Beneficial Tax Extenders Act Signed into Law

On December 18, President Obama signed into law the Protecting Americans from Tax Hikes Act (PATH).  The PATH Act aims to make several renewable tax provisions permanent and pave the way for more comprehensive tax legislation in the future.  Despite its broad coverage, several of the PATH Act’s provisions directly affect the restaurant industry. The most beneficial of the changes include:
  1. Making permanent a number of provisions that have, in the past, consistently expired and required Congressional renewal. The list of permanent items of interest to the restaurant industry include Section 179 depreciation expensing of assets indexed at $500,000 per year (with a $2 million phase-out limit), 15-year depreciation treatment of Qualified Leasehold Improvements and Qualified Restaurant Property, and an enhanced deduction for food donations made by non-C corporation entities.
  2. Extending certain provisions that expired at the end of 2014. These provisions include bonus depreciation and the Work Opportunity Tax Credit (WOTC).  Bonus Depreciation will remain at 50 percent for tax years 2015, 2016, and 2017, but it will be phased down to 40 percent for tax year 2018 and 30 percent for tax year 2019. The WOTC has been extended through tax year 2019 and includes an additional targeted class of hire referred to as a “Qualified Long-Term Unemployment Recipient.” These hires are individuals certified by the designated local agency as being in a period of unemployment no less than 27 consecutive weeks during which they received unemployment compensation under state or federal law.
The PATH Act has provided restaurants with many additional tax deductions and credits to take advantage of for tax year 2015 and beyond, and these provisions should be taken into account in year-end tax planning. Stay tuned to this blog for additional posts that explore specific provisions in-depth.