	Introduction

This report briefly summarizes and discusses the economic impact of selected business-related tax provisions that had expired at the end of 2014 and were extended or made permanent by the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ), signed into law on December 18, 2015. Provisions not made permanent would expire at the end of 2016 or the end of 2019. In the past, these provisions have been extended one, or in some cases two, years in each piece of legislation. The Senate Finance Committee had earlier reported legislation, the Tax Relief Extension Act of 2015 ( S. 1946 ), that would have retroactively extended expired tax provisions, for two years, through 2016. This report discusses provisions that include several employer-related benefits, international provisions that provide exceptions to the Subpart F rules, special cost recovery provisions, provisions related to regulated investment companies (RICs), and several other business-related provisions. Note that bonus depreciation, which allows a deduction of 50% of equipment investment, would be reduced to 40% in 2018 and 30% in 2019, before expiring. Specifically, H.R. 961 would have permanently extended the Subpart F exemption for active financing income and H.R. H.R. Specifically, the provisions addressed in the President's FY2016 budget include (1) the increased expensing for certain businesses under Section 179; (2) the 100% exclusion for qualified small business stock; (3) the research and experimentation (R&E) tax credit; and (4) certain employment-related credits (the Work Opportunity Tax Credit [WOTC] and the Indian employment credit). This report does not include provisions that in the past have been classified as charitable, community development, individual, or housing-related provisions. These provisions are included in the following CRS reports:
CRS Report R43517, Recently Expired Charitable Tax Provisions ("Tax Extenders"): In Brief , by [author name scrubbed] and [author name scrubbed]; CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions ("Tax Extenders"): In Brief , by [author name scrubbed]; CRS Report R43688, Selected Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief , by [author name scrubbed]; and CRS Report R43449, Recently Expired Housing Related Tax Provisions ("Tax Extenders"): In Brief , by [author name scrubbed]. Look-Through Treatment of Payments between Related Controlled Foreign Corporations under the Foreign Personal Holding Company Rules15

Unless an exception applies, Subpart F income includes dividends, interest, rent, and royalty payments between related firms. Increase in Expensing to $500,000/$2,000,000 and Expansion of Definition of Section 179 Property23

This provision allows firms to expense (deduct immediately), with dollar limits, the cost of investment in equipment. 108-357 ) included special rules to allow expensing for certain film and television production costs. Three-Year Depreciation for Race Horses Two Years or Younger28

The cost recovery period for horses is seven years, although race horses that begin training after age two have a three-year recovery period. Accelerated Depreciation for Business Property on an Indian Reservation 31

The Omnibus Budget Reconciliation Act of 1993 ( P.L. Credit for Certain Expenditures for Maintaining Railroad Tracks36

Qualified railroad track maintenance expenditures paid or incurred in a taxable year by eligible taxpayers qualify for a 50% business tax credit. Temporary Increase in Limit on Cover Over of Rum Excise Tax Revenues to Puerto Rico and the Virgin Islands41

Most federal excise taxes do not apply in the United States Virgin Islands (USVI) and Puerto Rico (PR) or the other possessions. Deduction Allowable with Respect to Income Attributable to Domestic Production Activities in Puerto Rico43

The Section 199 domestic production activities deduction reduces tax rates on certain types of economic activity, primarily domestic manufacturing activities.
The Consolidated Appropriations Act of 2016 (P.L. 114-113), signed into law on December 18, 2015, made permanent, extended through 2019, or extended through 2016 some tax provisions that had expired at the end of 2014. Previous legislation had extended these provisions for a year (or in some cases two years) at a time. Several bills had been considered in the 114th Congress to make some provisions permanent, including the R&E tax credit (H.R. 880), expensing of investments (H.R. 636, S. 1399), and treatment of built-in gains for Subchapter S corporations (H.R. 636). The Senate Finance Committee had earlier reported legislation, the Tax Relief Extension Act of 2015 (S. 1946), that would retroactively extend expired tax provisions, for two years, through 2016.
This report briefly summarizes and discusses the economic impact of selected business-related tax provisions that expired at the end of 2014. The list below indicates whether a provision was made permanent or extended through either 2016 or 2019. This report discusses
Provisions that include three employer-related benefits:
Work Opportunity Tax Credit (2019) Indian Employment Tax Credit (2016) Employer Wage Credit for Activated Military Reservists (permanent)
Two international provisions that provide exceptions from the Subpart F rules:
Look-Through Treatment of Payments between Related Controlled Foreign Corporations under the Foreign Personal Holding Company Rules (2019) Exceptions under Subpart F for Active Financing Income (permanent)
Seven special business cost recovery provisions:
Bonus Depreciation (2019, phased down from the current 50% share through 2017 to 40% in 2018 and 30% in 2019) Increase in Expensing to $500,000/$2,000,000 and Expansion of Definition of Section 179 Property (permanent) Special Expensing Rules for Certain Film and Television Productions (2016) 15-Year Straight-Line Depreciation Provisions (permanent) 7-Year Recovery Period for Motorsports Entertainment Complexes (2016) 3-Year Depreciation for Race Horses Two Years Old or Younger (2016) Accelerated Depreciation for Business Property on an Indian Reservation (2016)
Two provisions related to regulated investment companies (RICs):
Treatment of Certain Dividends of RICs (permanent) RIC Qualified Investment Entity Treatment under the Foreign Investment in Real Property Act (FIRPTA) (permanent, a separate provision expands this exemption for Real Estate Investment Trusts)
Eight other business-related provisions:
Tax Credit for Research and Experimentation Expenses (permanent) Credit for Certain Expenditures for Maintaining Railroad Tracks (2016) Reduction in S-Corporation Recognition Period for Built-In Gains (permanent) Election to Accelerate AMT Credits in Lieu of Additional First-Year Depreciation (2019) Temporary Increase in Limit on Cover Over of Rum Excise Tax Revenues to Puerto Rico and the Virgin Islands (2016) 100% Exclusion for Qualified Small Business Stock (permanent) Deduction Allowable with Respect to Income Attributable to Domestic Production Activities in Puerto Rico (2016) Modification of Tax Treatment of Certain Payments to Controlling Exempt Organizations (permanent)
This report does not include provisions that in the past have been classified as charitable, community development, individual, or housing-related provisions. These provisions are included in the following CRS reports:
CRS Report R43517, Recently Expired Charitable Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] and [author name scrubbed] CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] CRS Report R43688, Selected Recently Expired Individual Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed] CRS Report R43449, Recently Expired Housing Related Tax Provisions ("Tax Extenders"): In Brief, by [author name scrubbed]