Legislative update - House passes section 179 expensing, S corporation “tax extenders” 

June 12: The House today approved two bills that would permanently extend several expired provisions.

H.R. 4457 [PDF 258 KB], America’s Small Business Tax Relief Act of 2014

  • Would permanently extend the increased section 179 expensing maximum for small business investment from $25,000 to $500,000, with the threshold over which such expensing is phased out, from $200,000 to $2 million
  • Would expand qualifying investments to software

The Joint Committee on Taxation estimated that the bill would cost $73.1 billion over 10 years.

H.R. 4453 [PDF 251 KB] S Corporation Permanent Tax Relief Act of 2014, contains two extender provisions.

  • The first would require that corporations converting from C to S corporation status must hold assets for five years, rather than 10 years as under permanent law, to avoid the corporate tax rate on the built-in gain.
  • The second provision would allow the adjusted basis of a charitable contribution, rather than fair market value, to be used in calculating an S corporation shareholder's tax benefit from the charitable contribution.

The JCT has estimated that the bill would cost $2.2 billion.

White House position

The White House threatened vetoes of both bills, stating that the administration supports extension of the expensing provision with revenue offsets.

The administration wants to work with Congress to make progress on measures that strengthen the economy and help middle-class families, including pro-growth business tax reform. However, making traditional tax extenders permanent without offsets represents the wrong approach.

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