House Committee Addresses Business Tax ExtendersApril 30, 2014
On Tuesday, April 29, the House Ways and Means Committee held a markup of six bipartisan bills that would make several business extenders permanent. The markup focused on tax provisions that expired at the end of 2013 including the Research & Experimentation tax credit and Section 179 Business Expensing.
Specifically, the committee addressed the America’s Small Business Tax Relief Act of 2014 (H.R. 4457), legislation introduced by Reps. Pat Tiberi (R-Ohio) and Ron Kind (D-Wis.) that would make permanent expensing under Section 179 at its 2013 levels, allowing a $500,000 maximum of equipment expensing for companies with up to $2 million in qualified investments.
The committee examined the way S corporations’ built-in gains are recognized for tax purposes — a bill (H.R. 4453) introduced by Reps. Kind and Dave Reichert (R- Wash.) that would make the reduced five-year recognition period for those gains permanent and an incentive for S corporations that donate property (H.R. 4454).
The markup also addressed two provisions that help multinational corporations: an exemption for those corporations’ active financing income (H.R. 4429) under Subpart F, and the so-called “look-through” rules guiding payments between subsidiaries of the same corporation (H.R. 4464).
Finally, the committee dealt with legislation (H.R. 4438) introduced by Rep. Kevin Brady (R-Texas) that would simplify and make permanent the research and experimentation tax credit.
Ways and Means Committee Chairman Dave Camp (R-Mich.), who is retiring, has long maintained that extenders should be addressed as part of a broader tax reform bill. His tax overhaul draft, released in February, would make seven extenders permanent, the ones marked-up today, along with a provision renewing accelerated depreciation for racehorses which the committee did not address.
According to the Joint Committee on Taxation, the six extenders in total will cost $310 billion over 10 years to renew and make permanent.
Meanwhile, earlier this month, the Senate Finance Committee approved a package that would extend nearly all of the 55 breaks that expired at the end of the year for two years, at a cost of about $85 billion over 10 years. Senate floor action isn’t expected until June.
To find the specific legislative language from each bill, please click below.
HR 4429, “To amend the Internal Revenue Code of 1986 to permanently extend the subpart F exemption for active financing income.”
HR 4438, “To amend the Internal Revenue Code of 1986 to simplify and make permanent the research credit”.
HR 4453, “To amend the Internal Revenue Code of 1986 to make permanent the reduced recognition period for built-in gains of S corporations.”
HR 4454, “To amend the Internal Revenue Code of 1986 to make permanent certain rules regarding basis adjustments to stock of S corporations making charitable contributions of property.”
HR 4457, “To amend the Internal Revenue Code of 1986 to permanently extend increased expensing limitations, and for other purposes.”
HR 4464, “To amend the Internal Revenue Code of 1986 to make permanent the look-through treatment of payments between related controlled foreign corporations.”