A variety of beneficial tax provisions expired at the end of 2013. There has been hope that this Congress would retroactively reinstate some or all of those provisions for 2014 and later years. Among the most significant of these expired provisions are:
- the ability to deduct state and local sales taxes instead of income taxes;
- the “research and experimentation” tax credit;
- the ability to expense the first $500,000 spent on depreciable equipment for business;
- the 50 percent additional first-year bonus depreciation available with respect to certain property;
- the ability to treat as an expense the cost of producing a motion picture or television program;
- the ability to exclude 100 percent of the gain realized on the sale of “qualified small business stock”;
- the ability to receive a tax-free distribution from an IRA that is used to make a charitable contribution;
- a variety of energy-based tax credits; and
- the reduction of the Subchapter S “built-in” gain recognition period from 10 years to five years.
On December 3, 2014, the United States House of Representatives passed by a wide margin the “Tax Increase Prevention Act of 2014,” which would extend most of these provisions through 2014. The Senate also passed the Act by a wide margin on December 16, and President Obama is expected to sign it.