PART II.
The American Taxpayer Relief Act of 2012, (Act), affects American, Foreign and International businesses by extending expired or soon to be expiring temporary business tax concessions, referred to as “extenders”. Generally, this Act for businesses is based on a condensed version of the U.S. Senate Finance Committee’s Bill created on August 2, 2012. Therefore, extenders have breathed life in already expired tax concessions. Extenders also are keeping tax concessions alive that were to have become expired on December 31, 2012. Remember from Part I. of my article on the Act, I specifically noted that this Act refers to temporary and permanent tax modifications, which in all likelihood will continue to change the “permanent” tax modifications to an almost perpetual re-modification.
These extenders extend the life of the tax concessions, even though many of these concessions had already expired at the end of December 31, 2011, more than a year earlier from their re-instatement! Therefore, your tax advisor may want to be alerted to this re-instatement and question the possibility of filing Amended U.S. Individual and Corporate Tax Returns for 2011.
These extenders are as the following and I will mark those concessions that had expired in 2011 with an asterisk (*) to indicate that they are now retroactively effective to the beginning of tax year 2012:
GENERAL BUSINESS CONCESSIONS:
1. Tax credit for research and experimentation expenses (extending and modifying Internal Revenue Code, IRC, section 41(h)(1)(B))*
2. 50% Bonus depreciation for qualifying property purchased and placed in service before January 1, 2014 (2015 for certain property) (IRC section 168(k))
3. Election to accelerate AMT credits in lieu of bonus depreciation (IRC section 168(k)(4))
4. Exceptions under subpart F for active financing income (IRC sections 953(e)(10) and 954(h)(9))*
5. Look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules (IRC section 954(c)(6))*
6. 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (IRC sections 168(e)(3)(E)(iv), (v), (ix), 168(e)(7)(A)(i) and (e)(8))*
7. Increased expensing limits ($500,000/$2 million) and expanded definition of section 179 property (IRC sections 179(b)(1) and (2) and 179(f))*
8. Credit for certain expenditures for maintaining railroad tracks (IRC section 45G(f))*
9. Mine rescue team-training credit (IRC section 45N)*
10. Employer wage credit for activated military reservists (IRC section 45P)*
11. Seven-year recovery period for motorsports entertainment complexes (IRC section 168(i)(15) and 168(e)(3)(C)(ii))*
12. Accelerated depreciation for business property on an Indian reservation (IRC section 168(j)(8))*
13. Election to expense advanced mine safety equipment (IRC section 179E(a))*
14. Special expensing rules for certain film and television productions (IRC section 181(f))*
15. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico (IRC section 199(d)(8))*
16. Treatment of certain dividends of regulated investment companies (RICs) (IRC sections 871(k)(1)(C) and (2)(C), and 881(e)(1)(A) and (2))*
17. RIC qualified investment entity treatment under the Foreign Investment in Real Property Tax Act (FIRPTA) (IRC section 897(h)(4))*
18. Special rules for qualified small business stock (IRC section 1202(a)(4))*
19. Reduction in recognition period for S corporation built-in gains tax (IRC section 1374(d)(7))*
20. Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands (IRC section 7652(f))*
21. Temporary minimum low-income tax credit rate for non-federally subsidized new buildings (IRC section 42(b)(2))
22. Exclusion of military housing allowance for purposes of low-income housing tax credit (section 3005 of the Housing Assistance Tax Act of 2008) *
ENERGY TAX CONCESSIONS:
23. Placed-in-service date for wind facilities eligible to claim electricity production credit (extending and modifying IRC section 45(d) to allow a facility to be considered placed in service in 2013 so long as construction commences during the year)
24. Election to claim the energy credit in lieu of the electricity production credit for wind facilities (IRC section 48(a)(5))
25. Credit for construction of new energy-efficient homes (IRC section 45L(g))*
26. Credit for energy-efficient appliances (IRC section 45M(b))*
27. Credit for energy-efficiency improvements to existing homes (IRC section 25C(g))*
28. Alternative fuel vehicle refueling property (non-hydrogen refueling property) (IRC section 30C(g)(2))*
29. Incentives for biodiesel and renewable diesel*
− Income tax credits for biodiesel fuel, biodiesel used to produce a qualified mixture, and small agri-biodiesel producers (IRC section 40A)
