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Federal Tax Provisions Expiring 2009-2012

Volume 2010 / Issue 6

May 21, 2010

 
SELECTED FEDERAL TAX PROVISIONS EXPIRING 2009–2012
 
IRC Sec.
Provision
Expires on
 
Individual Tax Rates
 
1(h)
Reduced capital gain rates and dividends taxed at capital gain rates.
12/31/10
1(i)
10% tax bracket for individuals. After 2010, the lowest individual tax bracket is scheduled to revert back to 15%.
12/31/10
1(i)(2)
Reduced rates for the top four individual income tax brackets. After 2010, the current 25%, 28%, 33%, and 35% rate brackets are scheduled to revert back to 28%, 31%, 36%, and 39.6%, respectively.
12/31/10
1(f)(8)
Expanded 15% tax bracket for married filing joint taxpayers (MFJ). After 2010, the taxable income at which the 15% tax bracket ends for MFJ is scheduled to revert from 200% to 167% of the amount applicable to single taxpayers.
12/31/10
1202(a)(3)
Acquisition date for Qualified Small Business Stock (QSBS) to qualify for 75% gain exclusion. Note: QSBS acquired after 2/17/09 and before 2011 is eligible for a 75% exclusion. Otherwise, a 50% gain exclusion generally applies.
12/31/10
 
Individual Deductions
 
62(a)(2)(D)
Above-the-line deduction for certain expenses of elementary and secondary school teachers.
12/31/09
63(c)(2)(A)
Expanded standard deduction for MFJ. After 2010, the standard deduction for MFJ is scheduled to revert from 200% to 167% of the standard deduction for single taxpayers.
12/31/10
63(c)(7)
Additional standard deduction, up to $500 ($1,000 if MFJ) for state and local real property taxes.
12/31/09
68(g)
Repeal of overall limitation of itemized deductions. For 2010, the limitation is repealed. After 2010, the limitation is scheduled to revert back to what it was in 2001. Thus, itemized deductions (other than medical expenses, casualty losses, investment interest, and gambling losses) will be reduced by the lesser of (1) 3% of the amount of the taxpayer’s income exceeding the applicable threshold or (2) 80% of the deductions subject to the limit.
12/31/10
151(d)(3)
Repeal of phase-out of personal exemptions. For 2010, the phase-out is repealed. After 2010, the full phase-out is scheduled to apply.
12/31/10
164(b)(5)
Election to deduct state and local general sales taxes instead of state income tax.
12/31/09
164(b)(6)(G)
Deduction for state sales tax and excise tax on the purchase of qualified motor vehicles.
12/31/09
163(h)(3)
Deduction of mortgage insurance premiums as qualified residence interest.
12/31/10
 
Retirement Plans and IRAs
 
401(a)(9)(H)
Waiver of 2009 minimum required distribution rules for IRAs and defined contribution plans.
12/31/09
408(d)(8)
Tax-free treatment of qualified charitable distributions from IRAs for individuals age 70½ or older.
12/31/09
 
Education Tax Benefits
 
25A(i)
American opportunity credit. Note: After 2010, the American Opportunity credit will expire, but the Hope Scholarship credit, as in effect before 2009, is reinstated.
12/31/10
221
Student loan interest deduction modification to certain rules.
12/31/10
222(e)
Above-the-line deduction for qualified tuition and related expenses. 
12/31/09
529(e)(3)
Computer technology and equipment treated as qualified higher education expense for Sec. 529 accounts (qualified tuition programs) and Coverdell Education Savings Accounts.
12/31/10
530(b)
Increased contribution limit of $2,000 and other changes for Coverdell Education Savings Accounts. Note: After 2010, the maximum contribution limit falls to $500, K-12 education costs are no longer qualified expenses, and the contribution deadline is year-end (not 4/15).
12/31/10
 
Tax Credits
 
21(a)(2) and (c)
Increased maximum qualifying expenses for the dependent care credit of $3,000 ($6,000 for 2 or more kids), maximum credit percentage of 35%, and beginning phase-out range of $15,000. Note: After 2010, the maximum qualifying expenses falls back to $2,400 ($4,800 for two or more kids), the maximum credit percentage falls to 30%, and the phase-out range begins at $10,000.
12/31/10
24(a)
Increased child tax credit. After 2010, the current $1,000 credit is scheduled to revert back to $500.
12/31/10
24(d)
$3,000 threshold for determining the refundable portion of the child tax credit. Note: After 2010, the threshold returns to $10,000 (indexed for inflation).
12/31/10
25C(g)
Personal energy property credit of up to $1,500.
12/31/10
26(a)(2)
Ability to use certain nonrefundable personal credits against both regular tax and AMT.
12/31/09
30B(k)(2)
Alternative motor vehicle credit for advanced lean burn technology motor vehicles and qualified hybrid motor vehicles that are passenger automobiles or light trucks.
12/31/101
30B(k)(3)
Alternative motor vehicle credit for qualified hybrid motor vehicles other than passenger automobiles and light trucks.
12/31/09
30B(k)(4)
Alternative motor vehicle credit for qualified alternative fuel motor vehicles.
12/31/10
32(b)(3)
 
