Legislative update - House approves permanent bonus depreciation 

July 11:  The House today by a vote of 258-160 approved H.R. 4718, a bill that would make permanent 50% bonus depreciation for qualified property placed in service after 2013.

H.R. 4718 [PDF 267 KB] also would:

  • Expand the definition of qualified property to include internal portions of a building that are “qualified retail improvement property”
  • Make permanent an election that has intermittently been available to corporations to accelerate the use of certain otherwise unusable minimum tax credits, in exchange for giving up bonus depreciation on qualified property placed in service during the tax year and using straight-line depreciation; H.R. 4718 would modify the provision to allow an electing taxpayer in any tax year to take, in addition to the minimum tax credit otherwise allowed, a credit of up to 50% of the amount of alternative minimum tax from prior years that has not been used as a credit in tax years ending before January 1, 2014
  • Allow a taxpayer that plants or grafts trees or vines that bear fruits or nuts a deduction of 50% of the basis of the tree or vine in the year it is planted or grafted, beginning in 2014

Read Joint Committee on Taxation (JCT) descriptions of the bill and of an amendment in the nature of a substitute:

The bill would cost $287 billion over 10 years, according to the Joint Committee on Taxation. It contains no revenue offsets.

White House announcement

The White House on July 10, 2014, issued a Statement of Administration Policy [PDF 84 KB] announcing that the administration opposes H.R. 4718 and that a veto would be recommended if the bill were presented to the president. The administration notes that bonus depreciation was never intended to be “a permanent corporate giveaway” and that the cost would increase the deficit.

Status in the Senate

In April 2014, the Senate Finance Committee approved legislation that would extend the existing bonus depreciation rules to property placed in service in 2014 or 2015, and provide a two-year extension of the election to use additional minimum tax credits, without modification. Read TaxNewsFlash-United States.

The full Senate has not acted on that legislation.

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