− Income tax credits for renewable diesel fuel and renewable diesel used to produce a qualified mixture (IRC section 40A)
− Excise tax credits and outlay payments for biodiesel fuel mixtures (IRC sections 6426(c)(6) and 6427(e)(6)(B))
− Excise tax credits and outlay payments for renewable diesel fuel mixtures (IRC sections 6426(c)(6) and 6427(e)(6)(B))
30. Special rule for sales or dispositions to implement Federal Energy Regulatory Commission (FERC) or state electric restructuring policy (IRC section 451(i))*
31. Incentives for alternative fuel and alternative fuel mixtures (other than liquefied hydrogen)*
− Excise tax credits and outlay payments for alternative fuel (IRC sections 6426(d)(5) and 6427(e)(6)(C))
− Excise tax credits and outlay payments for alternative fuel mixtures (IRC sections 6426(e)(3) and 6427(e)(6)(C))
32. Cellulosic biofuel producer credit (IRC section 40(b)(6)(H)) (effective for fuel produced after date of enactment)
33. Special depreciation allowance for cellulosic biofuel plant property (IRC section 168(l)) (effective for facilities placed in service after date of enactment)
34. Credit for production of Indian coal (IRC section 45(e)(10)(A)(i))
35. Credit for plug-in electric motorcycles and three-wheeled highway vehicles (modification and extension of IRC section 30D)*
COMMUNITY ASSISTANCE, INFRASTRUCTURE & ECONOMIC DEVELOPMENT CONCESSIONS:
36. New markets tax credit (IRC section 45D(f)(1))*
37 Work opportunity tax credit (IRC section 51(c)(4))*
38. New York Liberty Zone tax-exempt bond financing*
39. Qualified zone academy bonds: allocation of bond limitation (IRC section 54E(c)(1))*
40. Empowerment zone tax incentives*
− Designation of an empowerment zone and of additional empowerment zones (IRC sections 1391(d)(1)(A)(i) and (h)(2))
− Increased exclusion of gain (attributable to periods through 12/31/16) on the sale of qualified business stock of an empowerment zone business (IRC sections 1202(a)(2) and 1391(d)(1)(A)(i))
− Empowerment zone tax-exempt bonds (IRC sections 1394 and 1391(d)(1)(A)(i))
− Empowerment zone employment credit (IRC sections 1396 and 1391(d)(1)(A)(i))
− Increased expensing under sec. 179 (IRC sections 1397A and 1391(d)(1)(A)(i))
− Non-recognition of gain on rollover of empowerment zone investments (IRC sections 1397B and 1391(d)(1)(A)(i))
4.1 Indian employment tax credit (IRC section 45A(f))*
42. American Samoa economic development credit (section 119 of the Tax Relief and Health Care Act of 2006 as amended by section 756 of The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010)*
BRIEF EXPLANATION OF SPECIFIC CONCESSIONS:
With 42 major concession areas to report on in this article, the specific and detailed analysis will be beyond the scope by the author. However, I will try to elaborate on some of the more salient concessions to help the reader understand their implications:
RESEARCH CREDIT CONCESSIONS:
The credit for research and experimentation expenses under IRC section 41 expired at the end of 2011. The Act retroactively extends the credit through the end of 2013 and makes changes including:
• Modifications to the rules for calculating the credit when there is a change of ownership for a portion of the trade or business and
• Modifications to the rules for aggregation of research expenses within a controlled group.
BONUS DEPRECIATION CONCESSIONS:
The Act extends for one year the 50 percent bonus depreciation for qualified property under IRC section 168(k). The provision applies to qualified property placed in service before January 1, 2014 (before January 1, 2015 for certain longer-lived and transportation assets).
The provision makes some modifications, notably decoupling bonus depreciation from allocation of contract costs under the percentage of completion accounting method rules for assets with a depreciable life of seven years or less that are placed in service in 2013. For regulated utilities, the provision clarifies that it is a violation of the normalization rules to assume a bonus depreciation benefit for ratemaking purposes when a utility has elected not to take bonus depreciation.
Generally, qualified property includes:
• Property with a MACRS recovery period of 20 years or less;
• Certain computer software;
• Water utility property; or
• Qualified leasehold improvement property.
ALTERNATIVE MINIMUM TAX CREDIT CONCESSION:
In addition, the Act provides for another temporary election to accelerate some AMT credits in lieu of bonus depreciation for property placed in service in 2013. This election allows corporations to effectively “monetize” a portion of their AMT credits in lieu of claiming bonus depreciation.
