On Dec 31, 2013, a number of tax provisions expired. A bunch of tax professionals, me included, have been screaming about it ever since.
The House passed a tax extension for one more year, Dec 31, 2014, and supposedly there was an agreement with the Senate and the President to push this through. In exchange, they would then all work together to revise the tax laws for corporations.
But then Sen Reid said that he wasn’t sure the Senate would get to the Tax Extender bill until 2015. They’d then make the changes retroactive. That simply doesn’t work for business owners.
Successful business owners are constantly weighing ROI on their investments. What will be the return on an investment? Right now, it might be the time to invest in some equipment or like one of my Facebook friends is consider, starting a restaurant. Normally these are great last minute tax breaks due to the accelerated depreciation available for restaurants and bonus depreciation and Section 179 immediate expensing available for equipment and furniture purchases.
This year, though, we don’t have much of that because the tax provisions have expired. If the Tax Extender bill is passed, we’ll have it for 2014 and businesses can make the purchases. If the Senate waits until 2015, it will be too late for good planning.
Meanwhile, tax professionals and business owners wait for some good news in time to do something about it.
Tax provisions extended for one more year in the bill that passed the House include:
- Expense deduction for elementary and secondary school teachers,
- Exclusion of COD for principal residence indebtedness,
- Employer-provided mass transit and parking benefits,
- PMI deductibility as interest,
- Deduction of state and local general sales tax,
- Tax-free distributions from IRA when contributed to charity,
- Research credits,
- Low-income housing credits,
- Military housing allowance exclusion,
- New markets tax credit,
- Railroad track maintenance credit,
- Mine rescue team training credit,
- Employer wage credit for veterans,
- Work opportunity tax credit,
- Accelerated depreciation for restaurants & qualified retail,
- Bonus depreciation,
- Enhanced depreciation for charitable donation of food inventory,
- Section 179 expensing,, and
- Lots more at http://www.gpo.gov/fdsys/pkg/BILLS-113hr5771ih/pdf/BILLS-113hr5771ih.pdf
The biggest challenge with this is the uncertainty. As a tax advisor, I don’t know what to advise my clients to do. Should they make year-end purchases and hope that the bill does pass? Should we pass and then find out in 2015 we should have assumed it would pass?
It’s a tough time to be a tax advisor.