Sterling Heights, MI (PRWEB) May 06, 2014
On April 29th, the House Ways and Means Committee agreed to make permanent six tax provisions that expired in December 2013. The bill still would need to be passed by the full House, Senate and signed by the President to become law.
The six permanent tax benefits in this bill include:
- §179 expensing: The enhanced Section 179 measure would maintain the expensing level at $500,000 that existed before extenders expired in December 2013.
- Research credit: This credit, which is commonly referred to as the research and development or R&D credit, would include an increased alternative simplified credit of 20 percent (up from 14 percent) and would be available to taxpayers who file amended tax returns.
- Basis reduction rule for S corporations making charitable contributions of property: This provision provides that the amount of a shareholder’s basis reduction in the stock of an S corporation by reason of a charitable contribution made by the corporation will be equal to the shareholder’s pro rata share of the adjusted basis of the contributed property.
- The five-year recognition period for built-in gains of S corporations: If an S corporation that was previously taxed as a C corporation has built-in gains attributable to the period during which it was a C corporation, it is subject to a corporate level tax (the built-in gains or BIG tax) when it recognizes the built-in gains within five years after its conversion to S corporation status.
- Active financing exemption for lenders under subpart F of the code: The active financing exception makes exceptions for foreign personal holding company income. For Section 954(h) to apply, a controlled foreign corporation must be “eligible,” which means it must be predominantly engaged in the active conduct of banking, financing or a similar business and must conduct substantial activity with respect to this business, as per IRC Section 954(h)(2)(A).
- Look-through treatment of payments between related controlled foreign corporations under the foreign personal holding company rules (sec. 954(c)(6)): Certain payments of dividends, interest, rents and royalties that would otherwise be included in foreign personal holding company income may be excepted if the payments are received from a related controlled foreign corporation and are properly attributable and allocable to income of the payor that is neither subpart F income nor treated as effectively connected to a US trade or business.
For more information or questions on this topic, please contact your professional at UHY LLP in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040 or visit us on the web at http://www.uhy-us.com.
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