Some Tax Extenders On the Way

Several favorable tax benefits expired on December 31, 2013. For several years these benefits have expired only to see Congress “resurrect” them in the following year. The unpredictability of what laws will be extended creates havoc with tax preparers and taxpayers not knowing whether transactions in 2014 will be covered or not. Some people believe that, instead of making certain provisions permanent, they are extended each year so voters can see that their legislators voted to make these apply in the current year. It would make more sense to make certain laws permanent but it doesn’t look like that will happen too soon.

Among the laws that expired on December 31, 2013 that are currently considered to be extended in 2014 in the “Expiring Provision  Improvement Reforms and Efficiency Act (the “EXPIRE” Act”) (tax people always have to have an acronym!) are the following:

(1)  research and experimentation credit

(2)  low income housing 9% credit rate freeze

(3)  increase in expensing to $500,000/$2,000,000 in 2014 and expansion of definition of Section 179 property

(4)  basis adjustment to stock of Sub S corporations making charitable contributions

(5)  $250 above the line deduction for certain expenses of elementary and secondary teachers.

(6)   exclusion of up to $2 million of discharged principal residence indebtedness from gross income

(7)  deduction for state and local sales taxes

(8)  tax free distributions from IRAs of taxpayers age 70 1/2 older for charitable purposes

ADVICE: Some of these extenders (consider the foreclosure of your home and the forgiveness of indebtedness NOT being income) are huge tax savings so keep your eye out and follow the news to see if and when these extenders are enacted.
 
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