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33 Federal Tax Provisions Expiring at the End of 2020

Nov 18, 2020

Paul S. Labiner

Paul Labiner

Managing
Partner

When Congress makes changes to the federal tax code, they have a choice as to whether those changes will be implemented permanently or temporarily. Passing permanent changes to the tax code can be difficult, so lawmakers often choose to include explicit sunset clauses for individual tax provisions.

This is true even in massive legislation like the Tax Cuts & Jobs Act in 2017, which made liberal use of sunset provisions for its various changes and updates to the personal and corporate tax code.

Many people and businesses were laser focused on the TCJA at the time of its passage, but they haven’t actively monitored which tax provisions expire when. Unfortunately, knowing is half the battle. Once a provision for a tax credit or deduction has expired, you are out of luck.

Below are 33 tax provisions that will expire on December 31, 2020, including many tax credits and deductions. We have included both the name of the provision and the section of the US tax code where you can find it. If you have any questions about how to use these expiring tax credits or deductions in your end-of-year estate planning, we are happy to help. Call us at (561)998-2362 or fill out the form below to schedule a Financial Legacy Review.

33 Expiring Tax Provisions and US Code Sections

Link: Title 26 US Code: Internal Revenue Code

  1. Credit for certain nonbusiness energy property (§ 25C(g))
  2. Credit for qualified fuel cell motor vehicles (§ 30B(k)(1))
  3. Credit for alternative fuel vehicle refueling property (§ 30C(g))
  4. Credit for two-wheeled plug-in electric vehicles (§ 30D(g)(3)(E)(ii))
  5. Credit for health insurance costs of eligible individuals (§ 35(b)(1)(B))
  6. Second generation biofuel producer credit (§ 40(b)(6)(J))
  7. Beginning-of-construction date for renewable power facilities eligible to claim the electricity production credit or investment credit in lieu of the production credit (§§ 45(d) and 48(a)(5))
  8. Credit for production of Indian coal (§ 45(e)(10)(A))
  9. Indian employment credit (§ 45A(f))
  10. New markets tax credit (§ 45D(f)(1))3
  11. Credit for construction of new energy efficient homes (§ 45L(g))
  12. Mine rescue team training credit (§ 45N(e))
  13. Employer credit for paid family and medical leave (§ 45S(i))
  14. Work opportunity credit (§ 51(c)(4))
  15. Exclusion from gross income of discharge of indebtedness on principal residence (§ 108(a)(1)(E))
  16. Benefits provided to volunteer firefighters and emergency medical responders (§ 139B(d))
  17. Treatment of premiums for certain qualified mortgage insurance as qualified residence interest ( 163(h)(3)(E)(iv))
  18. Three-year recovery period for racehorses two years old or younger (§ 168(e)(3)(A))
  19. Seven-year recovery period for motorsports entertainment complexes (§§ 168(e)(3)(C)(ii) and (i)(15)(D))
  20. Accelerated depreciation for business property on an Indian reservation (§ 168(j)(9))
  21. Special depreciation allowance for second generation biofuel plant property (§ 168(l)(2)(D))
  22. Energy efficient commercial buildings deduction (§ 179D(h))
  23. Special expensing rules for certain film, television, and live theatrical productions (§ 181(g))
  24. Medical expense deduction: adjusted gross income (AGI) floor 7.5% (§ 213(f))
  25. Deduction for qualified tuition and related expenses (§ 222(e))
  26. Special rule for sales or dispositions by a qualified electric utility to implement Federal Energy Regulatory Commission (“FERC”) or State electric restructuring policy (§ 451(k)(3))
  27. Look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules (§ 954(c)(6)(C))
  28. Empowerment zone tax incentives:
    1. Designation of an empowerment zone and of additional empowerment zones (§§ 1391(d)(1)(A)(i) and (h)(2))
    2. Empowerment zone tax-exempt bonds (§§ 1394 and 1391(d)(1)(A)(i))
    3. Empowerment zone employment credit (§§ 1396 and 1391(d)(1)(A)(i))
    4. Increased expensing under §179 (§§ 1397A and 1391(d)(1)(A)(i))
    5. Nonrecognition of gain on rollover of empowerment zone investments (§§ 1397B and 1391(d)(1)(A)(i))
  29. Black Lung Disability Trust Fund: increase in amount of excise tax on coal (§ 4121(e)(2))
  30. Oil Spill Liability Trust Fund financing rate (§ 4611(f)(2)
  31. Provisions modifying the rates of taxation of beer, wine, and distilled spirits, and certain other rules (§§ 263A(f)(4), 5001, 5041, 5051, 5212, and 5414)
  32. Incentives for alternative fuel and alternative fuel mixtures:
    1. Excise tax credits and outlay payments for alternative fuel (§§ 6426(d)(5) and 6427(e)(6)(C))
    2. Excise tax credits for alternative fuel mixtures (§ 6426(e)(3))
  33. American Samoa economic development credit (§ 119 of Pub. L. No. 109-432, as amended)

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