Press Room: Tax Release

December 18, 2014

One-Year Extension for 2014 of Expired Tax Provisions Clears Congress

Late on December 16, 2014, the Senate voted 76 to 16 to pass H.R. 5771, the Tax Increase Prevention Act of 2014. The Act provides a one-year retroactive extension of business and individual tax provisions that expired at the end of 2013. The bill now heads to the White House where President Obama is expected to sign it into law. The Senate has now joined the House in adjourning the current Congress. A new 114th Congress, with a Republican-led House and Senate, will convene on January 6, 2015.

Highlights of the Extended Provisions

The bill provides for an extension for 2014 of most of the business and individual expired provisions. It also includes technical corrections to previously enacted tax law changes, a new tax-advantaged savings account for disabled persons, and an extension through 2015 of certain provisions related to multiemployer defined benefit pension plans. The bill does not renew a handful of provisions related to expensing of certain refinery property, manufacturing of energy-efficient appliances, and health insurance tax credits for certain unemployed individuals.     

Extenders Renewed

Among the provisions renewed through the end of 2014 under the bill are:

  • The research credit (without modification)
  • 50% bonus depreciation, including the election to accelerate AMT credits
  • 15-year recovery period for qualified leasehold, restaurant, and retail improvements
  • Increased small business expensing limits ($500,000/$2 million)
  • Exclusion of 100%gain on certain small business stock
  • Subpart F exception for active financing income
  • CFC look-through treatment
  • Deduction of state and local sales taxes for individuals
  • Tax-free distributions from IRA plans by individuals 70 ½ and older for charity
  • Five-year reduced built-in gain period for S corporations
  • Basis adjustment to stock of S corporations making charitable contributions of property
  • Production tax credit for wind and other energy credits and deductions

The Takeaway

Now is the time to review the effect of these extended provisions on 2014 year-end tax planning. Although a one-year extension was passed, it is unclear whether these items will be extended again in 2015, or whether the 114th Congress will be more successful next year in making some of the tax extenders permanent.