By Nick Hopkins, CPA, CFP®
Partner, Director of Tax Services
Email Nick
On January 31, 2024, the House voted 357 to 70 to approve the Tax Relief for American Families and Workers Act of 2024. The legislation now moves to the Senate for consideration. Some key business tax provisions of the proposed legislation we wanted to make you aware of include:
Deduction for Research and Experimental Expenditures — The Act restores the ability for taxpayers to currently deduct qualified domestic R&E costs that are paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2026. Current law requires domestic R&E costs to be capitalized and amortized over a five-year period.
Extension of Allowance for Depreciation, Amortization, or Depletion in Determining the
163(j) Limitation on Business Interest — The Act restores the computation of adjusted taxable income for purposes of the limitation on the deduction for business interest expense to be determined without regard to any deduction allowed for depreciation, amortization, and depletion for tax years beginning after December 31, 2023 (and, if elected, for taxable years beginning after December 31, 2021) and before January 1, 2026.
Extension of 100 Percent Bonus Depreciation — The Act extends 100% bonus depreciation for qualified property placed in services after December 31, 2022, and before January 1, 2026.
Section 179 Increase in Limitations of Expensing of Depreciable Business Assets — The Act increases the maximum amount a taxpayer may expense under Section 179 to $1.29 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million and $3.22 million amounts are adjusted for inflation for taxable years beginning after 2024. The proposal applies to property placed in service in taxable years beginning after December 31, 2023.
Increase in Threshold for Information Reporting on Forms 1099-NEC and 1099-MISC — The Act increases the reporting threshold to $1,000 (adjusted for inflation after 2024) for payments made by a business for services performed by an independent contractor or subcontractor.
Enforcement Provision with Respect to COVID-Related Employee Retention Tax Credit — The Act extends the statute of limitations period on an assessment for the COVID-related Employee Retention Tax Credit to six years from the date of claim. The Act also extends the period for taxpayers to claim valid deductions for wages attributable to invalid ERTC claims that are corrected after the normal period of limitations. The Act also bars additional ERTC claims after January 31, 2024.
We will keep you updated on the status of the proposed legislation and any changes to the legislation as it continues to move its way through Congress. If Sponsel CPA Group can assist you further with achieving success in your business or personal affairs, please call us at (317) 608-6699 or email Nick Hopkins.