Protecting Americans from Tax Hikes (Path) Act Restores Higher Deduction for Donation of Qualified Conservation Easement

By Larry R. Gearhardt, Field Specialist, Taxation

On December 18, 2015, Congress passed and the President signed into law an agreement on tax extenders and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) of 2015” (the Act). Tax extenders are the 50+ tax provisions that are routinely extended by Congress on a one- or two-year basis. The Act makes permanent many of the individual and business extenders. One provision of the PATH Act restores the higher charitable deduction for donations of qualified conservation easements for farmers and ranchers.

QUALIFIED CONSERVATION CONTRIBUTIONS

A taxpayer’s aggregate qualified conservation contributions (i.e., contributions of appreciated real property for conservation purposes) were, for tax years beginning before Jan. 1, 2015, allowed up to the excess of 50% of the taxpayer’s contribution base over the amount of all other allowable charitable contributions (100% for qualified farmers and ranchers), with a 15-year carryover of such contributions in excess of the applicable limitation.

Under pre-Act law, these rules didn’t apply to any contribution made in a tax year beginning after Dec. 31, 2014, and contributions made thereafter were to be subject to the otherwise applicable 30% limit for capital gain property (50% limit for qualified farmers and ranchers).

New law. Effective for contributions made in tax years beginning after Dec. 31, 2014, the Act retroactively revives and permanently extends the charitable deduction for contributions of real property for conservation purposes and the enhanced deduction for certain individual and corporate farmers and ranchers. (Code Sec. 170(b)(1)(E)and Code Sec. 170(b)(2)(B), as amended by Act Sec. 111(a)).

A “qualified farmer or rancher” is a taxpayer more than 50% of whose gross income for the tax year is from the trade or business of farming.

Any contribution of property which is used in agriculture or livestock production (or available for such production) must remain available for production for the deduction to apply. Therefore, there must be a restriction that the property remain in agriculture.

 

 

 

Farm Liability Insurance – What’s in Your Policy?

By: Emily Adams, OSU Extension Educator and Peggy Hall, Asst. Professor, OSU Extension Agricultural & Resource Law

On one hand there are the optimists. They see the glass half empty and expect the best to happen in all situations. Then on the other hand are the pessimists, who often refer to themselves as realists. They anticipate what could go wrong and spend time thinking about alternate plans for when those unfortunate things actually happen. Pessimists, this article may not be for you, because you’ve thought these things through. So optimists- read on!

How often do you think about your farm liability insurance? When is the last time you reviewed your policy with your insurance provider to make sure that you really are covered for everything for which you think you are covered?

Farm liability insurance is one of the most common tools for agricultural risk management. Liability coverage helps you manage your liability for harm unintentionally caused to other people or property by your farming activities. It makes payments on your behalf to an injured party. It also defends you against lawsuits brought by a third party alleging liability within the scope of your policy.

We are all wired differently in our risk management personalities. For some people it seems like a waste of time to anticipate what could go wrong on your farm. You’ve got insurance; it’s probably covered, right?

Maybe, but maybe not. Depending on your policy and everything that you are doing in your farm operation, general farm liability insurance might not cover as much as you think. You should annually review your insurance policies with your insurance agent to make sure that all aspects of your farming operation are covered.

What levels of liability coverage are recommended?

According to Virginia Cooperative Extension, the consensus of insurance professionals is that any type of farm should have at least $1 million in coverage. But $1 million may not be enough for many farm operations in Ohio, based upon the farm’s assets and activities. A rule of thumb suggests an amount of coverage equal to the extent of your assets. For example, $5 million worth of real estate would mean $5 million in coverage. Another rule of thumb from Virginia Cooperative Extension is to obtain sufficient coverage to help you sleep at night. Request a quote for varying levels of coverage, and then gauge the increased cost compared to the increased comfort of higher coverage.

What should you review in your liability policy?

