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The 2014 “Tax Extenders” bill was passed by the House of Representatives last week, paving the way for a last-minute reprieve for many popular tax breaks. It still requires approval by the Senate and the President, but all indications are that this will happen by the end of the year. Although many of the approximately 50 provisions are geared toward very narrow categories of taxpayers, several popular business tax breaks will be resuscitated for 2014. It is important to be aware the extension is only effective through the end of 2014 – yes, for just a few weeks.

Some of the more common tax benefits extended are:

  • Research and development credit
  • 50 percent bonus depreciation
  • $500,000 Section 179 deduction
  • 100 percent gain exclusion for small business (“Section 1202”) stock1
  • Reduction in recognition period for S corporation built-in gains tax

A criticism of the bill is that it will be passed too late for many businesses to take advantage of the extended benefits. However, there is some time to put depreciable property in place (taking advantage of a faster write-off of these purchases), or even issue stock to investors or employees to allow such shareholders to exclude the gain on the sale of such stock from income if certain requirements are met.

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1 See "Opportunity extended to pay no taxes on sale of stock" for more information on Code Section 1202

For additional information, please contact:

Mark D. Klimek
216.348.5453
mklimek@mcdonaldhopkins.com

Tax Practice

Tax planning needs to be strategic. We consult with businesses at all stages of their development, from the initial choice of entity, through acquisition and other growth transactions, to business succession planning, and dispositions. Our tax advisors also work closely with clients on individual tax planning. Our attorneys provide businesses and individuals with comprehensive counseling in all areas of federal, state and local taxation.

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