Tax Law Changes

A special rule for contributions of capital gain real property made for conservation purposes, which expired at the end of 2011 is now revived for 2012 and continued through 2013

The following depreciation provisions are retroactively extended by the Act through 2014: 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; increased expensing limitations and treatment of certain real property as Code Sec. 179 property; special expensing rules for certain film and television productions; and the election to expense mine safety equipment.

Exclusion of 100% of gain on certain small business stock acquired before Jan. 1, 2014.

. The following business credits and special rules are also extended: The Code Sec. 41 research credit is modified and retroactively extended for two years through 2013.The temporary minimum low-income tax credit rate for nonfederally subsidized new buildings under Code Sec. 42(b)(2)(A) is extended to apply to housing credit dollar amount allocations made before Jan. 1, 2014.The housing allowance exclusion for determining area median gross income for qualified residential rental project exempt facility bonds is extended two years.The Code Sec. 45A Indian employment tax credit is retroactively extended for two years through 2013.The Code Sec. 45D new markets tax credits is retroactively extended for two years through 2013. The Code Sec. 45G railroad track maintenance credit is retroactively extended for two years through 2013.The Code Sec. 45N mine rescue team training credit is retroactively extended for two years through 2013.The Code Sec. 45P employer wage credit for employees who are active duty members of the uniformed services is retroactively extended for two years through 2013.The Code Sec. 51 work opportunity tax credit is retroactively extended for two years through 2013.Code Sec. 54E qualified zone academy bonds are retroactively extended for two years through 2013. The enhanced charitable deduction for contributions of food inventory under Code Sec. 174(e) is retroactively extended for two years through 2013.Allowance of the domestic production activities deduction for activities in Puerto Rico, for the first eight tax years of the taxpayer beginning after Dec. 31, 2005, and before Jan. 1, 2014.Exclusion from a tax-exempt organization's unrelated business taxable income (UBTI) of interest, rent, royalties, and annuities paid to it from a controlled entity under Code Sec. 512(b)(13)(E)(iv) is extended through Dec. 31, 2013.Treatment of certain dividends of regulated investment companies (RICs) as “interest-related dividends” is extended through Dec. 31, 2013.Inclusion of RICs in the definition of a “qualified investment entity” under Code Sec. 897(h)(4) is extended through Dec. 31, 2013.The exception under subpart F for active financing income (i.e., certain income from the active conduct of a banking, financing, insurance, or similar business) under Code Sec. 953(e)(10) and Code Sec. 954(h)(9) for tax years of a foreign corporation beginning after Dec. 31, '98, and before Jan. 1, 2014, for tax years of foreign corporations beginning after Dec. 31, 2005, and before Jan. 1, 2014.Look-through treatment for payments between related controlled foreign corporations (CFCs) under the foreign personal holding company rules under Code Sec. 954(c)(6) is extended through Jan. 1, 2014.Exclusion of 100% of gain on certain small business stock acquired before Jan. 1, 2014.Basis adjustment to stock of S corporations making charitable contributions of property under Code Sec. 1367(a) in tax years beginning before Dec. 31, 2013.The reduction in S corporation recognition period for built-in gains tax under Code Sec. 1374(d)(7) is extended through 2013, with a 10-year period instead of a 5-year period.Various empowerment zone tax incentives, including the designation of an empowerment zone and of additional empowerment zones under Code Sec. 1391(d) (extended through Dec. 31, 2013) and the period for which the percentage exclusion for qualified small business stock (of a corporation which is a qualified business entity) is 60%Code Sec. 1202(a)(2) (extended through Dec. 31, 2018).Tax-exempt financing for New York Liberty Zone under Code Sec. 1400L(d)(2) is extended for bonds issued before Jan. 1, 2014.Temporary increase in limit on cover over run excise taxes to Puerto Rico and the Virgin Islands is extended for spirits brought into the U.S. before Jan. 1, 2014.American Samoa economic development credit, as modified, is extended through Jan. 1, 2014.

Unemployment benefits, which were set to expire at the end of 2012, are extended for the long-term unemployed through the end of 2013

The state sales tax deduction was reinstated for 2012 and extended for 2013

Tax Credits extended include the Returning Heroes and Wounded Warriors Work Opportunity Tax Credit, the New Markets Tax Credit, The Low-Income Housing Tax Credit, the Research and Development Tax Credit and tax credits for Clean Energy

The first $5.12 million of one' estate valuation remains exempt from federal estate tax and will be indexed for inflation but the top tax rate on estates was changed from 35% to 40% for 2013.

Finally Congress has permanently addressed the alternative minimum tax issue and indexed the annual exemption limits for inflation, retroactive for 2012.