Congress Extends Certain Business Tax Deductions

Happy new year!

As a new year’s gift, Congress passed the Tax Increase Prevention Act of 2014 (“TIPA”).  It was signed into law on December 19th.

This law extended over 50 individual and business tax deductions and credits through the end of 2014 (they had all expired by the end of 2013).

Many are predicting that Congress will once again extend these tax breaks for 2015, but as of now they are not yet applicable to 2015.  It is possible that they could be retroactively applied to 2015 in late December 2015 (just like this year) but it would make more sense for tax planning if Congress passed a multi-year extension early in the next Congress.

Here is a list of some of the most important business tax provisions that were extended through 2014, and that may apply to the ASA community:

  • Research and Development Credit (TIPA Section 111);
  • Employer Differential Wage Credit for Payments to Military Personnel (TIPA Section 118);
  • Bonus Depreciation/Acceleration of the AMT Credit (TIPA Section 125);
  • Extension of increased expensing limitations under section 179 (TIPA Section 127);
  • Extension of temporary exclusion of 100 percent of gain on “qualified small business stock” (TIPA Section 136);
  • Extension of basis adjustment to stock of S corporations making charitable contributions of property (TIPA Section 137);
  • Extension of reduction in S-corporation recognition period for built-in gains tax. (TIPA Section 138);

This blog article does not address all tax provisions contained in TIPA, but only highlights previously-expired tax breaks that were extended and that may apply to the ASA community.  I do not provide tax advice and this blog article should not be treated as tax advice.

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Congress Working to Renew Business Tax Provisions

What do the following tax provisions all have in common?

  • Research and Development Tax Credit
  • Bonus Depreciation
  • Increased Expensing Limits

They are all business-friendly tax provisions that expired at the end of last year, and thus could be unavailable for businesses when they file their 2014 taxes.

These provisions have all been “temporary ” tax provisions that are regularly renewed.  The fact that they are regularly renewed means that businesses have come to rely on their regular renewal, and expect these provisions to be available.  This could be a real problem for American businesses if the provisions were not renewed; it would lead to unexpectedly high taxes for businesses.  In order to remedy the fact that these provisions are not yet renewed, Congress is still looking to reauthorize these provisions.

On December 3, the House of Representatives passed legislation that would extend these tax provisions by a year.  The measure passed by a vote of 378 – 46.  The bill is HR 5771.

The Senate is planning on taking this matter up, but wants to pass a two-year extender bill, to give businesses more confidence.

All of this needs to happen rapidly, because Congress will soon adjourn for the holidays.

Congress Passes New Budget Deal – What Does it Mean?

As you reach the office this morning, you will no doubt have already heard that Congress has passed a deal averting the fiscal cliff (at least for now).

But this is a tax bill and tax bills are rarely simple.  This tax bill is not a straightforward agreement to merely avert the fiscal cliff; it includes numerous authorizations and reauthorizations that affect a wide variety of people and businesses.

So what are the clauses that are most likely to affect the ASA Community?  Here are a few:

  • Extension and modification of research credit – this credit is extended through 2013, with new rules that apply when a company acquires another company.
  • Extension of employer wage credit for employees who are active duty members of the uniformed services – this permits an eligible small business employer to take a credit for differential wage payments made to qualified employees.
  • Extension of increased expensing limitations – the increased limit on Section 179 expensing, which has been scheduled to be reduced to $25,000, is extended for 2013.  This means that for 2013, businesses will be able to expense up to $500,000 (there are limits to this provision).
  • Extension of bonus depreciation – the bonus depreciation provisions are extended for another year, so they cover property put into service in 2013.  Bonus depreciation permits the first year depreciation for depreciable property to be increased, permit an acceleration of deductions related to such property.

As always, this article is meant to provide some ideas about what tax options may be available, but it is not meant to reflect tax advice.  For specific tax advice, you should consult with your tax attorney or accountant.

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