American Taxpayer Relief Act of 2012: Business & Investment Incentives : Dahman's Law
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American Taxpayer Relief Act of 2012: Business & Investment Incentives

by Samir Dahman on 01/18/13

On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012, which President Obama recently signed into law.  The Act extends a number of business and investment incentives. Significant items include:

  • Two-year extension of the research tax credit (through 2013).
  • Two-year extension of the new markets tax credit program (through 2013). Unused new markets tax credits may be carried over until 2018.
  • Two-year extension of the empowerment zone tax incentives for certain economically depressed census tracts and the tax incentives for issuing New York Liberty Zone bonds (through 2013).
  • Two-year extension of the 15-year straight-line amortization for qualified leasehold improvements, qualified restaurant property and qualified retail improvements (through 2013), to apply to property placed in service on or before December 31, 2013.
  • One-year extension of 50 percent bonus depreciation for new qualified property placed in service before January 1, 2014 (and before January 1, 2015 for certain long-lived and transportation property), and a one-year extension to allow taxpayers to elect to accelerate some alternative minimum tax credits in lieu of bonus depreciation (through 2013).
  • Two-year extension of the 2011 Section 179 expense amount and phase-out limitations so that for tax years 2012 and 2013, the Section 179 expense amount is increased to $500,000, reduced on a dollar-for-dollar basis to the extent that the cost of qualifying property exceeds $2 million. For taxable years beginning in 2014 and later, the maximum expensing amount is $25,000 and the phase-out limitation is $200,000.
  • Two-year extension of temporary 100 percent capital gains exclusion for individuals who sell "qualified small business stock" (through 2013).
  • Two-year extension of the five-year holding period for S corporation built-in gains tax for sales of S corporation stock occurring in 2012 and 2013.
  • Two-year extension of the work opportunity tax credit (through 2013).
  • Two-year extension of the Section 956(c)(6) look-through rule for dividends, rental and royalties received by a controlled foreign corporation from a related controlled foreign corporation for two years (through 2013).
  • Two-year extension of Subpart F exemption for active-financing income (through 2013).
  • Two-year extension of the inclusion of a regulated investment company within the definition of a "qualified investment entity" for purposes of the FIRPTA rules (through 2013).
  • Two-year extension of enhanced charitable deductions for contributions of food inventories to designated institutions (through 2013).
  • Two-year extension of the exception to unrelated business taxable income regarding payments of rent, royalties, annuities or interest income by a controlled organization to its tax-exempt controlling parent pursuant to a binding written contract in effect on August 17, 2006 (through 2013).
  • Two-year extension of rules relating to "interest-related dividends" and "short-term capital gain dividends" received by regulated investment companies (through 2013).
  • The Act also extends certain energy-related provisions, including:
  • One-year extension of the renewable electricity property wind production tax credit to apply to a facility placed in service, or for which construction begins, before January 1, 2014. Further modifies Section 45 to allow renewable energy facilities for which construction begins by December 31, 2013 to qualify for the production tax credit. Extends taxpayer's right to elect the 30 percent investment tax credit in lieu of the production tax credit for renewable energy facilities for which construction begins by December 31, 2013.
  • Two-year extension of the $1 per gallon tax credit for biodiesel, the 10 cents per gallon small agri-biodiesel producer tax credit and the $1 per gallon tax credit for diesel fuel created from biomass (through 2013).
  • Two-year extension of the tax credit for certain energy-efficient improvements to residential homes (through 2013).
  • Two-year extension of the new energy-efficient home credit to qualifying homes purchased before January 1, 2014, and of the tax credit for energy efficient dishwashers, clothes washers and refrigerators (through 2013).

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