The tax code contains many provisions that are considered temporary and will expire after a set period of time. The end of 2013 is no exception.
Listed below are some of the business provisions that are currently set to expire at the end of 2013:
• Research and experimentation credit.
• Work opportunity credit.
• Increasing in Section 179 expensing.
• Bonus depreciation.
• 15-year straight line cost recovery for qualified leasehold, restaurant, and retail improvements.
These expiring provisions will not affect all businesses. For example the 15-year straight line cost recovery provision will impact only businesses making certain leasehold improvements and restaurant and retail establishments.
The deduction for research and experimentation credit will likely have a more broad effect. This credit is used by many manufacturers who research and create new and innovative processes and products. Loss of this credit could encourage companies to spend less on research.
The work opportunity credit will only affect employers seeking to hire certain disadvantaged groups. Unfortunately, one of those groups are qualified veterans.
Section 179 Expensing
The adjustment to Section 179 expensing will affect any business the purchases personal property. Section 179 expensing is set to revert from $500,000 down to $25,000. Losing the ability to expense these purchases will likely cause businesses to slow the purchase of many items.
No longer having the ability to take bonus depreciation will affect any business that purchases new personal property. Bonus depreciation is the ability to expense 50% of the cost of new personal property. The purchase of new personal property may be curtailed with the loss of this provision.
The real question is whether or not congress will act to extend some of these provisions. If congress does act, will it be before or after the end of 2013?
We are committed to staying up to date on tax issues at The Whitlock Company. We are always available to assist you with any of your planning needs. If you have any planning questions, don’t hesitate to contact us 417-881-0145.