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Consideration of tax extenders, including sustaining higher Section 179 expensing levels and bonus depreciation, is expected in the lame-duck session, the American Soybean Association said in a weekly update Friday.
The group said there are three key tax issues that are still up in the air: a tax extenders package that includes extension of the $1 per gallon biodiesel tax credit; restoration of the maximum amount of expensing under Section 179 to $500,000; and reinstatement of the expired 50% bonus depreciation for the purchase of new capital assets.
ASA said each of the issues is especially important in the lame-duck session as delaying discussion into 2015 would be "problematic for tax filing season."
Specifically, lawmakers must decide whether or not to vote on tax extenders before 2015, whether the package should be for one or two years or permanent, and whether to drop some provisions from the package.
The tax extenders package is a collection of provisions that are not permanent law and expired as of Dec. 31, 2013.
Earlier this year, the Senate Finance Committee approved a bill that would extend the expiring provisions for two years, while the House has proposed making some of the provisions permanent and/or limiting the extension of the temporary credits to one year.
For many lawmakers, however, the cost of the breaks is an issue. Renewing all of the breaks that expired Dec. 31, 2013, for one year would cost about $54 billion in total, according to the Congressional Budget Office, ASA said.
A two-year proposal offered in the Senate and covering 51 breaks would cost $84.1 billion, spread over 10 years, ASA added.
The biodiesel tax credit provides support for jobs, economic development in rural communities, diversity in energy and fuel sources and reduction in greenhouse gas emissions, among others, ASA said. The group said the tax credit also improves the competitiveness of the developing biofuels industry with the mature petroleum industry.
ASA also advocated for Section 179 expensing and the bonus depreciation, which allows farmers to write off capital expenditures in the year that purchases are made rather than depreciate them over time.
The ability to immediately expense capital purchases also provides an incentive for farmers and ranchers to invest in their businesses and offers the benefit of reducing the record keeping burden associated with the depreciation, ASA said.
Under the expired law, the maximum amount that a small business can immediately expense when purchasing business assets, instead of depreciating them over time, is $25,000 adjusted for inflation.
Just last year, expensing was set at $500,000, a figure that ASA said it supports. Further, ASA also supports reinstatement of the expired 50% bonus depreciation for the purchase of new capital assets, including agricultural equipment.
More information can be found on ASA's Soy Action Center.