House Tax Deal Seeks to Make Several Extenders Permanent

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A raft of popular tax benefits for businesses like the research and development credit would become permanent under legislation introduced late Dec. 15, setting up a potential House vote on the legislation Dec. 17.

In addition to proposing permanency for the R&D credit, with modifications to let qualified small businesses claim it against the alternative minimum tax and their payroll taxes, the legislation would permanently extend increased expensing limits under Section 179 of the tax code and the subpart F exception for active financing income.

Beyond addressing tax extenders, the wide-ranging bill would also establish new restrictions on companies’ tax-free spinoffs into real estate investment trusts or REITs, as recently proposed by House Ways and Means Committee Chairman Kevin Brady (R-Texas), among dozens of other changes to the tax code.

In terms of taxes tied to the Affordable Care Act, the legislation would suspend the 2.3 percent tax on medical devices through 2017. The measure, blessed by Brady, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) and ranking member Ron Wyden (D-Ore.), was released after a late-night House Republican meeting in the Capitol.

According to a summary of the bill, another permanent provision for businesses is the 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.

On the individual side, the bill would make permanent the option to claim an itemized deduction for state and local general sales taxes in lieu of an itemized deduction for state and local income taxes, as well as make permanent an enhanced version of the child tax credit.