Obama's 2016 Budget Proposal: Part 3 Business Provisions


President Obama's 2016 Budget ProposalIn Part 1 of our three part series, we presented President Obama’s 2016 Budget Proposal for individuals. This proposal was recently released. The tax proposal would increase the taxes on higher-income taxpayers. It would also provide tax breaks for low-to middle-income taxpayers. The provisions we posted on were:

  • Child Care
  • Second Earner Tax Credit
  • Earned Income Tax Credit (EITC)
  • Education Tax Benefits – The American Opportunity Tax Credit (AOTC)
  • Top Capital Gains Rate
  • Itemized Deductions
  • Limit Retirement Account Contributions
  • Buffett Rule

In Part 2, we brought up some highlights that would impact individuals and small businesses regarding gifts and inheritance tax provisions.

Our final post in our three-part series is about President Obama’s 2016 Budget Proposal provisions for businesses. We want to remind you, these are proposals only.

Business Provisions

Section 179 Expensing:

  • Would make the Sec. 179 expense cap $500,000 for 2015 (it is currently at $25,000, down from $500,000 in 2014).
  • Would raise the expense cap to $1 million in 2016. This would make the $1 million permanent with inflation adjustment for future years.

Cash Basis Accounting:

  • Would expand use of the cash method of accounting to small businesses with less than $25 million in average annual gross receipts.
  • Estimated to apply to 99% of all businesses.

Qualified Small Business Stock:

  • Would permanently extend the 100% exclusion on capital gains from sales of tax-qualified small business stock held by individuals for more than five years
  • Would eliminate the inclusion of excluded gain from the Alternative Minimum Tax

Start-Up & Organizational Expense:

  • Would increase and consolidate the deduction for start-up and organizational expenditures

Small Employer Health Insurance Credit:

  • Would expand the credit for small employers to provide health insurance to apply to up to 50 (rather than 25) full-time equivalent employees
  • Phaseout between 20 and 50 employees (rather than between 10 and 25)

Mandatory Employer IRA Payroll Deductions

  • Would require employers with 10 or more employees, who do not have a 401(k) plan, to automatically enroll full-time and part-time employees in an optional IRA payroll deduction plan

Questions About the President Obama’s 2016 Budget Proposal?

Do these provisions and rules confuse you? Are you concerned what the president’s 2016 budget has in store for you, if it is passed? If you have thoughts, questions or concerns regarding how your taxes are filed, contact us or visit any one of our locations. You may also leave your comments below or post on our FacebookGoogle+ or LinkedIn pages.

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Alex Franch

Mr. Franch is a Tax Specialist and Partner at Joseph Cahill & Associates / WorthTax. He has a diverse background including a Bachelor of Science from Boston College in Mathematics and extensive military service. Mr. Franch is an Enrolled Agent and has eight years of tax preparation experience. He has been serving individuals, families, and businesses for several years with tax and financial planning strategies and is a junior partner with the firm. Mr. Franch is licensed by the Financial Industry Regulatory Authority (FINRA) with a Series 6, 63, 65, and 7, and by the Commonwealth of Massachusetts Division of Insurance.

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