In April 2014, both the Senate Tax Committee, and the House Ways and Means Committee each voted to extend approximately 50 tax breaks for a two-year period as part of “extender” packages.
The Senate package would cost about eighty-five billion while the House package would cost about 130 billion over 10 years. These breaks expired at the end of 2013.
High on the list of extended tax breaks in both bills is the proposed increase in the maximum Section 179 expending for 2014 and 2015 from the current $25,000 to $500,000.
The House bill would make permanent the five-year built-in-gain period for S Corporations.
The two houses will meet to reconcile their respective packages, although it is unclear whether anything gets done before the November mid-term elections.
Our staff discussed the diminished depreciation deduction for 2014 in many of our tax appointments this past few months; and it was a legitimate concern how the lower threshold was going to impact end- of- the-year decisions related to capital purchases. If the $25,000 is changed to $500,000, it allows for significant tax planning opportunities.
We will keep you posted as to the status of this legislation as it makes its way through the legislative process. It is important to keep in mind the political implications of this law change, so anything is possible. It is promising that both the House and Senate versions of the Extender package include similar language.
If you have questions about these or other issues, give the office a call and we will gladly discuss them with you!
On a lighter note, with these warm days and warm nights you can almost see the grass and alfalfa grow!! Gardens are starting to come up, and lawn movers are the equipment of choice! Enjoy the summer!!