Legislation (H.R. 5771) is making its way through Congress that would extend through Dec. 31, 2014, many popular tax breaks that expired on Dec. 31, 2013. The bill was passed by the House of Representatives on Dec. 3 and is currently awaiting Senate action.
If the bill is passed, the following business and individual income tax provisions will be extended.
- The tax credit for increasing research activities
- 50 percent bonus depreciation
- Increased small-business expensing (Section 179) limit
- The 100 percent exclusion from gross income of gain from the sale of small-business stock purchased during 2014
- 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 to five years
- The work opportunity tax credit
- The tax deduction for state and local general sales taxes in lieu of state and local income taxes
- The tax deduction for contributions of capital gain real property for conservation purposes
- The tax deduction for qualified tuition and related expenses
- The tax exemption for certain distributions from individual retirement accounts for charitable purposes
It remains to be seen if the Senate will pass the bill or if President Obama will sign the bill if it is passed by the Senate. For now, taxpayers will need to continue to play the annual waiting game for these important tax provisions. If passage of the extenders package is delayed, the IRS might be delayed with processing tax returns.