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Tax Benefits (Section 179)



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Tax Benefits (Section 179)

Tax Extenders Moving with Bonus Depreciation, Increased Expensing

On April 3, the Senate Finance Committee approved the Expiring Provisions Improvement Reform & Efficiency Act (EXPIRE Act) with strong bipartisan support.

The legislation, known inside the beltway as “tax extenders,” continues dozens of tax provisions that expired at the end of 2013, including important capital investment incentives such as bonus depreciation and increased Sec. 179 expensing levels.

Specifically, the bill includes a two-year extension of 50 percent bonus depreciation for qualified property purchased and placed in service before Jan. 1, 2016.  It also makes a conforming change to the percentage of completion rules for certain long term contracts.

Under current law, beginning in 2014, a taxpayer may immediately expense up to $25,000 of Sec. 179 property annually, with a dollar-for-dollar phase-out of the maximum deductible amount for purchases in excess of $200,000. The EXPIRE Act would increase the maximum amount and phase-out threshold in 2014 to the levels in effect in 2010 through 2013 ($500,000 and $2 million respectively). The legislation also extends the definition of Sec. 179 property to include computer software and $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for two years.

The full Senate will likely approve the EXPIRE Act in the near future. However, the House Ways & Means Committee is moving more slowly on tax extenders, as Chairman Dave Camp (R-Mich.) has announced his desire to examine each expiring provision individually through panel hearings and mark ups expected to continue well into the fall.

Article Date: 2014-04-07

 

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