News Column

House Legislation Restores Tax Relief for Small Business Investments

June 12, 2014



WASHINGTON, June 12 -- Rep. Kevin Cramer, R-N.D. (At-Large), issued the following news release:

Today the U.S. House of Representatives passed legislation to restore and make permanent a tax deduction for equipment and property investments made by small businesses including farming operations. America's Small Business Tax Relief Act of 2014, cosponsored by Congressman Kevin Cramer, addresses a lapse in the tax code which dropped the expensing limitation for tax deductions from $500,000 to $25,000. The legislation would restore the $500,000 cap and make it permanent.https://www.govtrack.us/congress/bills/113/hr4457

"Too often our tax code punishes small businesses and farmers who are trying to invest in their operations and create jobs in the process," said Congressman Kevin Cramer. "We can reduce the tax burden on North Dakota job creators and provide some additional certainty by making these deductions permanent. I hope the Senate will join us in recognizing the importance of this bill given the need for jobs in most of the country."

"Farming and ranching are capital intensive. When the tax code keeps changing, it's difficult for farmers and ranchers to plan and invest to keep their farms and ranches growing and thriving. By making Section 179 expensing permanent, agricultural producers will be able to reduce maintenance costs, take advantage of labor-saving advances, become more energy efficient and adopt technology with confidence. We appreciate this action by the House; it will go a long way toward helping farmers and ranchers in managing their business costs and expenses moving forward," said North Dakota Farm Bureau President Doyle Johannes.

Businesses are typically allowed to recover the cost of certain property through annual depreciation deductions. Under section 179 of the tax code, small businesses have been granted the temporary ability to deduct those costs immediately, instead of over the useful life of the property. From 2010 through 2013, the expensing limitation was $500,000, but this level has now dropped to $25,000.

Under the legislation, section 179 expensing would be made permanent at the 2013 level of $500,000, with the deduction phased out for investments exceeding $2,000,000 and both amounts indexed for inflation. The legislation also would restore and make permanent rules allowing computer software and certain investments in real property to qualify for section 179 expensing. In addition, the legislation would now allow investments in air conditioning and heating units to qualify for section 179 expensing.

The bill is supported by a cross-section of industry including the American Farm Bureau Federation, Associated Builders and Contractors, National Association of REALTORS, National Association of Wheat Growers, National Cattlemen's Beef Association, National Corn Growers Association, and the U.S. Chamber of Commerce.

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