December 24, 2014
Business Extenders in the 2014 Tax Increase Prevention Act

In the recently enacted "Tax Increase Prevention Act of 2014," Congress has once again extended a package of expired or expiring individual, business, and energy provisions known as "extenders." The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws which have been on the books for years but which technically are temporary because they have a specific end date. Congress has repeatedly temporarily extended the tax breaks for short periods of time (e.g., one or two years), which is why they are referred to as "extenders." The new legislation generally extends the tax breaks retroactively, most of which expired at the end of 2013, for one year through 2014.

I'm writing to give you an overview of the key tax breaks that were extended by the new law. Please call our office for details of how the new changes may affect you or your business.

The extended business credits and special depreciation and expensing rules include:

The extended business credits and special depreciation and expensing rules include:

  • the research credit;
  • the employer wage credit for activated military reservists;
  • the work opportunity tax credit;
  • 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets); 
  • the election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation; 
  • the enhanced charitable deduction for contributions of food inventory;
  • increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and expanded definition of property eligible for expensing (commonly referred to as Section 179 expensing);
  • the exclusion of 100% of gain on certain small business stock;
  • the basis adjustment to stock of S corporations making charitable contributions of property;
  • the reduction in S corporation recognition period for built-in gains tax;
  • the empowerment zone tax incentives;

I hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to call.

We wish you an enjoyable holiday season spent with family and friends!