In December, President Obama signed legislation that addresses the so-called tax extenders, some of which will be extended on a permanent basis while others will receive multi-year extensions, providing much-needed stability for some of the most key small-business tax credits and deductions. This legislation was strongly supported by SBAM and our national affiliate the National Small Business Association and was an issue the organizations have fought for over many years.
Of most significance to small businesses, the new law permanently extends the research and experimentation credit; increased expensing limits under section 179; the subpart F exception for active financing income; 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements; and the reduced recognition period for S corporation built-in gains tax.
A win for the Democrats includes getting permanent renewals of both the Earned Income Tax Credit and the Child Tax Credit, that are set to expire at the end of 2017. A number of other provisions, such as bonus depreciation, the look-through rule for payments between related controlled foreign corporations under the foreign personal holding company rules, the new markets tax credit and the work opportunity tax credit would be extended for five years, while others would get two-year extensions.
Lawmakers also included in the bill a provision to delay for two years the Affordable Care Act’s excise tax on medical devices. The legislation was ultimately packaged with the omnibus spending bill.