. Blaine Luetkemeyer (R-MO,) was a bipartisan bill that passed the House earlier this year.

HR 3329

Tax Reform Act Released

House Ways and Means Committee chairman Rep. Dave Camp, R-Mich., officially introduced H.R. 1, the Tax Reform Act of 2014. Camp’s legislation proposes formalizing the tax reform discussion draft released on February 26th.The Tax Reform Act of 2014 makes the code simpler and fairer by:

  • Providing a significantly more generous standard deduction so that 95 percent of taxpayers will no longer be forced to itemize their individual tax deductions.
  • Reducing the size of the federal income tax code by 25 percent.
  • Tackling fraud, abuse and mismanagement at the IRS to protect hard-earned taxpayer dollars.

It proposes to make the economy stronger by

  • $3.4 trillion in additional economic growth
  • 1.8 million new jobs
  • $1,300 per year more in the pockets of middle-class American families

Camp called for the legislation to “spur further action” during the 114th Congress, which begins in January. Meanwhile, incoming Senate Finance Committee Chairman Orrin Hatch and the U.S. Senate Finance Committee Republican staff released a nearly 350 page report on all things tax reform, entitled “Comprehensive Tax Reform for 2015 and Beyond,” outlining issues that policymakers will face if they attempt comprehensive tax reform in the upcoming Congress.

NMTC Coalition Releases Economic Impact Analysis

The New Markets Tax Credit (NMTC) Coalition releasedA Decade of the New Markets Tax Credit: An Economic Impact Analysis,” a report on the economic impact of the New Markets Tax Credit (NMTC) program from 2003 to 2012. The report gives a brief history of the NMTCs for the past decade and identifies how many jobs were created as a result of the program, analyzes investment trends within the industry, and discusses the direct and indirect economic effects of the program. From 2003 to 2012, NMTC investments generated nearly $118 billion in economic activity, creating more than 744,000 jobs in low-income rural and urban communities, according to the report. The report also found that the federal revenue generated by NMTC investments more than pays for the cost of the program.

House Passes Tax Extenders

On Wednesday, December 3, 2014, the House of Representatives passed a $42 billion package that would extend the nearly 50 tax provisions in the “tax extenders” bill through the end of 2014, putting the measure on a path toward President Obama’s desk. The breaks – known collectively as “extenders” – include a range of tax incentives for businesses, individuals, and non-profits. 

House Republicans turned to the one-year extension after talks between Senate Majority Leader Harry Reid (D-Nev.) and Ways and Means Committee Chairman Dave Camp (R-Mich.) over the broader deal broke down following a veto threat from President Obama. While the one year deal is not ideal, lawmakers from both parties echoed sentiments that it’s a start and better than no deal at all.

Senate Finance Committee Chairman Ron Wyden (D-OR) told reporters on Thursday that the Senate would not amend the House bill, setting the stage for an up-or-down vote, probably within a week.However, Majority Leader Harry Reid (D-Nev.) said Thursday night that the Senate might not be able to pass the House tax extenders bill before the end of the year. Reid said it was “imperative” for the Senate to pass a government funding bill and a defense spending measure before adjourning for the year but that senators would have to wait and see if a tax deal makes it to the floor. “Everyone knows we have to do a spending bill. Everyone knows we have to do a defense bill,” Reid said on the Senate floor. “Everyone knows that we’re trying to do some tax extenders. We’re trying to do that, but we’ll see.” For now, it’s a waiting game to see what if any action will be taken by the Senate.

List of Extenders Passed in the House on December 3, 2014

Provision 10-year revenue effect of 1 year extension (2015-2024, Millions of Dollars)
Individual Extenders
Above-the-line deduction for teacher classroom expenses


Discharge of indebtedness on principal residence excluded from gross income of individuals


Parity for exclusion from income for employer-
provided mass transit and parking benefits


Mortgage insurance premiums treated as qualified  residence interest


Deduction for State and local general sales taxes


Contributions of capital gain real property made for conservation purposes


 Above-the-line deduction for qualified tuition and related expenses


Tax-free distributions from IRAs to certain public
charities for individuals age 70-1/2 or older, not
to exceed $100,000 per taxpayer per year


Business Extenders
Research credit


Minimum LIHTC rate for non-Federally subsidized new buildings (9%)


Military housing allowance exclusion for determining area median gross income


Indian employment tax credit


New markets tax credit


Railroad track maintenance credit


Mine rescue team training credit


Employer wage credit for activated military reservists


Work opportunity tax credit


Qualified zone academy bonds


Classification of certain race horses as 3-year  property


15-year straight-line cost recovery for qualified  leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements


 7-year recovery period for motorsports entertainment complexes


Accelerated depreciation for business property
on an Indian reservation


Bonus depreciation


Enhanced charitable deduction for contributions
of food inventory


Increased expensing limitations and treatment of
certain real property as section 179 property


Election to expense mine safety equipment


Special expensing rules for certain film and
television productions


Deduction allowable with respect to income
attributable to domestic production activities in
Puerto Rico


Modification of tax treatment of certain payments
under existing arrangements to controlling exempt


Treatment of certain dividends of RICs


Treatment of RICs as “qualified investment
entities” under section 897 (FIRPTA)


Exception under subpart F for active financing


Look-through treatment of payments between
related CFCs under foreign personal holding company
income rules


Exclusion of 100 percent of gain on certain
small business stock


Basis adjustment to stock of S corporations
making charitable contributions of property


Reduction in S corporation recognition period for
built-in gains tax


Empowerment zone tax incentives


Temporary increase in limit on cover over of rum
excise tax revenues (from $10.50 to $13.25 per proof
gallon) to Puerto Rico and the Virgin Islands


American Samoa economic development credit


Energy Tax Extenders
Credit for section 25C nonbusiness energy


Second generation biofuel producer credit


Incentives for biodiesel and renewable diesel


Credit for the production of Indian coal


Beginning-of-construction date for renewable
power facilities eligible to claim the electricity
production credit or investment credit in lieu of
the production credit


Credit for construction of energy-efficient new


Special allowance for second generation biofuel
plant property


Energy efficient commercial buildings deduction


Special rule for sales or dispositions to
implement Federal Energy Regulatory Commission
(“FERC”) or State electric restructuring policy for
qualified electric utilities


Excise tax credits relating to certain fuels


Alternative fuel vehicle refueling property


Automatic extension of amortization periods


Extension of shortfall funding method and
endangered and critical rules




Note: Details differ from total due to rounding.
Source: Joint Committee on Taxation