Increased (45%) earned income credit percentage for taxpayers with three or more qualifying children and increased phase-out threshold for MFJ filers. Note: After 2010, the credit percentage for taxpayers with three or more qualifying children will be the same as for those with two or more qualifying children and the phase-out threshold for MFJ status will be $3,000 greater than for other taxpayers.
12/31/10
36(h)
 
First-time homebuyer credit of up to $8,000 and long-time homeowner credit of up to $6,500.
4/30/103
36A
 
Making work pay credit.
12/31/10
36C
 
Adoption credit.
12/31/11
41(h)(1)(B)
 
Research and experimentation expenses credit.
12/31/09
45D(f)(1)
 
New markets tax credit.
12/31/09
45L(g)
 
Credit for construction of new energy-efficient homes.
12/31/09
45M(b)
 
Energy-efficient appliances credit.
12/31/10
 
          Alternative Minimum Tax
55(d)(1)
 
Increased AMT exemption. Note: After 2009, amount is $33,750 for Single or HOH, $45,000 for MFJ or QW and $22,500 for MFS.
12/31/09
56(g)(4), 57(a)(5)
 
Date for issuing private activity bonds whose interest will not be an AMT adjustment item or be added back to a corporation’s adjusted current earnings (for computing corporate AMT).
12/31/10
 
          Business Deductions and Business Property
167(g)(8)
Five-year amortization of music and music copyrights.
12/31/10
168(e)(3)(B)
Five-year recovery period for farming business machinery and equipment.
12/31/09
168(e)(3)(E)
15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
12/31/09
168(k)(2)
Additional first-year bonus depreciation allowance (50% of basis) for qualified property.
12/31/092
168(k)(4)
Election by corporations to accelerate AMT and research credits in lieu of bonus depreciation allowance.
12/31/092
172(b)(1)(H)
Extended NOL carryback period of up to five years.
12/31/09
179(b)(7)
Increase in Section 179 deduction limit and qualifying property phase-out threshold to $250,000 and $800,000, respectively. Note: After 2010, the amounts are $25,000 and $200,000 (not indexed for inflation).
12/31/10
613A(c)(6)
Suspension of 100 percent-of-net-income limit on percentage depletion for oil and gas from marginal wells.
12/31/09
 
Charitable Contributions
170(e)(3)(c)
Enhanced charitable deduction for contributions of food inventory.
12/31/09
170(e)(3)(D)
Enhanced charitable deduction for contributions of book inventories to public schools.
12/31/09
170(e)(6)(G)
Enhanced charitable deduction for corporate contributions of computer equipment for educational purposes.
12/31/09
1367(a)
Basis adjustment equal to shareholder’s share of property’s adjusted basis when S corp makes charitable contributions of property.
12/31/09
 
Provisions for Employers
38(b), 1024
Temporary tax credit of up to $1,000 per employee for retaining qualified new employees.
12/31/11
51(d)(14)
Work opportunity tax credit targeted group status for unemployed veterans and disconnected youth.
12/31/10
127(c)
Exclusion of up to $5,250 of employer-provided education assistance.
12/31/10
132(f)
Monthly exclusion for employer-provided mass transit and parking benefits equal to the amount excluded for employer-provided parking. Note: After 2010, the exclusion for mass transit parking benefits is $100 (indexed for inflation).
12/31/10
137
Exclusion for employer-provided adoption assistance.
12/31/11
3301(1)
FUTA surtax of 0.2 percent.
6/30/11
3111(d)
Temporary employer social security tax exemption for wages paid to qualified new employees.
12/31/10
6432
Sixty-five percent subsidy for payment of COBRA health care coverage continuation premiums.
5/31/10
 
Income Exclusions
85(c)
Exclusion of unemployment compensation benefits from gross income.
12/31/09
108(a)(1)(E)
Exclusion of income from the discharge of indebtedness for a personal residence.
12/31/12
108(i)
Deferral and ratable inclusion of income from business debt discharged by reacquisition.
12/31/10
139B
Exclusion from income for benefits provided to volunteer firefighters and emergency medical responders.
12/31/10
 
Other Business Provisions
341
Repeal of collapsible corporation rules.
12/31/10
1374(d)(7)
Seven-year recognition period for S corporation built-in gains tax. Note: After 2010, the recognition period is ten years.
12/31/10
6654(d)(1)
Reduced estimated tax payments for individuals with small business income.
12/31/09
                                      Estate and Gift Taxes
1014
Basis step-up rules for property acquired from a decedent. Basis step-up rules are repealed for 2010 and reinstated after 12/31/10.
12/31/09
1022
Modified carryover basis rules for property inherited from a decedent who dies during 2010.
12/31/10
2210, 2664
Various estate and Generation Skipping Transfer (GST) tax provisions provided by Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), including the $3.5 million estate tax exclusion and current maximum estate tax rate of 45%. The estate and GST tax is repealed for decedents dying in 2010.
12/31/09
2210, 2664
Temporary repeal of the estate and GST tax. For decedents dying after 2010, the estate and GST tax provisions are scheduled to revert back to the law in effect before EGTRRA, including the $1 million exclusion and the top tax rate of 55%.
12/31/10
2502
Various gift tax provisions provided in EGTRRA, including the maximum gift tax rate of 45% for 2009 and 35% for 2010. After 2010, the gift tax provisions are scheduled to revert back to the law in effect before EGTRRA, including the top tax rate of 55%.
12/31/10