House moves to make permanent certain “tax extenders

House moves to make permanent certain “tax extenders

The House Ways and Means Committee has scheduled for Thursday, February 12, a mark-up of three bills that would make permanent certain “tax extenders”—

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  • H.R. ___, to simplify and make permanent the research credit under section 41
  • H.R. 622, to make permanent a deduction provided individual taxpayers to deduct state and local general sales tax
  • H.R. 529, to extend 529 plans, incorporate computer equipment and software into section 529, and amend the rules concerning the earnings portion of any distribution to be determined by aggregating accounts

Descriptions of these bills and revenue estimates have been prepared by the Joint Committee on Taxation and are posted on the JCT website.

Other bills move to House floor

Last week, the Ways and Means Committee reported bills to make permanent:

  • An increase in allowable section 179 expensing levels to an annual maximum of $500,000 for qualifying small businesses (H.R. 636)
  • A reduction of the recognition period for built-in gains tax in section 1374(d) to five years (H.R. 629)
  • Rules regarding basis adjustments to stock of S corporations making charitable contributions of property (H.R. 630)
  • The section 170(b) rules for qualified conservation contributions by individuals and certain corporations (H.R. 641)
  • Special rules in section 170(e)(3)(C) for contributions of food inventory, to modify the limitation on the aggregate amount of such contributions taken into account, and add rules for determining food basis and value in certain cases (H.R. 644)
  • The rule in section 408(d)(8) allowing certain tax-free distributions from individual retirement accounts (IRAs) for charitable purposes (H.R. 637)
  • Rules to lower the current 2% rate of excise tax on net investment income of private foundations to 1% (H.R. 640)

The House Rules Committee has combined these seven bills into two bills (using two of the original bill numbers).

  • H.R. 644, Fighting Hunger Incentive Act of 2015, containing the permanent extensions relating to: 
    • Food inventory
    • IRA charitable contributions
    • Qualified conservation easements
    • Private foundation excise tax (this is a new proposal, one that has not traditionally been part of the “tax extenders”)
  • H.R. 636, America’s Small Business Tax Relief Act of 2015, containing the permanent extensions relating to:
    • Section 179 expensing
    • Section 1374 built-in gain tax
    • S corporation basis adjustment

The House schedule indicates the full House will take up and consider these bills later this week.

Administration’s position

The administration issued Statements of Administration Policy (SAPs) stating that the president would veto these two bills, in large part because the revenue costs are not offset.

In the last Congress, there were various attempts to make some of these proposals permanent; however, ultimately, the proposals were extended only temporarily as part of a larger “tax extenders package.”

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