Tuesday, September 23, 2014

Just in

Congress likely to take up tax extenders in November

Washington—House approval last week of the Jobs for America Act (H.R. 4) sets the stage for post-election action on a number of Farm Bureau-supported tax incentives that lapsed at the end of last year. The legislation incorporates 15 bills previously passed by the House, including those related to section 179 small business expensing and bonus depreciation.   

Farm Bureau puts a priority on tax code provisions that give farm and ranch businesses the ability to deduct expenses immediately instead of having to depreciate them over time.   

“Because farming requires large investments in machinery, equipment and other depreciable capital, farmers and ranchers place great value on tax code provisions that allow them to write off capital expenditures in the year that purchases are made,” said Pat Wolff, American Farm Bureau Federation tax specialist. “Tax provisions that accelerate expensing and depreciation allow farmers and ranchers to better manage cash flow, minimize tax liabilities and reduce borrowing. The ability to immediately expense capital purchases also offers the benefit of reducing the record-keeping burden associated with the depreciation.”  

Section 179 allows a taxpayer to deduct all or part of the cost of new or used business property rather than depreciating the cost over a longer period of time. The immediate expensing provided by Section 179 allows farmers and ranchers to cash flow purchases that otherwise would be impossible or that would require them to incur debt expense when purchases cannot be delayed.

The bill (H.R. 4457) incorporated in the Jobs for America Act would make permanent the 2013 Section 179 small business expensing maximum limit of $500,000 with a dollar-per-dollar phase-out threshold set at $2 million. If Congress fails to adopt the legislation, the expensing limit for 2014 will be only $25,000.  

The bonus depreciation provision in the Jobs Act, passed earlier this year as H.R. 4718, would make 50 percent bonus depreciation permanent and expands the deduction to vines and trees that bear fruits and nuts.   

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