BUSINESS Extenders

The tax extenders bill passed in mid December 2014.  There were a number of tax provisions that were scheduled to expire at the end of 2013. Here is a list of a few of the business tax breaks that were set to expire.

BUSINESS Extenders: 

Credit for Increasing Research Activities: Extends through 2014 the research and development (R&D) tax credit. The R&D credit generally allows taxpayers a 20 percent credit for qualified research expenses or a 14 percent alternative incremental credit (AIRC). 

Work Opportunity Tax Credit:  Extends through 2014 the work opportunity tax credit that allows employers elect to claim a credit for a percentage of qualified first- and/or second-year wages paid to or incurred for targeted group employees during the tax year.  This target group includes veterans.   

15-Year Straight-Line Cost Recovery for Qualified Leasehold Improvements, Qualified

Restaurant Buildings and Improvements, and Qualified Retail Improvements: Extends through 2014 the 15-year straight-line cost recovery for qualified leasehold improvements. 

Bonus Depreciation: Extends through 2014 the 50% special depreciation allowance to recover part of the cost of qualified property placed in service during 2014 (2015 for certain property with a longer production period). The property must be new; used property does not qualify.  The bonus depreciation is available the first year the property is placed in service. 

Section 179: Extends through 2014 the increased expensing limitations and treatment of certain real property as section 179 property. The provision would also extend the small business expensing limitation and phase-out amounts in effect from 2010 to 2013 ($500,000 and $2 million) to property placed in service during 2014. In 2015 these amounts will revert to $25,000 and $200,000, respectively. 

Contributions of Food Inventory: Extends through 2014 the enhanced charitable deduction for contributions of food inventory of wholesome food that is saved properly.  The food inventory must be donated to an approved agency and receipted.  The deduction is equal to 50% of the donated food's appreciated value not to exceed twice the donated food's cost basis.  This extension applies to non-corporations.  The C-corporation mandate is permanent.  

Subchapter S-Corporation Charitable Contribution Basis Adjustment:  Extends through 2014 the provision providing that a shareholder's basis in the stock of an S corporation is reduced by the shareholder's pro rata share of the adjusted basis of property contributed by the S corporation for charitable purposes. A Subchapter S corporation may give appreciated stock or land to charity. Only the basis of the S corporation in the donated asset will be used to reduce the shareholder basis, even though the full fair market value deduction is claimed by the shareholder.

Subchapter S-Corporation Recognition Period for Built-in Gains Tax:  Extends through 2014 the reduction of period for which and S corporation must hold assets following a conversion from a C corporation to an S Corporation. If an S corporation that was taxed as a C corporation has built-in gains attributable to the period during which it was a C corporation, it is subject to a corporate-level tax when it recognizes the built-in gains within a certain period of time after the conversion to S corp status. The holding period is reduced from ten years to five years to avoid the corporate level tax on built-in gains. 

Energy-efficient New Homes:  Extends through 2014 the tax credit for manufacturers of energy-efficient residential homes. An eligible contractor may claim a tax credit of $1,000 or $2,000 for the construction or manufacture of a new energy efficient home that meets qualifying criteria.

*Congress.gov H.R.8 - American Taxpayer Relief Act of 2012 112th congress (2011-2012) https://www.congress.gov/bill/112th-congress/house-bill/8
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This blog is not meant to offer legal or comprehensive advice.  You should consult a tax professional for questions regarding your unique situation.