Senate Passes Extenders Legislation for Calendar Year 2014

In a last minute legislative action, the Senate passed the renewal of nearly all of the so-called Extenders legislation by a vote of 76 to 16. IN the Tax Increase Prevention Act of 2014 (H.R. 5771) extends provisions that expired January 1, 2014, but which will again expire on January 1, 2015.

According to the JCT, this one year extension costs $41.6 billion over 10 years.

Excerpts from the CRS summary are below:

Subtitle B: Business Tax Extenders – Extends through 2014:

  • the tax credit for increasing research activities;
  • 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;
  • authority for issuance of 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 charitable contributions of food inventory by taxpayers other than C corporations;
  • the increased expensing allowance for business assets, computer software, and qualified real property (i.e., leasehold improvement, restaurant, and retail improvement 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 in 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.

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.

Subtitle C: Energy Tax Extenders – Extends 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.

Subtitle D: Extenders Relating to Multiemployer Defined Benefit Pension Plans – Extends through 2015 the automatic extensions of amortization periods for multiemployer defined benefit pension plans and for multiemployer funding rules under the Pension Protection Act of 2006.

Posted by Theodore H. Waggner, Esq., Associate Editor, Wealth Strategies Journal