2020 is mercifully about to come to an end. Though we won’t be out of the woods entirely, we can soon say that we’ve survived the year that was and forge ahead. But with the end of each year comes the expiration of some provisions that, unless otherwise extended, will cease to exist in the coming tax filings.

According to the Journal of Accountancy, a variety of tax credits and other provisions are set to expire at the end of 2020. Though many are limited in scope, for those businesses and individuals who use these, it’s important to plan for change.

Understandably, these can be extended by Congress and many of these will likely see extensions, but as of now, the following may fall out of use.

Business Credits

The most likely of the provisions to affect controllers, these tax credits may impact everything from hiring benefits to location choice to R&D. According to JoA, the following will expire:              

  • Sec. 45A Indian employment credit.
  • Sec. 45D new markets tax credit.
  • Sec. 45N mine rescue team training credit.
  • Sec. 45S employer credit for paid family and medical leave.
  • Sec. 51 work opportunity credit.

Empowerment Zones

An empowerment zone is an area of high poverty and unemployment located in an urban or rural area. One of the areas that has been extended, Congress passed an extension last year on December 20, 2019.

  • Secs. 1391(d) and (h) designation of an empowerment zone and of additional empowerment zones.
  • Sec. 1394 empowerment zone tax-exempt bonds.
  • Sec. 1396 empowerment zone employment credit.
  • Sec. 1397A increased expensing under Sec. 179.
  • Sec. 1397B nonrecognition of gain on rollover of empowerment zone investments.

Depreciation and Expensing

An important consideration for businesses (in the wake of the changes to carryback in the CARES Act), the right depreciation strategy can impact the way you work. The following are set to expire:

  • Sec. 168(e)(3)(A) three-year recovery period for racehorses two years old or younger.
  • Sec. 168(e)(3)(C)(ii) seven-year recovery period for motorsports entertainment complexes.
  • Sec. 168(j)(9) accelerated depreciation for business property on Indian reservations.
  • Sec. 181 special expensing rules for certain film, television, and live theatrical productions.

Stay ahead of Change: Join the Controllers Council Community

2020 has presented a plethora of changes in the way that controllers need to operate, and this is just one of the many things you need to consider as you close out the year.

Stay tuned for all the latest news and analysis from the Controllers Council, and discuss how you are adjusting in our forum (just one of the many benefits of membership). Click here to learn more about joining.

Additional Tax Resources

Preparing for 1099 Changes at Year-End

Tax Season is Coming: Forgiveness, Denials, and a Lot of Tax Complexity

How Different States Approach Sales Tax Collection