Summary of provisions approved February 9, 2018

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Tax Legislative Update
Breaking news from Capitol Hill
From Grant Thornton’s Washington National Tax Office
Feb. 9, 2018
2018-02
Congress extends expired tax provisions and amends Tax Cuts and Jobs Act
Congress attached a substantial tax package to the government funding bill enacted on Feb. 9, reinstating
dozens of tax incentives that expired at the end of 2016 and making the first revisions to the recently enacted tax
reform bill.
The Bipartisan Budget Act of 2018 (H.R. 1892) emerged from a compromise between Senate Democrats and
Republicans, and includes tax priorities from both sides. Most significantly, it reinstates the “extender” tax
provisions that had expired in 2016. But the overwhelming majority of these provisions were only extended for a
single year. They are now retroactively available for 2017, but remain expired for 2018. Key extender provisions
extended for 2017 include (full list available in table below):
 Alternative and biofuel fuel credits
 Section 45L credit for energy-efficient new homes
 Section 25C for energy-efficient home improvement
 Section 25D for residential energy property
 Section 179D deduction for energy-efficient commercial building property
 Indian employment tax credit under Section 45A
 Railroad track maintenance tax credit under Section 45G
 Expensing for advanced mine safety equipment
 Mine rescue team training credit under Section 45N
 Three-year depreciation for racehorses
 Seven-year cost recovery for motor-sports entertainment complexes
 Special expensing for film and television and live theatrical productions
 Section 199 deduction for Puerto Rican production activities
The Section 48 and Section 45 energy credits were also extended for the property types excluded from last
extension, but with various date and credit ranges.
H.R. 1892 also includes the first changes to the Tax Cut and Jobs Act since it was enacted late last year. The
changes are narrow, but still something of a surprise. Democrats had previously signaled that they would

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oppose any incremental corrections or fixes, and would instead craft a unified platform for replacement. The
revisions do the following:
 Expand the availability of the newly created opportunity zones in Puerto Rico
 Limit the scope of new excise tax on college and university endowments to those with 500 “tuition-
paying” students (and more than 50% in the United States) rather than just 500 students
 Clarify that the changes to alcohol excise taxes shall be not construed to pre-empt, supersede, or
otherwise limit or restrict any state, local or tribal law that prohibits or regulates the production or sale
of distilled spirits, wine or malt beverages.
The enactment of these provisions is a good sign for hopes that Congress can address some of the ambiguities
and errors in the legislation. Their passage may indicate less reluctance than expected from Democrats to help
clean up other technical glitches and unintended results. Still, further changes will likely be an uphill battle.
Democrats received major concessions in this agreement, and are likely levy heavy demands for any future
TCJA changes. It’s worth noting that Republicans could not secure a key fix they have been pushing. The bill did
not include a change to the new pass-through income deduction under Section 199 that would alleviate a bias in
favor of grain cooperatives.
The bill also expands the designated disaster areas qualifying for the employer-retention credit and other tax
incentives in the aftermath of Hurricanes Harvey, Irma and Maria. Similar incentives are also made available to
disaster areas from the California wildfires. For more information on disaster related incentives, see our Tax
Insights.
Finally, the bill includes a handful of new tax changes that have been committee and member priorities. The
provisions run the gamut, from IRS administrative changes on issues like installment payment fees,
whistleblower awards, and wrongful levies, to changes on hardship distributions.
The following provides more details on the tax provisions.
Extenders
The legislation extends the bulk of the provisions that expired at the end of 2016 for just one year. They are
generally reinstated for 2017, but remain expired for 2018. The outlook for further extension is unclear. Many
Senate Republicans supported a two-year extension, while House Ways and Means Committee Chair Kevin
Brady, R-Texas, opposed any extension at all. The one-year compromise keeps them alive for now, but taxpayers
can no longer count on Congress to routinely extend these provisions with little controversy. Now that many of
the most popular former temporary tax provisions are permanent and tax reform has been achieved, there is
significant Republican reluctance to keeping the extender process alive. The table below details the provisions
that have been extended.
Provision The Bipartisan Budget Act of 2018
Individual tax provisions
Above-the-line deduction for qualified tuition  Extends for 2017
Deduction for mortgage insurance premiums  Extends for 2017

