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WASHINGTON, June 12, 2014 -- The House passed legislation Thursday that would make permanent a tax provision that allows farmers and other small businesses to immediately write off up to $500,000 in equipment purchases such as combines and large tractors rather than follow a depreciation schedule.
The Small Business Relief Act (H.R. 4457), which passed in a 272-144 bipartisan vote, would amend the Internal Revenue Code and make permanent changes brought about in H.R. 8: American Taxpayer Relief Act of 2012, also known as the “fiscal cliff” bill. At the time, the changes were temporary and were enacted for 2012 and 2013.
The bill raises the threshold for Section 179 deductions on business expenses to $500,000, the same level seen in 2012 and 2013 but higher than the $25,000 listed in the permanent law of Section 179. This allows small business owners to take an immediate deduction on capital investments instead of following a depreciation schedule.
Bob McCan, president of the National Cattlemen's Beef Association, applauded the House action, saying these kind of tax code provisions “give our producers the certainty they need to make sound financial decisions.” They also spur economic growth “by encouraging the purchase of and investment in machinery and equipment,” he said.
Legislation under consideration in the Senate would extend the tax provision by two years instead of making it permanent. The difference in approaches will likely slow down final approval, possibly until a lame-duck session after the November elections, according to Pat Wolff, senior director of congressional relations at the American Farm Bureau Federation.
“The Senate says that we should only do a two year extension and then use that two years to work on comprehensive tax reform,” Wolff said. “On the House side they want to do (comprehensive tax reform) a little bit at a time by making these provisions permanent.”
For AFBF, “the goal is to get the deductions back on the books as soon as possible,” Wolff said. “Certainly, we would like to see them be permanent, but if perfect is the enemy of getting things done, we need to get going on the two year [extensions].”