Tax Extenders Package Unlikely in 2013

Dec. 12, 2013

A number of popular business and individual tax breaks are scheduled to expire on Dec. 31, 2013. Recent comments by congressional leaders suggest an extenders package is not likely to be passed by the end of the year. The tax breaks scheduled to expire on Dec. 31, 2013, include:

  • The credit for research and experimentation expenses
  • The 50 percent bonus depreciation and higher Section 179 limits
  • The 15-year straight-line cost recovery for qualified leasehold, restaurant, and retail improvements
  • The work opportunity tax credit
  • Itemized deductions for state and local sales taxes

A comprehensive list of expiring provisions can be found on the Congressional Research Service’s website.

If history is any indication, some or all of these popular provisions could be extended retroactively. Retroactive extension is more likely if Congress does not pass a comprehensive tax reform package in 2014. Until congressional action is taken, businesses must deal with the uncertainty about the fate of the expiring provisions.

Although many of the available incentives are difficult to accelerate, businesses might want to take steps to complete purchases of capital assets by the end of 2013 to take advantage of the favorable depreciation and Section 179 deductions. Additionally, businesses will need to consider the expiration of these provisions in determining their income tax expense under U.S. generally accepted accounting principles.

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Howard M. Wagner
Partner, National Tax Services