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Provision The Bipartisan Budget Act of 2018
Exclusion for principal residence debt
forgiveness income
 Extends for 2017
General business tax provisions
Indian employment tax credit  Extends for 2017
Railroad track maintenance tax credit  Extends for 2017, with transition relief allowing safe harbor assignments
pursuant to a binding written contract within 90 days of enactment
Mine rescue team training credit  Extends for 2017
Depreciation provisions
Three-year depreciation for racehorses  Extends for property placed-in-service in 2017
Seven-year cost recovery for motor-sports
entertainment complexes
 Extends for property placed-in-service in 2017
Expensing for advanced mine safety
equipment
 Extends for property placed-in-service in 2017
Special expensing for film, television and live
theatrical productions
 Extends for 2017
Energy tax provisions
Section 30B fuel cell vehicle  Extends for 2017
 Hybrid and alternative fuel vehicle credits under Section 30B remain expired
Section 30D plug-in electrical vehicle credit  Credit for plug-in motorcycles is extended for 2017
 General plug-in vehicle credit, which will begin to phase out once 200,000
vehicles are sold, is unchanged
Credit for production of Indian coal  Extends for 2017
Special depreciation for cellulosic biofuel plant
property
 Extends for 2017
Incentives for biodiesel and renewable diesel  Extends for 2017 and requires the IRS to issue guidance within 30 days of
enactment, allowing submission for all 2015 claims over a 180-day period, with
payment required within 60 days
Alternative fuel and alternative fuel mixture
credit
 Extends for 2017 and requires the IRS to issue guidance within 30 days of
enactment, allowing submission for all 2015 claims over a 180-day period, with
payment required within 60 days
Alternative fuel vehicle refueling property credit  Extends for 2017
Special rule for qualified electric utility
dispositions to implement Federal Energy
Regulatory Commission or state restructuring
policy
 Extends for 2017
Section 45 Production Tax Credit  No extension for wind property, which is still available at 80% credit value for
construction commencing in 2017, 60% in 2018 and 40% in 2019
 All other property types, which had expired unless construction began before
2017, are extended for construction beginning in 2017 at 100% rate
 Election to claim Investment Tax Credit remains available for all property
Section 48 Investment Tax Credit  Extends the 30% credit for fuel cell, fiber optic solar, and small wind energy
property so that it is available along with solar energy property at full 30% rate
for construction beginning in 2017-19, 26% in 2020, and 22% in 2021
 Extends the 10% credit if available for microturbines, combined heat and
power, and geothermal energy property for construction beginning before 2022
Section 45L energy-efficient new home credit  Extends for 2017
Section 25C energy-efficient home
improvement tax credit
 Extends for 2017

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Provision The Bipartisan Budget Act of 2018
Section 25D residential energy property credit  Provides that geothermal, small wind and fuel cell property is extended
through 2021 along with solar property and at the same credit phase-down as
solar property
Section 179D deduction for energy-efficient
commercial building property
 Extends for 2017
Section 45J advanced nuclear power
production credit
 Provides that Treasury can allocate up to 6,000 megawatt capacity of unused
credit after the initial expiration of the credit on Dec. 31, 2020
 Allows certain public utilities to transfer the tax credits
Incentives for specific locations
Accelerated depreciation for Indian reservation
business property
 Extends for 2017
Empowerment zone tax incentives  Extends for 2017 and provides transition relief for nominations which included
a termination date tied to the Dec. 31, 2016 expiration date
Section 199 deduction for Puerto Rican
production activities
 Extends for 2017
Increased limit on rum excise tax cover for
Puerto Rico and the Virgin Islands
 Extends through 2021 maintains the cover-amount as based on $13.25 per
proof gallon regardless of actual tax collected
American Samoa economic development
credits
 Extends for 2017
New tax changes
The new tax changes represent less than $2 billion in revenue changes over the next 10 years. The largest
package is a series of administrative provisions that do the following:
 Extend the waiver to the statute of limitations for refunds of tax on restitution for the wrongly incarcerated
 Expand the relief for improper IRS levies on retirement plans
 Cap the installment sale fee at current amount and provides a waiver if the taxpayer’s adjusted gross
income is within 250% of poverty level and agrees to electronic payment
 Require the IRS to create a simplified individual income tax form for seniors
 Create an above-the-line deduction for attorneys’ fees related to certain whistleblower claims
 Expand the definition of “collected proceeds” for determining IRS whistleblower awards
 Create a new exception for the private foundation excess business holding tax for certain philanthropic
business holdings
Two changes are made to the retirement plan hardship distribution rules. First, Treasury is directed to remove
the ban on employee contributions and elective deferrals for six months after a hardship distribution. Second,
employers would be permitted to allow hardship distributions for employer contributions and investment
earnings.
The legislation clarifies that Section 6050W requirements for payment card and third-party network reporting
do not apply to a foreign payee merely because a payment is made in U.S. dollars. It also allows the foreign-
earned income exclusion to certain members serving in a combat zone. Finally, the bill repeals a shift in the
timing of estimated tax payments for September 2020 that was originally enacted simply for budget scoring
rules.

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Dustin Stamper
Director, Washington National
Tax Office
T +1 202 861 4144
E dustin.stamper@us.gt.com
Dustin Stamper
Director, Washington National
Tax Office
T +1 202 861 4144
E dustin.stamper@us.gt.com