House Passes One Year Tax Break Extensions
On December 3, 2014, the House passed a one year extension for more than 50 tax breaks that had previously expired. While this is positive and helpful to many businesses and individuals, many had hoped for some permanent reform or at least a two year extension covering 2014 and 2015.
Discussions were underway between senior House and Senate leaders of both parties to make certain provisions permanent, but those discussions were ended by President Obamas's veto threat. The administration believed the negotiations were too heavily favoring large corporations and not doing enough for the middle class. As a result, House Republicans moved forward with a short term extension.
Some of the key items extended under the House bill are listed below.
Business Extender Items
- Research and development tax credit
- 50% bonus depreciation
- $500,000 IRC 179 limit and related phase out for qualifying acquisitions exceeding $2,000,000
- 5 year recognition period for the built-in gain tax
- Work opportunity tax credit
- Energy efficient commercial buildings deduction (IRC 179D)
Individual Extender Items
- Certain tax free distributions from IRAs for charitable purposes
- Above the line deduction for qualified tuition and related expenses
- State and local sales tax deduction
While not certain, it appears that the Senate and White House will not oppose the extender bill. The House plans to adjourn for the year next week limiting the ability to make changes.
Paul Ryan, incoming House Ways and Means Committee Chairman, has announced that he plans to pursue an overhaul of the tax code in 2015 focusing on lowering corporate rates. He has indicated that changes would need to be made to account for pass-through entities as well.
Hopefully many of these items will be addressed permanently in any tax code overhaul.