  • What is the aggregate limit of the policy? The aggregate limit is the maximum amount your insurer will pay to settle your claims during the policy period, which is typically on an annual basis.  Is this amount sufficient to address your risk?
  • What types of incidents are covered by your general liability insurance?  A standard policy covers liability for bodily injury or property damage arising from incidents related to the farm business and its premises and operations, and can include incidents arising from sales of raw produce from a farm roadside stand.  Does this general coverage address all of your farming activities?
  • What activities are not covered by your general liability insurance? A standard policy lists activities that are specifically excluded from coverage, which might include custom farming, special events on the farm, processed food products, farmer’s market sales and other off-farm activities, and non-farming businesses like excavation, snow removal or landscaping. Are you in need of additional coverage for these types of activities?
  • How does your policy address harm from manure, fertilizers, chemicals or contaminants? Most often, this type of harm is deemed “pollution” that is excluded from general liability coverage.  A standard policy will likely define “pollution” as a discharge or dispersal of chemicals, wastes or contaminants on the farm premises, on another property or during transport.  Is there is high risk of discharge of manure, fertilizer or chemicals in your farming operation that is not covered by your policy?
  • Does your coverage extend to your employees, family members and representatives and their actions?  It is important to understand who a policy defines as “the insured,” which typically includes you as the policyholder and any legal entities you name for the farm business.  A standard policy might also include farm employees and relatives residing with the policyholder as insured parties.  Is everyone involved in your farm’s operations included in the policy?

What gaps might exist in your liability policy?

  • What changes have been made in structures, land, equipment or other farm assets? If the value of your assets has grown since you first obtained your policy, you may need to revise your coverage limits.
  • What additional agricultural activities or other enterprises are in need of coverage? If you are involved in new enterprises or agricultural activities, you may need to increase your coverage or obtain an additional policy endorsement that addresses the activity.
  • Do you need to address pollution risk?  If you use, store or transport manure, fertilizer or chemicals, you should assess the risk of a discharge that could affect crops, livestock, a waterway or another’s property.  Supplemental coverage is available to address “pollution” incidents, which typically addresses sudden, accidental discharges of materials used in normal farming operations.  Because pollution coverage can vary widely, it is important to understand both your risk of an incident as well as the limitations of your pollution coverage.

What would happen if…

  • You cause a chemical spill when traveling from one farm location to another?
  • One of your farm employees causes an accident while driving machinery on a roadway?
  • You are the cause of an accident while plowing snow for a neighbor?
  • A family member is involved in an accident while custom baling hay on someone else’s property?

It can be painful for the optimist to sit down and consider the “what if’s” of life. But it is much more painful to have the unexpected happen and result in costly expenditures that could even mean losing the farm. Make the time to know what’s in your policy.

Some excellent resources:

eXtension Insurance, Records and Planning

University of Wisconsin Extension – Farm Liability Insurance A3917

Virginia Cooperative Extension – Insurance Factsheet

Virginia Cooperative Extension – How Much Liability Insurance Coverage Should I Have?

Virginia Cooperative Extension – Questions to Ask When Comparing Insurance Coverage

Registration Open for 2016 East Ohio Women in Agriculture Conference

By: Emily Adams, OSU Extension Educator

Registration is now open for the third annual East Ohio Women in Agriculture Conference. This year’s conference will be April 1, 2016 at a new location, R. G. Drage Career Technical Center in Massillon. Last year over 100 women from 27 counties across Ohio attended.  This year’s program will feature 16 break-out sessions presented by OSU Extension educators, farmers, and partner agencies including: Finance, Livestock, Special Interest, Food & Family, Partner Agencies and one youth session.

The Finance track sessions include:

“Creating a Business Plan” – Holly Bolinger, Ohio Small Business Development Center, Kent State University at Stark

Learn the components of a good business plan, the resources available to assist you and how to give the bank what it needs to make a financial decision.

“An Unhappy Couple: Why Business & Personal Finances Should Never Be Together” – Cheryl Mickley, OSU Extension Educator

Tips for keeping these accounts separated

“Many Eggs – Many Baskets” – Abbe Turner, Lucky Penny Farm & Creamery

Explore how to diversify your farm or home business to provide multiple streams of income.

Kim Davis will deliver this year’s conference welcome and keynote speakers Sereana Howard Dresbach and Megan Dresbach  will address Growing Confidence, Connections and the Next Generation.

The 2012 Census of Agriculture indicates that 28% of farmers in Ohio (31,413 of 113,624 operators) are female. Women farm operators play a vital role throughout Ohio and especially in east central Ohio agriculture. Of the nineteen Ohio counties with over 500 women operators, ten are located in eastern Ohio. Wayne County ranks top in the state with over 800 women farm operators.

