This past June, I penned an article for IA entitled “Tax Talk: Section 179 – Status Update,” in which I tacitly warned readers and practitioners to watch the tax legislation after the November mid-terms for a new tax bill. Well, the wrangling has begun in earnest, and what do you suppose we have? If you guessed gridlock, bullying, veto threats, or child-like tantrums, you’ve been doing your reading.
To get an idea of what the Tax Extenders Bill is, below is a much abbreviated list of expiring tax deductions/credits that will be lost:
- A variety of credits designed to increase employment (my take: if you analyze these credits by the numbers, many of these credits have been effective in raising employment),
- Deduction for state and local sales tax (my take: if you live in a state with no state income tax, you love this deduction; if not, you probably don’t know it exists),
- Enhanced Section 179 deduction (my take: in the business world, this deduction rules; for more information, see my June article here.)
- 50% Bonus Depreciation allowing businesses to deduct up to 50% of the cost of a newly purchased asset (my take: if I had to choose between this and the renewal of the Section 179 deduction, give me 179),
- The $250 deduction for school teachers spending their own money for supplies, etc. (my take: my school teacher clients love this deduction, so I’m 100% for it; anything to improve the education of our kids will win my vote), and
- A large number of other items, some with merit (in my opinion), others laughable (my favorite…a temporary increase in limit on cover over rum excise tax revenues to Puerto Rico and the Virgin Islands…seriously?).
Back to the wrangling…so, all of this wrangling prompted the House to revise their original thoughts into a one-year extension for the package of tax breaks aptly named the Taxpayer Tax Increase Prevention Act of 2014. And, of great note, this bill received heavy bipartisan support passing by a whopping 378- 46 vote. Could this make one think that maybe, just maybe, there is some wisdom to passing this bill? Well…
When asked, Senate Majority Leader Harry Reid indicated it was imperative that the Senate pass a government spending bill and a defense spending bill. Well, what about the tax extenders?
Senator Reid: "Everyone knows we have to do a spending bill. Everyone knows we have to do a defense bill," Reid said on the Senate floor. "Everyone knows that we’re trying to do some tax extenders. We’re trying to do that but we’ll see."
News flash: as of last Friday, the House-passed bill had not yet even been sent to the Senate for consideration.
So, with Congress set to adjourn this Friday, not to return until early January 2015, what are the chances the Senate will a) accept and pass a House-passed bill without any changes, b) send it the President for signature (assuming he will sign it), and c) do all of this by Friday, December 12, 2014?
If you were a betting person, how would you wager on any tax extensions? As is, Vegas hasn’t even posted odds…