Married Taxpayer Filing Separately Not Entitled to Full Deduction
Married Taxpayer Filing Separately Not Entitled to Full Deduction of $1.1 Million for Mortgage Interest.
A taxpayer who elects married filing separately is limited to a deduction for interest paid on $500,000 of home-acquisition indebtedness plus interest paid on $50,000 of home-equity indebtedness, the Tax Court has ruled (Bronstein v. Commissioner, Dec. 59,060, 138 TC No. 21).
The Tax Court found that the statutory language on acquisition indebtedness and home-equity indebtedness is clear on its face. A married individual filing a separate return is limited to a deduction for interest paid on $500,000 of home-acquisition indebtedness. Likewise, a married individual filing a separate return is limited to a deduction for interest paid on $50,000 of home-equity indebtedness. The taxpayer offered no evidence to override this language and have the $1 million and $100,000 limits apply to the returns of married taxpayers filing separately.
Business and Tax News
President Signs Highway/Student Loan Bill (Jul. 9, 2012).
President Obama on July 6 signed the Moving Ahead for Progress in the 21st Century Act (MAP-21) (HR 4348 ), which raises $20.4 billion in revenue and reauthorizes the fuel and ticket excise taxes that support the Highway Trust Fund through the end of fiscal year 2014. The bill raises $9.4 billion by stabilizing interest rates for pension funds and about $9.8 billion from changes to single-employer pension plans.
Obama Plugs Extension of Middle-Class Tax Cuts.
President Obama on July 9 reiterated his call for a one-year extension of the Bush-era tax cuts for those earning under $250,000 per year, but it does not appear likely that Republicans will go along as they continue to insist on a one-year extension for all taxpayers, including the wealthy. No one should see an income tax hike next year—not families, not small businesses and other job creators.
White House Renews Call to Increase Enhanced Small Business Expensing After 2012 (Jul. 12, 2012).
The White House renewed its support for enhanced Code Sec. 179 expensing on July 11. Senior Obama administration officials announced the proposal and related initiatives for small businesses during a conference call with reporters. Under current law, the Code Sec. 179 dollar limit for tax years beginning in 2012 is $139,000 and the investment limitation is $560,000.