On Dec. 16, 2014, Congress passed the “Tax Increase Prevention Act of 2014” (TIPA), which the President is expected to sign into law. TIPA extends through 2014 depreciation and expensing provisions for businesses that had expired at the end of 2013:
- Increased Section 179 expense amounts for 2014
TIPA retroactively extends for one year the increased $500,000 maximum expensing amount under Code Sec. 179 and the increased $2 million investment-based phase out amount. These increased amounts will apply for qualified property placed in service before January 1, 2015. For tax years beginning after 2014, the maximum expensing amount is again scheduled to drop to $25,000 and the investment-based phase out amount is scheduled to drop to $200,000.
- 50% bonus first year depreciation extended
TIPA extends 50% first year bonus depreciation for one year so that it applies to qualified property acquired and placed in service before January 1, 2015 (before January 1, 2016 for certain longer-lived and transportation property).
- First year depreciation cap for 2014 autos and trucks increased by $8,000
For passenger automobiles placed in service in 2014, the adjusted first year depreciation expense limit is $3,160; for light trucks or vans, it is $3,460.
TIPA provides that the first year depreciation limit in increased by $8,000 provided the qualified vehicle is new and placed in service before January 1, 2015.
- 15-Year write off for qualified leasehold and retail Improvements and restaurant property extended
TIPA retroactively extends for one year the inclusion of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property in the 15-year MACRS class. Such property qualifies for 15-year recovery if it is placed in service before January 1, 2015.