Legislative update - Ways and Means acts to extend six expired provisions 

April 29:  The House Ways and Means Committee today approved—on a mostly partisan basis—bills that would permanently extend six of the more than 50 “tax extenders.” The committee approved no revenue offsets for any of the extensions, which together would cost $310 billion over 10 years.

Tax extenders to be made permanent

The six bills (each identified below by the bill number) would make permanent:


  • Research and experimentation credit (H.R. 4438)
  • Exceptions under subpart F for active financing income (H.R. 4429)
  • Look-through treatment of payments between related controlled foreign corporations (CFC) under the foreign personal holding company rules (H.R. 4464)
  • Section 179 expensing (H.R. 4457)
  • Basis adjustment to stock of S corporations making charitable contributions of property (H.R. 4454)
  • Reduction in S corporation recognition period for built-in gains tax (H.R. 4453)

Research credit proposal

Under the research credit bill (H.R. 4438), for tax years beginning after 2013, the “traditional” method of computing the credit would be repealed, and the Alternative Simplified Credit (ASC)—which has been elective—would be the only available method of computing the credit.


  • The ASC would be raised from 14% to 20%, for research spending in excess of 50% of the average spending in the three preceding tax years.
  • A special ASC method for taxpayers that did not have research expenses in all three preceding years would be modified to allow them a credit of 10% of their current research spending.
  • The credit for “basic” research spending would be modified to make it, also, a credit equal to 20% of current year “basic” research spending in excess of 50% of the three-prior-year average spending.

Senate Finance action on tax extenders

On April 3, the Senate Finance Committee approved legislation that would extend 53 of the expired provisions for two years, through 2015. The extensions would cost $85 billion over 10 years.


Finance Chairman Ron Wyden (D-OR) on April 28 introduced a bill representing the committee’s action. It is not yet available.




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

Subscribe

Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.


Email your contact information.

TaxNewsFlash-United States by year