LEASEHOLD IMPROVEMENTS DEPRECIATION CONCESSION:
The Act retroactively extends the 15-year straight-line cost recovery for certain leasehold, restaurant, and retail improvements, and new restaurant buildings that are placed in service before January 1, 2014. The provision had originally expired at the end of 2011.
IRC Section 179 Expensing Limitation:
The Act increases the maximum amount and phase-out threshold in 2012 and 2013 for small business expensing under section 179 to the levels in effect in 2010 and 2011. For tax years beginning in 2013, the limitation is raised to $500,000 and would be reduced if the cost of IRC section 179 property placed in service exceeds $2 million. Within those thresholds, the Act allows a taxpayer to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. Those limitation amounts will return to $25,000 and $200,000, respectively, after 2013.
ACTIVE FINANCING INCOME EXCEPTION & CONTROLLED FOREIGN CORPORATION, CFD, LOOK-THROUGH
The exception in subpart F allowing deferral of the active financing income of a controlled foreign corporation (CFC) engaged predominantly in banking, financing, or similar business activity expired at the end of 2011. The Act retroactively extends the exception through the end of 2013.
Similarly, the IRC section 954(c)(6) look-through treatment for payments between related CFCs expired in 2011. The Act retroactively extends the treatment through 2013.
IGNORED IRC SECTIONS
Leaders of the House and Senate tax-writing committees indicated throughout 2012 that the days of routine extension of expiring tax provisions may be coming to an end. This sentiment was, at least in small measure, reflected in the Act’s extenders package.
The Act does not include Treasury 1603 grants for specified energy property in lieu of tax credits enacted in the American Recovery and Reinvestment Act of 2009. Several other provisions that typically have been part of tax extenders legislation — such as the enhanced charitable deduction for contributions of book inventories to public schools and for corporate contributions of computer inventory for educational purposes — also are excluded.
ENERGY PROVISIONS
The Act extends tax credits for construction of energy-efficient new homes, energy-efficiency improvements to existing homes, and the manufacture of energy-efficient appliances, as well as various incentives for biodiesel and renewable diesel, alternative fuel, and alternative fuel mixtures. Incentives for biodiesel and renewable diesel and the extension and modification of the wind production tax credit are also included in the legislation. Additionally, the Act extends the production tax credit for wind through 2013 and includes a modification to allow renewable energy facilities that begin construction before the end of 2013 to claim 10 years of credits—a substantial change from the prior placed in service rules that applied to such projects. It also disallows commonly recycled paper from qualifying for the section 45-production tax credit.
SUNDRY PROVISIONS
Other extended business provisions include the New Markets Tax Credit, the Work Opportunity Tax Credit, and the special exclusion rules for certain small business stock.
IN-DEPTH ANALYSIS OF THE SECTIONS OF THE ACT SELECTED BY THE AUTHOR:
I.
Among the taxpayer-favorable aspects of the American Taxpayer Relief Act of 2012 (Act), the 100 percent exclusion from gross income of gain on the sale of Qualified Small Business Stock (QSBS), provided for in section 1202 of the Internal Revenue Code, was extended for an additional year. Therefore, gain from the sale of QSBS purchased during the period between September 2010 and December 31, 2013 will not be subjected to tax, provided certain requirements are met.
Historically, this exclusion only provided taxpayers with a 50 percent exclusion (75 percent for QSBS purchased between February 2009 and September 2010) from gross income attributable to gain from the sale of QSBS, with the remaining non-excluded gain taxed at the 28 percent rate. The 50 percent exclusion and higher 28 percent rate resulted in an effective tax rate of approximately 14 percent (7 percent for QSBS purchased between February 2009 and September 2010).
The purpose of this exclusion is to encourage investment in new ventures. Therefore, certain requirements for qualification exist, which include the following:
The stock must be purchased or acquired by a contribution of property or services at the time of its original issuance by the corporation and must be held for a period of more than five years;
The interest held must actually be stock in the Qualified Small Business (not warrants, etc.);
The holder of QSBS may be any taxpayer, including a partnership; however, corporations are not eligible to claim this exclusion;
The maximum amount of gain eligible for exclusion with respect to a single issuer is the greater of $10 million or 10 times the taxpayer’s basis in the QSBS; and
The corporation issuing the stock must be a “Qualified Small Business,” which among other requirements means the corporation is a C corporation, has no more than $50 million in gross assets prior to the issuance of such QSBS, and employs at least 80 percent of its assets (measured by value) in the active conduct of one or more trades or businesses, but generally excluding service businesses.
