On July 11, the U.S. House of Representatives passed a bill to restore and make permanent the 50 percent bonus depreciation provision. The vote was 258-160, largely along party lines, with only 34 Democrats voting for the bill and two Republicans voting against it.

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July 16, 2014
House Passes Permanent Bonus Depreciation Provision
On July 11, the U.S. House of Representatives passed a bill to restore and make permanent the 50 percent bonus
depreciation provision. The vote was 258-160, largely along party lines, with only 34 Democrats voting for the bill and
two Republicans voting against it. This marks the fifth expired business tax provision (“extender”) that the House has
voted to permanently restored this year. As with the other extender bills passed by the House, President Obama has
vowed to veto the $287 billion bonus depreciation bill because it contains no budget offsets. The bill also is unlikely to
pass the Democrat-led U.S. Senate, which is seeking only a two-year extension of all of the expired tax provisions.
The bonus depreciation provision, which last applied to qualifying property placed in service before January 1, 2014,
generally allowed taxpayers to immediately deduct 50 percent of the cost of original-use tangible personal property, off-
the-shelf computer software and qualified leasehold improvement property. The new bill expands the availability of
bonus depreciation to owner-occupied retail stores and to fruit and nut-bearing trees and vines.
Permanent extender bills previously passed by the House include:
• The research tax credit;
• The enhanced $500,000 Section 179 expensing deduction (increased from $25,000);
• The five-year built-in gain recognition window on conversions from regular corporations to S corporations
(currently 10 years); and
• The provision that allows S corporations to donate appreciated property and to only reduce the owners’ basis in
their S corporation stock by the cost basis of the donated property.
The President and Congressional Democrats have criticized these extender bills for not containing budget offsets. They
have also criticized the House for moving forward with some of these provisions given that they would have been allowed
to lapse under the comprehensive tax overhaul plan introduced by House Ways and Means Committee Chair Dave
Camp (R-Mich) this past February.
Following a path similar to what we’ve seen for the last several years, the Senate Finance Committee in April approved
the EXPIRE Act which would have restored and extended the above provisions, and several others, through 2015. The
full Senate still has not taken action on the EXPIRE Act, bogged down by procedural issues and desires by Senate
Republicans to tack on amendments to the legislation that would repeal the medical device tax and other parts of the
Affordable Care Act.
Despite the recent activity by the House, many pundits believe that the votes are largely symbolic and intended to
establish positions prior to the upcoming mid-term elections. Several members of Congress have stated publicly that
they do not believe the extenders will be resolved until after the election.
For more information on the status of the tax extenders and how you should plan accordingly, contact your local CBIZ
MHM tax professional.
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