This conference invites women to learn about a variety of agricultural topics and to form connections with other women of similar interests. A detailed schedule and both online and mail in registration information can be found at u.osu.edu/eastohiowomeninag/

 

 

Ohio Farm Custom Rate Survey 2016

by: Barry Ward, Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics

A large number of Ohio farmers hire machinery operations and other farm related work to be completed by others. This is often due to lack of proper equipment, lack of time or lack of expertise for a particular operation. Many farm business owners do not own equipment for every possible job that they may encounter in the course of operating a farm and may, instead of purchasing the equipment needed, seek out someone with the proper tools necessary to complete the job. This farm work completed by others is often referred to as “custom farm work” or more simply “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

Ohio State University Extension collects surveys and publishes survey results from the Ohio Farm Custom Survey every other year and we need your assistance in securing up-to-date information about farm custom work rates, machinery and building rental rates and hired labor costs in Ohio.

This year we are updating our published custom farm rates for Ohio. Extension Educators in Ohio will be disseminating surveys at select educational activities throughout the winter. There is also an online survey option that anyone can access. The online survey is available at: http://aede.osu.edu/customrate2016

 

We would ask that you respond even if you know only a few rates. We want information on actual rates, either what you paid to hire custom work or what you charged if you perform custom work. Custom Rates should include all ownership costs of implement & tractor (if needed), operator labor, fuel and lube. If fuel is not included in your custom rate charge there is a place on the survey to indicate this.

 

You may access the survey at: http://aede.osu.edu/customrate2016

The deadline to complete the survey is March 31st.

 

 

 

 

Planning for the Future of Your Farm Workshops to be Held across Ohio in 2016

by David Marrison, OSU Extension Educator

What does it take to successfully pass on the farm business to the next generation? It takes a lot of hard work, time and communication to make a successful management transfer. The Farm Transition Team of OSU Extension is pleased to be offering a series of workshops across Ohio to help farm families plan for the transition of their business to the next generation.

This workshop will help farmers assess the future of the farm business, discuss developing the next generation of managers, communicate about farm succession, review retirement planning, plan for the unexpected, consider long-term healthcare costs, understand legal considerations of farm transition and discover ways to increase family communication. This workshop will challenge farm families to actively plan for the future of the farm business. In between session, farm families will be asked to hold critical family conversations to help identify planning areas that will need work to accomplish a successful farm business transition.

Some of the key topics which will be addressed during the workshops include:

  • Key questions to answer when planning for the future of the family farm business
  • Family communication in the farm transition process
  • Providing income for multiple generations
  • Farm succession with multiple offspring and family members: Fair vs. Equal
  • Retirement strategies
  • Strategies to get my farm and family affairs in order
  • Long term health care issues and costs
  • Getting your family affairs in order
  • Farm business structures and their role in estate and transition planning
  • Estate and transfer strategies
  • Trusts and life insurance
  • Tax implications of estate and transition planning

Pre-registration is required for each location. The workshop is being taught by the OSU Extension Farm Transition team in conjunction with the Wright & Moore Law Company. The sessions currently planned for 2016 are as follows. Farm families are encouraged to attend the workshop which best suits their travel and calendar needs. Specific information for each location can be obtained by contacting the host county.

 

Defiance County

Dates:                   February 18 & 25, 2016

Location:              OSU Extension Defiance County, 06879 Evansport Rd, Defiance, OH 43512

Details:                 RSVP by February 4, 2016

Cost: $60/person or $100 for 2 people from the same farm business.

Phone:                 419-782-4771

Registration Flyer at:      http://defiance.osu.edu/events/farm-business-transition-workshop

 

Champaign County

Dates:                   March 1 & 15, 2016

Location:              Champaign County Community Center Auditorium

Details:                 RSVP by February 23, 2016

Cost is $35/person or $60 per couple

Phone:                 937-484-1526

Registration Flyer at: http://go.osu.edu/agevents

 

Pickaway County

Dates:                   March 22 & 29, 2016

Location:              Pickaway Co Community Foundation, 770 N Court St, Circleville OH 43113

Details:                 RSVP by March 11, 2016

Cost is $35/person or $60 per couple

Phone:                 740-474-7534

Registration Flyer at:

http://pickaway.osu.edu/sites/pickaway/files/imce/AG_documents/2016%20Transition%20Planning%20registration%20flyer.pdf

 

Sandusky County

Dates:                   April 6 & 13, 2016

Location:              Sandusky County Job & Family Services Bldg, 2511 Countryside Dr, Fremont, OH 43420

Details:                 RSVP by March 15, 2016

Cost is $60 for the first person and $40 for each family member from same operation thereafter.