Barring any further extensions of this 100 percent exclusion, the 50 percent exclusion will return for QSBS purchased after December 31, 2013. This is an important development for those taxpayers that are interested in making investments in startup or otherwise qualifying small corporations during the 2013 calendar.
II.
The Act permanently extends the benefits provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. This Act allows companies in certain foreign jurisdictions to be treated as “Qualified Foreign Corporations” (“QFCs”) and allows for dividends received from QFCs by U.S. persons to be taxed at long term capital gain rates and not ordinary income tax rates, which is typical. Pursuant to the Bill, the long-term capital gain rates will be raised from 15% for those taxpayers earning income in excess of $400,000 (individuals), $425,000 (heads of households), and $450,000 (married filing jointly) to 20%. Taxpayers below the 25% income tax bracket will continue to be taxed at zero percent and those in the middle income tax bracket will continue to be taxed at 15%. This permanent extension provides for significant income tax planning alternatives and options.
III.
Another aspect of the Act with international tax implications is the one-year extension of the look-through treatment of payments between related controlled foreign corporations (“CFCs”) under the foreign personal holding company rules. The extension allows the tax deferral of certain payments, such as interest, dividends, rents, and royalties, between CFCs and applies until January 1, 2014. As a result, CFCs will be able to continue transferring certain payments between one another without triggering current year U.S. income tax.
IV.
The Act also extends through 2013 the subpart F exception for active financing income. This provision allows a U.S. parent of a foreign subsidiary engaged in a banking, financing, or similar business to defer tax on such subsidiary’s earnings if the subsidiary is predominantly engaged in such business and conducts substantial activity with respect to such business. To qualify, the subsidiary must pass an entity level income test to demonstrate that the income is active, not passive, income.
V.
The Act permanently applies a 20% withholding tax to gains on the disposition of U.S. real property interests by partnerships, trusts, or estates that are passed through to partners or beneficiaries that are foreign persons under the Foreign Investment in Real Property Tax Act.
VI.
The Act extends and modifies the production tax credit (PTC) and reenacts bonus depreciation for property placed in service before January 1, 2014. The production tax credit expired for wind projects that were not placed in service before January 1, 2013, and was scheduled to expire for biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic facilities that were not placed in service before January 1, 2014. The Act extends PTC for such facilities if construction begins before January 1, 2014. The actual date the project is placed in service is not relevant; the key is whether construction begins during 2013.
Although the Act does not define what it means to begin construction, it is anticipated that the rules will be substantially similar to analogous rules under the now-expired 1603 cash grant program. In general, under these rules, a taxpayer can establish that it has begun construction of a project either by satisfying a physical work test or a 5 percent safe harbor.
Under the physical work test, the taxpayer must have begun physical work of a significant nature on specified energy property. The work must be reasonably continuous—it will not be sufficient to begin work during 2013 and then take a long hiatus and complete the project at a later date.
Under the 5 percent safe harbor, the taxpayer must pay (in the case of a cash method taxpayer) or incur (in the case of an accrual method taxpayer) 5 percent or more of the total cost of the specified energy property. A cost is generally incurred when: (i) the fact of the liability is fixed, (ii) the amount of the liability is determinable with reasonable accuracy, and (iii) the economic performance test of Treas. Reg. § 1.461-4 has been satisfied with respect to such cost.
VII.
The bonus depreciation rules, which generally expired at the end of 2011, are reenacted for property placed in service during 2013. The amount of bonus depreciation allowed will equal 50 percent of the cost basis of the qualifying property. The determination of when property is placed in service is based on the totality of facts and circumstances. In general, property is considered to be placed in service when it is in a condition or state of readiness and is available for a specifically assigned function. Equipment that is operational but undergoing testing to eliminate defects is considered to be in a condition or state of readiness and availability for a specifically assigned function. The Internal Revenue Service has stated that the following factors are to be considered in determining placed-in-service dates for power plants: approval of required licenses and permits; passage of control of the facility to the taxpayer; completion of critical tests; commencement of daily or regular operation; and synchronization into a power grid for generating electricity to produce income.
