Congress has passed a deal averting the fiscal cliff (at least for now); but this is a tax bill and tax bills are rarely simple.
This tax bill is more than merely an agreement setting tax rates; it includes numerous authorizations and reauthorizations that affect a wide variety of people and businesses. Some of our favorite tax deductions were scheduled to ‘go over the cliff’ and this bill reauthorizes them.
So what are the clauses that are most likely to affect the MARPA Community? Here are a few:
- Extension and modification of research credit – this credit is extended through 2013, with new rules that apply to treatment of the credit when a company acquires another company.
- Extension of employer wage credit for employees who are active duty members of the uniformed services – this permits an eligible small business employer to take a credit for differential wage payments made to qualified employees (very important to the numerous MARPA members who employ reservists).
- Extension of increased expensing limitations – the increased limit on Section 179 expensing, which has been scheduled to be reduced to $25,000, is extended for 2013. This means that for 2013, businesses will be able to expense up to $500,000 (there are limits to this provision, so please read the law carefully).
- Extension of bonus depreciation – the bonus depreciation provisions are extended for another year, so they cover property put into service in 2013. Bonus depreciation permits the first year depreciation for depreciable property to be increased, permit an acceleration of deductions related to such property, which can be important to companies considering investment in new production equipment.
The bill also delays the effect of sequestration, which may provide some relief to those supporting defense contracts, but is also expected to foster continued uncertainty about those contracts.
As always, this article is meant to provide some ideas about what tax options may be available, but it is not meant to reflect tax advice. For specific tax advice, you should consult with your tax attorney or accountant.