2014 Tax Extenders Act (H.R. 5771)

The House voted December 3rd to extend tax breaks through the end of 2014. The bill contained about 50 provisions benefiting individuals, businesses and non-profits. The bill now goes to the Senate for approval. Some of the larger tax breaks are noted below:

Individual Tax Breaks Extended – Amends the Internal Revenue Code to extend through 2014:
• the tax deduction for expenses of elementary and secondary school teachers.
• the exclusion from gross income of imputed income from the discharge of indebtedness for a principal residence;
• the equalization of the exclusion from gross income for employer-provided commuter transit and parking benefits;
• the tax deduction for mortgage insurance premiums;
• the tax deduction for state and local general sales taxes in lieu of state and local income taxes;
• the tax deduction for contributions of capital gain real property made for conservation purposes;
• the deduction from gross income for qualified tuition and related expenses; and,
• tax-free distributions from individual retirement accounts (IRAs) for charitable purposes.

Also extends through 2014 provisions allowing continuation of health care benefits for eligible trade adjustment assistance (TAA) and Pension Benefit Guaranty Corporation (PBGC) beneficiaries.

Business Tax Breaks Extended through 2014:
• the tax credit for increasing research expenditures (R&E);
• the low-income housing tax credit rate for newly constructed non-federally subsidized buildings;
• the Indian employment tax credit;
• the new markets tax credit;
• the tax credit for qualified railroad track maintenance expenditures;
• the tax credit for mine rescue team training expenses;
• the tax credit for differential wage payments to employees who are active duty members of the Uniformed Services;
• the Work Opportunity Tax Credit (WOTC);
• authority for issuing qualified zone academy bonds;
• the classification of race horses as three-year property for depreciation purposes;
• accelerated depreciation of qualified leasehold improvement, restaurant, and retail improvement property, of motorsports entertainment complexes, and of business property on Indian reservations;
• accelerated depreciation of certain business property (bonus depreciation);
• the special rule allowing a tax deduction for contributions of food inventory by taxpayers other than C corporations;
• the increased expensing allowance for business assets, computer software, and qualified real property;
• the election to expense advanced mine safety equipment expenditures;
• the expensing allowance for film and television production costs and costs of live theatrical productions;
• the tax deduction for income attributable to domestic production activities in Puerto Rico;
• tax rules relating to payments between related foreign corporations and dividends of regulated investment companies;
• the treatment of regulated investment companies as qualified investment entities for purposes of the Foreign Investment Real Property Tax Act (FIRPTA);
• the subpart F income exemption for income derived in the active conduct of a banking, financing, or insurance business;
• the tax rule exempting dividends, interest, rents, and royalties received or accrued from certain controlled foreign corporations by a related entity from treatment as foreign holding company income;
• the 100% exclusion from gross income of gain from the sale of small business stock;
• the basis adjustment rule for stock of an S corporation making charitable contributions of property;
• the reduction of the recognition period for the built-in gains of S corporations;
• tax incentives for investment in empowerment zones;
• the increased level of distilled spirit excise tax payments into the treasuries of Puerto Rico and the Virgin Islands; and,
• the tax credit for American Samoa economic development expenditures.

Also amends the Housing Assistance Tax Act of 2008 to extend through 2014 the exemption of the basic military housing allowance from the income test for programs financed by tax-exempt housing bonds.

Energy Tax Breaks Extended through 2014:
• the tax credit for residential energy efficiency improvements;
• the tax credit for second generation biofuel production;
• the income and excise tax credits for biodiesel and renewable diesel fuel mixtures;
• the tax credit for producing electricity using Indian coal facilities placed in service before 2009;
• the tax credit for producing electricity using wind, biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic renewable energy facilities;
• the tax credit for energy efficient new homes;
• the special depreciation allowance for second generation biofuel plant property;
• the tax deduction for energy efficient commercial buildings;
• tax deferral rules for sales or dispositions of qualified electric utilities; and,
• the excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

My Two Cents: “Better late than never!”