Section 179 Expensing
The expensing limitation is increased to $1 million and the phase out beginning at $2.5 million assets placed in service.
100 percent expensing allowed through 2022 for qualified property placed in service after 9/27/2017; 80, 60, 40 & 20 percent bonus depreciation for property placed in service in 2023–2026, respectively.
Research and Development Credit
Research and Development Credit is preserved.
Income Attributable to Domestic Production Activities Deductions (DPAD)
DPAD is repealed and no longer available. The repeal may have a great impact on manufacturing companies that previously enjoyed significant DPAD credits.
Entertainment Expense Deductions
No deduction is allowed generally for entertainment, amusement, or recreation; membership dues for a club organized for business, pleasure, recreation, or other social purposes; or a facility used in connection with any of the above. This is a significant departure and includes disallowance of meals and entertainment expenses that were previously 50% deductible.
The limit on the NOL deduction is 80% of the taxpayer’s taxable income for the current year and provides that amounts carried to other years be adjusted to account for the limitation. Therefore, income will no longer be reduced to zero with available NOL’s. Amounts are to be carried forward indefinitely and do not expire. Additionally, NOL’s can no longer be carried back 2 years, except for farming NOL’s.
Business Interest Expenses
Deduction for net interest expenses incurred by a business is limited 30% of the business’s adjusted taxable income. Businesses with average annual gross receipts of $25 million or less are exempt from the limit. Disallowed interest could be carried forward indefinitely.
Like Kind Exchanges
Deferral of gain is now limited to like-kind exchanges to real property that is held primarily for sale.