Tax Provisions Expiring in 2011

Below is a partial list of expiring tax provisions that may impact your business or personal tax situation next year.

Business Tax Provisions

According to a Congressional Research Service report dated December 1, 2011, the following tax provisions will expire on December 31, 2011:

  • Research and development and the work opportunity tax credits;
  • Enhanced charitable deductions for contributions of food, books, and computer technology
  • Special S-corporation built-in gains tax suspension period; and
  • 15-year recovery period for leasehold improvements, restaurant property, and retain improvements.

Furthermore, the 100 percent bonus depreciation deduction will be scaled back to 50 percent in 2012, and the Section 179 deduction limit will fall from $500,000 this year to an inflation-adjusted $139,000 in 2012.

Individual Tax Provisions

According to the same Congressional Research Service report, the following personal deductions will expire on December 31, 2011:

  • Elementary and secondary school teacher expenses;
  • State and local sales taxes;
  • Mortgage insurance premiums;
  • Qualified tuition and related expenses.

The 2010 Tax Relief Act allowed a taxpayer's nonrefundable personal credits to offset regular tax (net of any allowable foreign tax credit) and AMT for 2011, and also authorized a reduction in the employee's share of the Social Security payroll tax to 4.2 percent for 2011.  Finally, the tax-free treatment of distributions from IRAs for charitable purposes will expire at the end of 2011.

Congress may extend the payroll tax break and presumably will pass another (one year) AMT patch.  Finally, the tax-free treatment of distributions from IRAs for charitable purposes will expire at the end of 2011.

If you have any questions about these provisions or would like more information, please contact your Meaden & Moore representative, Pete DeMarco (pdemarco@meadenmoore.com) or Karen McCarthy (kmmcarthy@meadenmoore.com) at (216) 241-3272.