LegiStorm

Summary:

A number of temporary tax provisions expired at the end of 2016. Although some temporary or expired provisions were addressed in the 2017 tax revision (P.L. 115-97), most of the provisions that expired in 2016 have not been extended beyond their 2016 expiration date. Some have suggested that a tax extenders bill enacted early in 2018 could retroactively extend expired tax provisions. Alternatively, another policy option is to allow expired tax provisions to remain expired. Table 1 provides information on expired tax provisions and "tax extenders." Specifically, the table includes (1) all provisions that expired in 2016 and 2017 and were not addressed in the 2017 tax revision (P.L. 115-97); (2) provisions that would be extended in the Tax Extender Act of 2017 (S. 2256); and (3) for provisions that were extended for two years, retroactive for 2015 and through 2016, in the Consolidated Appropriations Act, 2016 (P.L. 114-113), the cost of that extension over the 10-year budget window (fiscal years 2016 through 2025). However, with the enactment of P.L. 115-97, the current law tax baseline has substantively changed. Thus, past cost estimates may not necessarily be indicative of the cost of future extensions. Table 1. Expired Tax Provisions and "Tax Extenders" Provision Year Provision Expired Would Be Extended in S. 2256?Estimated Cost of Extension in P.L. 114-113 (billions) Individual Discharge of indebtedness on principal residence excluded from gross income 2016YES$5.1 Premiums for mortgage insurance deductible as interest 2016 YES $2.3 Deduction for qualified tuition and related expenses 2016 YES $0.6 Business Indian employment credit 2016 Yes $0.1 Railroad track maintenance credit 2016 Yes $0.4 Mine rescue team training credit 2016 Yes -i- Three-year depreciation for race horses two years old or younger 2016 Yes — Seven-year recovery period for motorsports entertainment complexes 2016 Yes $0.1 Accelerated depreciation for business property on an Indian reservation 2016 Yes $0.2 Election to expense advanced mine safety equipment 2016 Yes — Special expensing rules for certain film, television, and live theatrical productionsa 2016 Yes -i- Deduction for income attributable to domestic production activities in Puerto Ricob 2016 Yes $0.2 Special rate for qualified timber gainsc 2016 Yes n/ad Empowerment zone tax incentivese 2016 Yes $0.5 Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands 2016 Yes $0.3 American Samoa economic development credit 2016 Yes -i- Energy Credit for certain nonbusiness energy property 2016 Yes $1.3 Credit for residential energy propertyf 2016 Yes n/ag Credit for qualified fuel cell motor vehicles 2016 Yes -i- Credit for alternative fuel vehicle refueling property 2016 Yes $0.1 Credit for two-wheeled plug-in electric vehicles 2016 Yes -i- Second generation biofuel producer credit 2016 Yes -i- Incentives for biodiesel and renewable diesel 2016 Yes $2.6 Beginning-of-construction date for non-wind production tax credit (PTC) facilitiesh 2016 Yes $1.4 Credit for production of Indian coal 2016 Yes $0.1 Credit for construction of new energy efficient homes 2016 Yes $0.8 Energy credit for hybrid solar lighting, geothermal heat pump, small wind, combined heat and power (CHP), fuel cell, and microturbine property 2016 Yes n/ag Five-year cost recovery for certain energy property 2016 Noi n/ag Special depreciation allowance for second generation biofuel plant property 2016 Yes -i- Energy efficient commercial buildings deduction 2016 Yes $0.3 Special rule for sales or dispositions to implement Federal Energy Regulatory Commission ("FERC") or State electric restructuring policy 2016 Yes — Incentives for alternative fuel and alternative fuel mixtures 2016 Yes $0.9 Oil Spill Liability Trust Fund financing rate 2017 Yes n/ag Source: Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2016-2027 (JCX-1-18), January 9, 2018; the Tax Extender Act of 2017 (S. 2256); and Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in 2015 (JCS-1-16), March 14, 2016. Notes: S. 2256 also includes an extension of Qualified Zone Academy Bond authority. However, the authority to issue tax-credit bonds, like the Qualified Zone Academy Bonds, was repealed in P.L. 115-97. An "-i-" indicates a cost of less than $50 million. An "—" indicates no revenue cost. Film, television, and live theatrical productions are eligible for additional first-year depreciation if placed in service after September 27, 2017, and before January 1, 2027. The domestic production activities deduction (Section 199) is repealed after 2017. The special rate for qualified timber gains is provided in Internal Revenue Code Section 1201(b). Section 1201 is repealed after December 31, 2017. This special rate for corporate timber gains, enacted for one year in P.L. 114-113, had an estimated revenue cost of $35 million. Empowerment zone tax incentives include designation of an empowerment zone and of additional empowerment zones; empowerment zone tax-exempt bonds; empowerment zone employment credit; increased expensing under Section 179; and nonrecognition of gain on rollovers of empowerment zone investments. Tax credits for residential solar energy property are available until December 31, 2021. The provision had not expired and thus was not extended in P.L. 114-113. Beginning-of-construction date for wind is December 31, 2019. P.L. 115-97 generally provides full and immediate expensing of capital investments placed in service after September 27, 2017, and before January 1, 2023 (with the bonus depreciation amount phased down after this date). Public utility property is generally excluded. In addition to extending expired provisions as noted in Table 1, the Tax Extender Act of 2017 (S. 2256) proposes to modify the advanced nuclear production tax credit and expand the tax credit for carbon dioxide sequestration. Additional background information on extenders generally and descriptions of expired provisions can be found in the following CRS products: CRS Report R44677, Tax Provisions that Expired in 2016 ("Tax Extenders"), by Molly F. Sherlock; CRS Report R44925, Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief, coordinated by Molly F. Sherlock; CRS Report R44930, Business Tax Provisions that Expired in 2016 ("Tax Extenders"), coordinated by Molly F. Sherlock; and CRS Report R44990, Energy Tax Provisions That Expired in 2016 ("Tax Extenders"), by Molly F. Sherlock, Donald J. Marples, and Margot L. Crandall-Hollick.