House to Vote on Tax Extender Bill by Thursday

The Tax Increase Prevention Act of 2014 will extend for one year tax provisions that expired on Dec. 31, 2013

David Camp, R-Mich., is chairman of the House Ways and Means Committee. (Photo: AP) David Camp, R-Mich., is chairman of the House Ways and Means Committee. (Photo: AP)

The full House is likely to vote by Thursday on stop-gap legislation to extend by one year certain tax extenders that expired on Dec. 31, 2013. 

The bill, H.R. 5771, the Tax Increase Prevention Act of 2014, was taken up Tuesday by the House Rules Committee, which must clear all legislation for floor action. The bill will extend for one-year certain individual and business tax provisions that expired at year-end 2013.

(Related: House Renews Tax Extenders Through End of 2014)

The House Committee on Ways and Means on Tuesday released a section-by-section summary of the one-year tax extenders bill. In releasing the summary, Ways and Means Chairman David Camp, R-Mich., said extending the provisions will prevent “tax increases on millions of families and businesses as the tax year 2014 filing season begins early next year.”

By enacting H.R. 5771, “Congress can continue to pursue its efforts to make certain expiring tax provisions permanent to provide certainty and stability to families and businesses, without causing disruption for taxpayers trying to file their 2014 tax returns,” Camp said.

The Joint Committee on Taxation (JCT) estimates that the legislation would reduce revenues by $44.7 billion over the ten-year budget window (fiscal years 2015 through 2024).

The extenders package includes the following:

Section 102. Extension of exclusion from gross income of discharge of qualified principal residence indebtedness. The provision would extend through 2014 the exclusion from gross income of a discharge of qualified principal residence indebtedness. According to JCT, this provision would reduce revenues by $3.143 billion over 2015-2024.

Section 104. Extension of mortgage insurance premiums treated as qualified residence interest. The provision would extend through 2014 the treatment of qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction. This deduction phases out ratably for taxpayers with adjusted gross income of $100,000 to $110,000 (half those amounts for married taxpayers filing separately). According to JCT, this provision would reduce revenues by $919 million over 2015-2024.

Section 105. Extension of deduction of State and local general sales taxes. The provision would extend through 2014 the option to take an itemized deduction for State and local general sales taxes in lieu of an itemized deduction for State and local income taxes. The taxpayer may either deduct the actual amount of sales tax paid in the tax year, or, alternatively, an amount prescribed by the Internal Revenue Service (IRS). According to JCT, this provision would reduce revenues by $3.142 billion over 2015-2024.

Section 107. Extension of above-the-line deduction for qualified tuition and related expenses. The provision would extend through 2014 the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction is capped at $4,000 for anindividual whose adjusted gross income (AGI) does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers). According to JCT, this provision would reduce revenues by $300 million over 2015- 2024.

Section 108. Extension of tax-free distributions from individual retirement plans for charitable purposes. The provision would extend through 2014 the ability of individuals at least 70½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts (IRAs. The exclusion may not exceed $100,000 per taxpayer in any tax year. According to JCT, this provision would reduce revenues by $384 million over 2015-2024.

Section 111. Extension of research credit. The provision would extend through 2014 the research and development (R&D) tax credit. The R&D credit generally allows taxpayers a 20% credit for qualified research expenses or a 14% alternative simplified credit. According to JCT, this provision would reduce revenues by $7.629 billion over 2015-2024.

Section 125. Extension of bonus depreciation. The provision would extend 50 percent bonus depreciation to property acquired and placed in service during 2014 (2015 for certain property with a longer production period). This provision would continue to allow taxpayers to elect to accelerate the use of AMT credits in lieu of bonus depreciation under special rules for property placed in service during 2014. The provision would also continue a special accounting rule involving long-term contracts and a special rule for regulated utilities. According to JCT, this provision would reduce revenues by $1.492 billion over 2015-2024.

Section 127. Extension of increased expensing limitations and treatment of certain real property as section 179 property. The provision would extend the small business expensing limitation and phase-out amounts in effect from 2010 to 2013 ($500,000 and $2 million) to property placed in service during 2014. These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software, qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property also would be extended through 2014. According to JCT, this provision would reduce revenues by $1.434 billion over 2015-2024.

-- Related: House Renews Tax Extenders Through End of 2014

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