According to a report from the Joint Committee on Taxation (JCX-3-13), 55 federal tax provisions are set to expire at the end of 2013. Congressional tax writers have notified Washington lobbyists that these temporary tax breaks will not be extended by the end of the year.
While the expiration of tax incentives is nothing new to taxpayers – who have seen Congress retroactively extend tax incentives in the past, including most of the 55 set to expire – some feel this year may be different. One reason is that 2014 will be the final year in which Dave Camp (R-Mich.) and Max Baucus (D-Mont.) will serve as chairman of the House Ways and Means Committee and Senate Finance Committee, respectively. Both Camp and Baucus are advocates of comprehensive tax reform and some believe that any extension of the tax breaks would be admission that their tax reform efforts are bound to fail. Holding-up an extenders package could be a way for Camp and Baucus to generate pressure for broader revisions to the Tax Code (which could include provisions making certain of the expiring tax incentives permanent).
While taxpayers may apply any benefits derived from the expiring tax provisions to their 2013 returns, there is no guarantee that all (or any) of these tax breaks will be available next year. As such, those taxpayers close to making a decision that may benefit from an expiring tax incentive, may want to speed-up the deliberation process. Some of the more well-known tax provisions set to expire include those for:
1. Tax credits for research and experimentation expenses
2. Tax-free distributions from individual retirement plans for charitable purposes
3. Credits for constructing energy efficient homes or purchasing energy efficient appliances
4. The work opportunity tax credit
5. Exclusion from gross income of discharge of indebtedness on principal residence
6. Party for the exclusion from income for employer-provided mass transit and parking benefits
7. Bonus first-year depreciation for 50% of basis of qualified property
8. 15-year straight-line cost recovery for qualified leasehold improvements, restaurant buildings and improvements, and retail improvements
9. Special rules for contributions of capital gain real property for conservation purposes
10. Increase in special expensing to $500,000/$2,000,000 and expansion of the definition of section 179 property
11. Special rules for qualified small business stock
12. Reduction in S-corporation recognition period for built-in-gains tax
December 17, 2013
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Written by Brad Sklar and David Drum, Publishers, Tax Planning Blog
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