Ag Policy Blog

It's the first week of December and Congress is once again pushing deadlines on business tax breaks.

This event has become so commonplace that accounting firms, the IRS and others are increasingly accustomed to the reality. Businesses have less opportunity to plan around taxes because they are generally left with a narrow band of time to take advantage of changes in tax policy.

In other words, it's that holiday season in D.C. known as lobbying for "tax extenders" legislation.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, told reporters on Monday in Washington that he thinks there could be a mix of short-term tax extensions and some permanent changes for other tax policies. http://www.bna.com/…

The potential deal seems to be getting more complicated. The Senate wants to delay some tax changes that were part of the Affordable Care Act, a/k/a Obamacare, including the tax on expensive insurance policies, the "Cadillac tax" as well as delay taxes on medical devices.

Business groups are pushing for bigger, more permanent cuts in areas that could affect farm machinery or equipment sales.

Democrats are leveraging extensions and increases on tax breaks such as the Earned Income Credit and the Child Tax Credit.

The National Association of Manufacturers and U.S. Chamber of Commerce are making a big push to get the tax-extenders done. http://dld.bz/… http://dld.bz/…

Some of the business items included in a Senate bill last summer included:

A renewal of the $500,000 Section 179 deduction. The $500,000 deduction expired at the end of 2014 and fell all the way down to $25,000. In the past, the $500,000 deduction has been available to any business with taxable income at $2 million or lower. Businesses with equipment purchases above $2 million would see the $500,000 deduction decline on a dollar-for-dollar amount.

Bonus Depreciation: The earlier tax plan also would extend bonus depreciation for business property put into service after Dec. 31, 2014. This would reinstate 50% first-year depreciation for approved business equipment and machinery.

Energy: Cellulosic producers would like see an extension of the $1.01 per gallon second generation biofuel "cellulosic" tax credit. The tax credit expired at the end of 2014 as well. The $1 per gallon biodiesel tax credit also expired at the end of 2014.

Blender Pumps: Under the earlier bill, companies that install blender pumps, or "qualified clean-fuel vehicle refueling property," would get to claim a 30% credit, up to $30,000 per location, for putting in such blender pumps. Ethanol, biodiesel, natural gas, compressed natural gas and hydrogen pumps would be eligible for the credit for pumps put into service in 2015 and 2016.

Second-Generation Biofuel Producers: would also qualify for special 50% bonus depreciation for any facilities put into service in 2015 or 2016.

Wind, closed-loop biomass and methane production tax credits that expired at the end of last year would also be extended through 2016.

Congress is supposed to wrap up by Dec. 18 this year, but we'll see how that goes.

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