Congress Extends Dozens of Tax Incentives for 2014 Only
Congress has approved an extension of dozens of tax incentives which had expired at the end of 2013. That legislation now goes to the White House, where President Obama is expected to sign it into law. This last-minute reinstatement would be retroactive to Jan. 1, 2014, but expires again on Dec. 31 without more Congressional action this year or next. That means taxpayers have an opportunity for tax minimization that requires immediate action to benefit for the 2014 tax year. If you think these tax situations identified below apply to you, please contact your AGH tax professional immediately.
The legislation affects a broad range of significant tax strategies, including Section 179 expensing, bonus depreciation, research and development tax credit, and 15-year straight-line cost recovery for qualified leasehold improvements. Here's a brief overview of the provisions and changes which will affect the most taxpayers:
- Section 179 expensing for small businesses: Reinstates the maximum expense deduction to $500,000 for qualifying depreciable business assets acquired in tax years beginning in 2014. The expensing limit was set to decrease to $25,000 for tax years beginning in 2014.
- Bonus depreciation expense deduction: Reinstates the 50% bonus depreciation deduction for qualified depreciable property acquired prior to Jan. 1, 2015. The bonus depreciation deduction was scheduled to expire for property placed in service after Dec. 31, 2013.
- Research and development tax credit: Reinstates the research and development credit for qualified research expenses incurred through Dec. 31, 2014. The credit was scheduled to expire for amounts paid or incurred after Dec. 31, 2013. The credit is equal to 20% of the amount by which qualified research expenses exceed a base amount.
- Qualified leasehold improvements: Reinstates the shorter 15-year depreciation life for qualified leasehold improvements made to the interior portion of certain nonresidential real property. This includes qualified restaurant property, and retail improvement property. The depreciable life was scheduled to increase to 39 years for leasehold improvements made after Dec. 31, 2013.
For more information or questions about how this may affect you, please contact your AGH tax professional, AGH's Shawn Sullivan, or Eric Thummel using the information below.
Senior Vice President
Shawn serves as one of two primary leaders in the firm’s large tax group. He has extensive public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, wholesale/retail distribution, real estate development and management, construction, and contractor industries. In addition to enhancing business performance to minimize tax consequences, he has experience in mergers and acquisitions and international tax and business structuring.
A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.
Tax/Construction Team Leader
Eric Thummel leads the firm’s construction team and he also has experience serving manufacturing and agribusiness clients as well as providing individual and trust tax services. Eric is a certified public accountant who serves on the board of the Greater Wichita Area Construction Financial Management Association chapter. He’s also a member of the Agribusiness Council of Wichita, Kansas Society of Certified Public Accountants and the American Institute of Certified Public Accountants.
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NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.