Phone:                 419-334-6340

Registration Flyer at: http://sandusky.osu.edu/

More information about the OSU Extension Farm Transition Team and media requests can be obtained by contacting David Marrison at marrison.2@osu.edu or 440-576-9008.

 

 

OSU’s Agricultural Outlook Webinar Provides Insights for 2016

by: Chris Bruynis, Assistant Professor & Extension Educator

What’s ahead for farmers and agriculture businesses in 2016? Ohio State University’s Department of Agricultural, Environmental, and Developmental Economics (AEDE) and Ohio State University Extension, both located in the College of Food, Agricultural, Environmental Sciences, will be hosting an agricultural outlook webinar on February 1, 2016, starting at 6:30 p.m. EST.  Listen and learn from OSU faculty as they discuss the opportunities and challenges for the agricultural sector, and interpret the impact of recent policy decisions on the agricultural sector.

Registration cost is $10/person and can be paid for with a major credit card. Registration can be completed on-line at https://www.regonline.com/AgOutlook2016 and is limited to 200 registrants.  Webinar log-in information will be send to all registrants closer to the event. There will be a period previous to the webinar for participants to test their connections and technology.

Topics that will be covered along with presenters include:

  • Examining Land Values, Rents, Crop Input Costs & Margins in 2016 – Barry Ward, OSU Extension Leader in Ag Production Management
  • President Obama’s Clean Power Plan and Ohio – Brent Sohngen, OSU Department of Agricultural, Environmental and Development Economics
  • The Trans-Pacific Trade Partnership: What Might it Mean for U.S. Agriculture? – Ian Sheldon, OSU Department of Agricultural, Environmental and Development Economics
  • Grain Markets in 2016 – Matt Roberts, OSU Department of Agricultural, Environmental and Development Economics

These presentations will provide excellent information and insights that will benefit farmers and agricultural leaders as they make plans for 2016 and beyond. Direct questions to Chris Bruynis, OSU Extension at bruynis.1@osu.edu or 740-702-3200.

Section 179 Expensing Increased and Bonus Depreciation Allowed Under "Protecting Americans from Tax Hikes" Act

By Larry R. Gearhardt, Assistant Professor and Field Specialist in Taxation, OSU Extension

On December 18, 2015, Congress passed and the President signed into law an agreement on tax extenders and numerous other tax provisions in the “Protecting Americans from Tax Hikes (PATH) of 2015” (the Act). Tax extenders are the 50+ tax provisions that are routinely extended by Congress on a one- or two-year basis. The Act makes permanent many of the individual and business extenders. Some of the more pertinent provisions are as follows:

Section 179 Expense Deduction

Under Sec. 179 of the Internal Revenue Code, a taxpayer may elect to deduct as an expense, rather than to depreciate over time, up to a specified amount, the cost of new or used tangible personal property placed in service during the tax year in the taxpayer’s trade or business. In this case, “taxpayer” does not include an estate, trust, or certain non-corporate lessors. The maximum annual expensing amount generally is reduced dollar-for-dollar by the amount of Code Sec. 179 property placed in service during the tax year in excess of a specified investment ceiling.

The old law provided that, for 2015, the maximum expensing limit was $25,000 and the investment ceiling was $200,000. Pursuant to the new law, the expensing limit was increased to $500,000 and the investment ceiling was increased to $2,000,000 before the phase-out begins. These amounts were made retroactive to the beginning of 2015 and they were made permanent for future use. In addition, for any tax year beginning after December 31, 2015, both the $500,000 and the $2,000,000 are indexed for inflation.

The amount eligible to be expensed in a tax year cannot exceed the taxable income derived from the taxpayer’s active conduct of a trade or business. The amount deducted under Code Sec. 179 can offset the taxpayer’s income, but it cannot be used to create a loss. However, any amount that is not allowed as a deduction because of the taxable income limitation may be carried forward to succeeding tax years.

“Eligible property” for Code Sec. 179 purposes is any tangible property that is Code Sec. 1245 property (generally machinery and equipment) depreciated under the MACRS rules of Code Sec. 168, regardless of its depreciation recovery period. In short, if you can depreciate it, the property would qualify for Sec. 179 treatment. “Eligible property” includes machinery and equipment; property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment; livestock, including horses, cattle, hogs, sheep, goats, mink and other fur bearing animals; grain bins; single purpose livestock and horticultural structures; and agricultural fences and drainage tile. Both new and used property qualifies.

