Congress Delays “Extender” Legislation Again

On December 3, the House of Representatives passed the Tax Increase Prevention Act of 2014 (H.R. 5771). The bill would extend 56 tax provisions which expired or were reduced at the end of 2013. The bill extends the provisions for 2014.

Since many of the provisions in the House‐passed bill are also in the Senate extender bill, it is expected to pass
the Senate shortly and be sent to the President before the lame‐duck session ends. Among the provisions expected to be extended are:

  • Election for itemizers to deduct sales taxes in lieu of state income tax.
  • Mortgage insurance premium deduction as mortgage interest.
  • Tuition deduction.
  • $250 teacher supply deduction.
  • Residential energy credit.
  • American Opportunity Tax Credit.
  • Reduced earnings threshold for refundable child tax credit.
  • 179 Expense deduction.  For the last few years, the so-called Section 179 expense deduction was set at $500,000.  This meant that businesses could immediately depreciate up to $500,000 for the cost of qualifying business assets. The deduction was limited to earned income and was reduced dollar-for‐dollar once the qualifying assets hit $2 million.  Without an extender the amount reverts to$25,000 for 2014.
  • Bonus Depreciation. Businesses could also write off 50% of qualified new property purchased and placed in service in 2013. It was restricted to new assets, which meant that the first use of the property had to begin with the taxpayer.  This provision was not extended and expired at the end of 2013.  Congress is expected to extend bonus depreciation for assets placed in service in 2014.

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