CONCLUSION:
There are significant concessions yet to be considered by the Senate, Congress and the President as the next four years proceed during the Presidency of Obama and beyond:
A. Provisions Expiring in 2013 Provision (Code section) Expiration Date
1. Credit for certain non-business energy property (sec. 25C(g)) 12/31/13
2. Alternative fuel vehicle refueling property
(non-hydrogen refueling property)(sec. 30C(g)(2)) 12/31/133
3. Credit for two- or three-wheeled plug-in electric vehicles
(sec. 30D(g)) 12/31/13
4. Credit for health insurance costs of eligible individuals (sec. 35(a)) 12/31/13
5. Second generation biofuel producer credit (formerly cellulosic biofuel producer credit)
(sec. 40(b)(6)(H)) 12/31/13
6. Incentives for biodiesel and renewable diesel:
a. Income tax credits for biodiesel fuel, biodiesel used to produce a qualified mixture, and small agri-biodiesel producers (sec. 40A) 12/31/13
b. Income tax credits for renewable diesel fuel and renewable diesel used to produce a qualified mixture (sec. 40A) 12/31/13
c. Excise tax credits and outlay payments for biodiesel fuel mixtures (secs. 6426(c)(6) and 6427(e)(6)(B)) 12/31/13
d. Excise tax credits and outlay payments for renewable diesel fuel mixtures(secs. 6426(c)(6) and 6427(e)(6)(B)) 12/31/13
7. Tax credit for research and experimentation expenses (sec. 41(h)(1)(B)) 12/31/13
8. Determination of low-income housing credit rate for credit allocations with respect to non-federally subsidized buildings (sec. 42(b)(2)) 12/31/13
9. Beginning-of-construction date for renewable power facilities
eligible to claim the electricity production credit or investment credit in lieu of the production credit (secs. 45(d) and 48(a)(5))
12/31/13
10. Credit for production of Indian coal sec. 45(e)(10)(A)(i)) 12/31/13
11. Indian employment tax credit (sec. 45A(f)) 12/31/13
12. New markets tax credit (sec. 45D(f)(1)) 12/31/13
13. Credit for certain expenditures for maintaining railroad tracks (sec. 45G(f)) 12/31/13
14. Credit for construction of new energy homes (sec. 45L(g)) 12/31/13
15. Credit for energy efficient appliances (sec. 45M(b)) 12/31/13
16. Mine rescue team training credit (sec. 45N) 12/31/13
17. Employer wage credit for activated military reservists (sec. 45P) 12/31/13
18. Work opportunity tax credit (sec. 51(c)(4)) 12/31/13
19. Qualified zone academy bonds: allocation of bond limitation (sec. 54E(c)(1)) 12/31/13
20. Deduction for certain expenses of elementary and secondary school teachers (sec. 62(a)(2)(D)) 12/31/13
21. Discharge of indebtedness on principal residence excluded from gross income of individuals (sec. 108(a)(1)(E)) 12/31/13
22. Parity for exclusion from income for employer-provided mass transit and parking benefits (sec. 132(f)) 12/31/13
23. Treatment of military basic housing allowances under low-income housing credit (sec. 142(d)) 12/31/13
24. Premiums for mortgage insurance deductible as interest that is qualified residence interest (sec. 163(h)(3)) 12/31/13
25. Deduction for State and local general sales taxes (sec. 164(b)(5)) 12/31/13
26. Three-year depreciation for race horses two years old or younger (sec. 168(e)(3)(A)) 12/31/13
27. 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (secs. 168(e)(3)(E)(iv), (v),(ix), 168(e)(7)(A)(i) and (e)(8)) 12/31/13
28. Seven-year recovery period for motorsports entertainment complexes (secs. 168(i)(15)and 168(e)(3)(C)(ii)) 12/31/13
29. Accelerated depreciation for business property on an Indian reservation (sec. 168(j)(8)) 12/31/13
30. Additional first-year depreciation for 50 percent of basis of qualified property (secs. 168(k)(1) and (2) and 460(c)(6)(B)) 12/31/13
31. Election to accelerate AMT credits in lieu of additional first-year depreciation (sec. 168(k)(4)) 12/31/13
32. Special depreciation allowance for second-generation biofuel plant property(sec. 168(l)) 12/31/13
33. Special rules for contributions of capital gain real property made for conservation purposes (secs. 170(b)(1)(E) and
170(b)(2)(B)) 12/31/13
34. Enhanced charitable deduction for contributions of food inventory (sec. 170(e)(3)(C)) 12/31/13