The Code Sec. 179 deduction applies to the tax year when the eligible property is “placed in service.” This may be different than the date of purchase. Property is “placed in service” when it is ready and available for a specific use, even if the item is not being currently used. Warning: writing a check on the last day of the year to purchase new machinery or equipment does not automatically qualify that item to be deducted in that tax year. In addition to writing the check, the machinery or equipment must be ready and available to use in that tax year. This may be extremely important when taking on a long-term project, such as constructing a building.

A Code Sec. 179 deduction is taken on tax form 4562. The taxpayer may elect to deduct the entire cost of the property (within limitations), none of the cost, or a portion of the cost of the item. Even though Code Sec. 179 provides for a “deduction,” taking the deduction reduces the basis in the property the same as if it was depreciated. A “recapture” of the deduction may be triggered if the item is later sold for more than its basis.

Bonus First-Year Depreciation Extended Through 2019

There was no Accelerated First-Year Depreciation (AFYD) for 2015 under the old law. Under the new law, Congress provided some future stability by providing for AFYD through 2019, albeit on a decreasing scale. Eligible taxpayers will be able to claim:

  • A 50% bonus depreciation allowance for qualified property placed in service in 2015, 2016, and 2017;
  • A 40% bonus depreciation allowance for qualified property placed in service in 2018; and
  • A 30% bonus depreciation allowance for property placed in service in 2019.

In general, property qualifies for the bonus depreciation allowance if it is property to which the modified accelerated cost recovery system (MACRS) rules apply with a recovery period of 20 years or less. This includes virtually all of the items used in agriculture. Unlike the Code Sec. 179 expense deduction, which applies to both new and used property, the bonus depreciation allowance applies to only new property. Its original use must commence with the taxpayer.

The bonus depreciation allowance is also taken on tax form 4562. The basis of the property and the depreciation allowances in the year of purchase and later years are appropriately adjusted to reflect the additional first-year depreciation deduction. A taxpayer may elect out of additional first-year depreciation for any class of property (as opposed to an individual item) for any tax year.

 

New Rule for Plants With Long Production Periods

The Act contains a special new rule for plants planted or grafted after December 31, 2015 and before January 1, 2020. Bonus depreciation is allowed for certain trees, vines, and plants bearing fruit or nuts when planted or grafted rather than when the plant reaches income-producing stage. Under the old law, for depreciation purposes, fruit-bearing or nut-bearing plants were deemed “placed in service” when they reached an income-producing stage. The “placed in service” rule was relaxed in the Act so that a fruit-bearing or nut-bearing plant is deemed “placed in service” when planted or grafted. Therefore, plants with a long pre-production period can qualify for the bonus depreciation allowance under the new law.

A “specified plant” that qualifies is a plant, planted or grafted in the United States, that is: (1) any tree, vine, or plant that bears fruit or nuts; or (2) any other plant that will have more than one yield of fruits or nuts and generally has a pre-productive period of more than two years from the time of planting or grafting to the time that the plant bears fruit or nuts.

Other Extended Provisions Worth Noting

In addition to the foregoing provisions, the PATH Act extended the following provisions, among others:

  • A permanent extension of the general state and local sales tax deduction.
  • A permanent extension of the $250 educator expense deduction.
  • A permanent extension of the Credit for Increasing Research Activities (research credit)
  • A permanent extension of the 15-year recovery period for qualified leasehold improvements, qualified restaurant property and qualified retail improvements.
  • An extension of the tuition and fees deduction through 2016.
  • An extension of the nonbusiness energy credit through 2016.
  • An extension of mortgage insurance premiums paid or accrued as an itemized deduction through 2016.
  • An extension of the qualified principal residence indebtedness exclusion for debt discharge income through 2016.

2016 Standard Mileage Rates for Business, Medical and Moving Announced

By: Larry Gearhardt, Field Specialist, Taxation, Ohio State University Extension

 

The Internal Revenue Service has issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

Farmland Leasing Workshops Offered Throughout Ohio

Source: Barry Ward, Assistant Professor, OSU Extension Leader, Production Business Management, Department of Agricultural, Environmental and Development Economics and Peggy Hall, Assistant Professor, OSU Extension Director, Agricultural & Resource Law Program

Ohio State University Extension will offer four Farmland Leasing Workshops throughout Ohio this upcoming February, 2016. The three hour workshops will include topics of interest to both landowners and farm operators, such as factors affecting leasing options and rental rates, analyzing rent survey data and legal requirements and provisions for farm leases. The speakers will help attendees consider how to use data in negotiations and to apply legal information to leasing practices. Workshop presenters include Barry Ward, Assistant Professor, OSU Extension and Leader, Production Business Management and Peggy Hall, Assistant Professor, OSU Extension and Director of OSU’s Agricultural & Resource Law Program.

