Yes Virginia, There Is A Tax Extender Bill In Congress

Jan 1 2014, 2:22pm CST | by

When you woke up this morning, it wasn’t just your pants and dignity that were missing. Also gone were the R&D credit, bonus depreciation, and the deduction for qualified tuition.

In all, 55 provisions of the Internal Revenue Code died an unceremonious death as the possum dropped last night, but understand – this is nothing new. The Code is about as permanent as a Kardashian marriage, with provisions routinely being written for a finite period, expiring, and then either proactively or retroactively being extended. It’s the worst business model imaginable – particularly because many of these short-term provisions were written specifically as business incentives, yet there tenuous nature makes it impossible for businesses to plan for them – but it’s a model that Congress has maddeningly embraced.

Consistent with this cycle, Congress is currently working to resurrect the dead provisions. Senator Harry Reid (D-NV), recently introduced Senate Bill 1859, which would extend the overwhelming majority of the expired provisions. But don’t get too excited; the extensions would only be through the end of 2014, which means we’ll be right back in this will-they-or-won’t-they mess next December.

So what would be extended by Senate Bill 1859? It’s times like this I wish I wrote for Bleacher Report, because I’d put each provision on a separate page in a gallery, make you click through all 50-plus of them, and get rich off the ad revenue. But since Forbes doesn’t care about ad revenue*, I’ll just list them out here. Remember, all provisions would be extended through December 31, 2014.

  • The Heath Care Tax Credit.
  • $250 deduction for certain expenses of K-12 teachers.
  • Exclusion of up to $2,000,000 of cancellation of indebtedness from a qualified principal residence (see here for a detailed explanation).
  • Deduction for state and local sales taxes in lieu of income taxes.
  • Above-the-line deduction for qualified tuition.
  • Up to $100,000 of tax-free distributions allowed from the IRA of someone aged 70 ½ or older directly to a charitable organization.
  • The R&D Credit.
  • The New Markets Tax Credit.
  • 15-year depreciation life for qualified leasehold improvements, restaurant buildings and retail improvements.
  • 50% bonus depreciation.
  • The Section 179 limit would remain at $500,000 (without an extension, it plummets to $25,000).
  • 100% exclusion available for the sale of qualified small business stock held longer than five years (see here for a detailed explanation).
  • Abbreviated 5-year recognition period for S corporation built-in-gains (see here for a detailed explanation). gives the bill a 20% chance of being enacted. Realistically, while many of these provisions enjoy mutual support from both political parties, others, such as the exclusion for principal residence COD and the various depreciation benefits, are less universally backed. As you might imagine, if even ONE of the provisions becomes a political bargaining chip, it could hold up the extension process for months. And as I discussed above, this largely defeats the purpose of many of the provisions, because their sole goal is to provide incentive to businesses; incentive to buy, to expand, and to invest in themselves. It’s awfully hard for a provision to accomplish this goal when it, you know…no longer exists.

*not accurate. Forbes cares a great deal about ad revenue.

Follow along on twitter @nittigrittytax

Source: Forbes Business


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

Russia to lose $40 bn a year due to sanctions: Minister
Moscow, Nov 24 (IANS/EFE) Western sanctions against Russia triggered by its actions in Ukraine will cost the country's economy $40 billion a year, Russian Finance Minister Anton Siluanov said Monday.
Excess of a protein may trigger schizophrenia
New York, Nov 24 (IANS) Overabundance of a protein in the brain cells during brain development may cause abnormalities in its structure and lead to schizophrenia, says a study.
How humans colonised the Tibetan plateau
Washington, Nov 24 (IANS) After several failed attempts to negotiate the tough terrain of the Tibetan plateau, farming cold-tolerant barley helped humans adapt to year-round living at higher altitudes some 3,600 years ago, says a new research.
Indian equity bulls should't anticipate further crude price decline (Currency Corner)
Oil is in a bear market. Over the past few months, both major crude benchmarks - Brent and Western Texas Intermediate (WTI) - have corrected by over 25-30 percent from their 2014 peak. Interestingly, and as it often happens in the financial markets, the timing of this plunge has surprised many. The fundamental factors behind the drop in oil prices—easing - geopolitical tensions, slowing economic growth, especially in the Euro area and China, the Libyan output hitting the supply market again and the US shale oil revolution (the dominant factor) — could have been factored in well before and the plunge could have been smoother and more gradual, unlike the kind of capitulation we are witnessing now.

Latest from the Network

Hamilton admits hardly sleeping the night before
Abu Dhabi, Nov 24 (IANS/CMC) Newly crowned Formula 1 World champion Lewis Hamilton has revealed he hardly slept the night before the season-ending Abu Dhabi Grand Prix which he eventually won to clinch his second...
Read more on Sport Balla
Real Madrid to play in Australian tournament
Melbourne, Nov 24 (IANS) Real Madrid, which boasts the most expensive squad in world football, have been announced as one of three teams to compete in the International Champions Cup in Melbourne in July. The...
Read more on Sport Balla
Cruzeiro win Brazil Serie A title
Belo Horizonte (Brazil), Nov 24 (IANS) Cruzeiro have clinched their second consecutive Brazilian Serie A title with a 2-1 victory over Goias. Everton Ribeiro struck the winner at the Mineirao stadium Sunday after...
Read more on Sport Balla
Honours shared in Milan derby
Rome, Nov 24 (IANS) Inter Milan have played out a 1-1 draw against crosstown rivals AC Milan in a sellout Serie A game. Jeremy Menez gave AC Milan a lead at halftime but Joel Obi equalised for Inter shortly after the...
Read more on Sport Balla
IOC chief condemns Afghan bombing
Lausanne, Nov 24 (IANS) International Olympic Committee President Thomas Bach condemned the suicide bombing at a volleyball tournament in Afghanistan. The lone bomber detonated explosives Sunday during a local...
Read more on Sport Balla
Marseille tops French league
Paris, Nov 24 (IANS) Marseille have climbed to the top of the French league after rallying to beat Bordeaux 3-1. With the victory, they now enjoy a one-point lead over Paris Saint-Germain. Bordeaux striker Thomas...
Read more on Sport Balla
New crew aboard Russian spaceship reach ISS
Washington, Nov 24 (IANS) Three new crew members from the US, Russia and Italy arrived Monday at the International Space Station (ISS) on board a Russian spaceship. Terry Virts of NASA, Soyuz Commander Anton...
Read more on Business Balla
Sears plans for big Black Friday 2014
Sears is looking foward to cashing in big time for the upcoming Black Friday 2014 shopping holiday on Novermber 28th. Members of Sears have seen their Black Friday specials start one week early and the company has...
Read more on Black Friday Countdown
Apple gears up for Black Friday
Black Friday is fast approaching and one company that plans on seeing a sales increase is Apple. Apple has announced that they will have discounted prices for the upcoming buying holiday and one product they plan on...
Read more on Black Friday Countdown
Thousands protest in Chile in favour of new constitution
Santiago, Nov 24 (IANS/EFE) Several thousand people took to the streets of Santiago and other Chilean cities to demand a Constitutional Assembly as a means to provide the country with a new constitution, as was...
Read more on Politics Balla