Last week the U.S. House of Representatives approved a bill extending many temporary tax breaks, but only through December 31. Before we totally celebrate the whopping planning opportunities that all of four weeks allow until these “new” extenders expire, the Senate still has to approve these extenders. The Senate is expected to vote on it this week so now tax planning gets a whole three weeks to incent businesses to make large capital purchases to save 2014 taxes.
Some of the business “friendly” provisions in this extenders package include:
Unfortunately, as I write this blog, these extenders are not a done deal until the Senate approves. And as we have witnessed too many times before, politics can play enormous havoc with certainty.
Even with these extenders likely passing this week, most businesses cannot make large purchases happen quickly, and, thus, are not able to take tax advantage of the extenders in 2014. As a tax planner, I would recommend taking a look at the potentially large difference in tax accumulated depreciation and corresponding book accumulated depreciation. Go through and compute the taxable income difference that you may begin (or continue) to notice when 2014 book depreciation dwarfs 2014 tax depreciation. A real possibility of a larger than expected tax liability is looming as of April 15, 2015.
Tax planners like to have a PLAN. Unfortunately, we will (once again) have no firm answers as to when or whether Congress will again extend these “extenders” into 2015, with most expiring at the stroke of midnight on January 1, 2015. Hopefully they will give us more than three weeks late next year to work with the applicable 2015 tax extender laws. And I believe in Santa Claus, the Easter Bunny and the Chicago Bears!
Written by: Jeff McGowan, CPA, CGMA
Phone: 574.289.4011, x245