Topics included in the workshop are:

Factors affecting leasing options and rates

Evaluating cash rent survey data

Farmland leasing options: fixed and flexible cash leases

Creating a legally enforceable lease

Legal provisions in farmland leases

Analyzing good and bad leasing practices

Dates and Locations of Farmland Leasing Workshops:

February 3, 2016, 1:00 pm—4:00 pm

Location: Kent State University Tuscarawas, New Philadelphia, Science and Advanced Technology Center

Registration:http://coshocton.osu.edu/program-areas/agriculture-and-natural-resources/news-and-upcoming-events

Questions: Contact Chris Zoller at 330-339-2337 or Emily Adams at 740-622-2265.

 

February 10, 2016, 6:00–9:00 pm

Location: OSUE Clermont County

Registration:  Contact OSU Extension at 513-732-7070

 

February 17, 1:00–4:00 pm

Location: OSUE Defiance County

Registration: Contact OSU Extension Defiance County at 419-782-4771; clevenger.10@osu.edu

 

February 17, 6:00 p.m.—9:00 pm

Location: OSUE Putnam County

Registration and questions: Contact Beth Scheckelhoff at 419-592-0806; Scheckelhoff.11@osu.edu

 

Check the events calendar at http://aglaw.osu.edu for workshop details.

President signs into law funding and tax extender bills impacting a host of tax provisions.

Source: Larry Gerhardt, OSU Extension Specialists, Taxation

The following article contains excerpts from the December 21 RIA Weekly Tax Watch, Checkpoint, published by ThompsonReuters, Inc.

On December 18, Congress passed and the President signed into law the “Consolidated Appropriations Act, 2016” and “Protecting Americans from Tax Hikes (PATH) Act of 2015,” funding the government and providing a number of significant tax changes. The Senate, by a vote of 65-33, had passed this legislation earlier in the day. The House had passed the Consolidated Appropriations Act earlier in the morning, by a vote of 316 to 113, and had previously passed the PATH Act, by a vote of 318 to 109, on December 17.

Tax provisions in the PATH Act include: the retroactive extension of the 50 or so taxpayer-favorable tax ”extender”—temporary tax provisions that are routinely extended by Congress on a one- or two-year basis that had been expired since the end of 2014, making permanent more than a dozen individual and business extenders (including the enhanced child tax credit, American opportunity tax credit, and earned income tax credit, parity for exclusion from income for employer-provided mass transit and parking benefits, the deduction of State and local general sales taxes, the research credit, and 15-year straight-line cost recovery for qualified leasehold improvements . . . ).

Three tax provisions particularly relevant for agriculture are:

 Extension and modification of increased expensing limitations and treatment of certain real property as section 179 property. The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software and qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) also are permanently extended. The provision modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016 and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing. The provision further modifies the expensing limitation with respect to qualified real property by eliminating the $250,000 cap beginning in 2016.

 Extension and modification of bonus depreciation. The provision extends bonus depreciation for property acquired and placed in service during 2015 through 2019 (with an additional year for certain property with a longer production period). The bonus depreciation percentage is 50 percent for property placed in service during 2015, 2016 and 2017 and phases down, with 40 percent in 2018, and 30 percent in 2019. The provision continues to allow taxpayers to elect to accelerate the use of AMT credits in lieu of bonus depreciation under special rules for property placed in service during 2015. The provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. The provision also modifies bonus depreciation to include qualified improvement property and to permit certain trees, vines, and plants bearing fruit or nuts to be eligible for bonus depreciation when planted or grafted, rather than when placed in service.

 Extension and modification of research credit. The provision permanently extends the research and development (R&D) tax credit. Additionally, beginning in 2016 eligible small businesses ($50 million or less in gross receipts) may claim the credit against alternative minimum tax (AMT) liability, and the credit can be utilized by certain small businesses against the employer’s payroll tax (i.e., FICA) liability.