35. Increase in expensing to $500,000/$2,000,000 and expansion of definition of section 179 property (secs. 179(b)(1) and
(2) and 179(f)) 12/31/13
36. Placed-in-service date for partial expensing of certain refinery property (sec. 179C(c)(1)) 12/31/13
37. Energy efficient commercial buildings deduction (sec. 179D(h)) 12/31/13
38. Election to expense advanced mine safety equipment (sec. 179E(a)) 12/31/13
39. Special expensing rules for certain film and television productions (sec. 181(f)) 12/31/13
40. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico
(sec. 199(d)(8)) 12/31/13
41. Deduction for qualified tuition and related expenses (sec. 222(e)) 12/31/13
42. Tax-free distributions from individual retirement plans for charitable purposes(sec. 408(d)(8)) 12/31/13
43. Special rule for sales or dispositions to implement Federal Energy Regulatory Commission (“FERC”) or State electric
restructuring policy (sec. 451(i)) 12/31/13
44. Modification of tax treatment of certain payments to controlling exempt organizations (sec. 512(b)(13)(E)) 12/31/13
45. Treatment of certain dividends of regulated investment companies (“RICs”) (secs. 871(k)(1)(C) and (2)(C), and881(e)(1)(A) and (2)) 12/31/13
46. RIC qualified investment entity treatment under the Foreign Investment in Real Property Tax Act (“FIRPTA”) (sec. 897(h)(4)) 12/31/13
47. Exceptions under subpart F for active financing income (secs. 953(e)(10) and 954(h)(9)) 12/31/13
48. Look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules (sec. 954(c)(6)) 12/31/13
49. Special rules for qualified small business stock (sec. 1202(a)(4)) 12/31/13
50. Basis adjustment to stock of S corporations making charitable contributions of property (sec. 1367(a)(2)) 12/31/13
51. Reduction in S corporation recognition period for built-in gains tax (sec. 1374(d)(7)) 12/31/13
52. Empowerment zone tax incentives:
Designation of an empowerment zone and of additional empowerment zones (secs. 1391(d)(1)(A)(i) and (h)(2)) 12/31/13
b. Increased exclusion of gain (attributable to periods through 12/31/18) on the sale of qualified business stock of an
empowerment zone business secs. 1202(a)(2) and 1391(d)(1)(A)(i)) 12/31/13
c. Empowerment zone tax-exempt bonds (secs. 1394 and 1391(d)(1)(A)(i) 12/31/13
d. Empowerment zone employment credit (secs. 1396 and 1391(d)(1)(A)(i)) 12/31/13
e. Increased expensing under sec. 179 (secs. 1397A and 1391(d)(1)(A)(i)) 12/31/13
f. Non-recognition of gain on rollover of empowerment zone investments (secs. 1397B and 1391(d)(1)(A)(i)) 12/31/13
Note: The empowerment zone tax incentives may expire earlier than December 31, 2013 if a State or local government provided for an expiration date in the nomination of an empowerment zone, or the appropriate Secretary revokes an empowerment zone’s designation. The State or local government may, however, amend the nomination to provide for a new termination date.
53. Incentives for alternative fuel and alternative fuel mixtures (other than liquefied hydrogen):
Excise tax credits and outlay payments for alternative fuel (secs. 6426(d)(5) and 6427(e)(6)(C)) 12/31/13
Excise tax credits for alternative fuel mixtures (sec. 6426(e)(3)) 12/31/13
54. Temporary increase in limit on cover over of rum excise tax revenues
(from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands (sec. 7652(f)) 12/31/13
55. American Samoa economic development credit (sec. 119 of Pub. L. No. 109-432 as amended by sec. 756 of Pub. L. No. 111-312) 12/31/13
At the date of this writing, there are tax concession provisions expiring in 2014, 2015, 2016, 2017 and 2018, 2019, 2020, 2021, 2022 and 2023. You can clearly see that the year 2013 will be a busy year indeed for the Senate, Congress, the President and Lobbyists. The revenue measures will be anything but predictable or reliable and the costs to run governments within the United States control, its states, territories, possessions will all take additional revenue or cost cutting. You really need to stay on top of these concessions and/or check very often with your trusted tax advisor.
Michael Nelson,Esq.
