United States: 2014 Will Ring In Uncertainty For Many US Taxpayers

Last Updated: December 20 2013
Article by John L. Harrington, Sander Lurie, Lisa M. Pekkala and Marc D. Teitelbaum

Dozens of tax provisions will expire, leaving affected individuals and companies wondering about timing and likelihood of extension.

When 2013 ends, so will more than 50 US tax provisions. Nearly all of these expiring tax provisions have suffered this fate before, only to be extended retroactively after months of uncertainty for affected taxpayers.

Included among the list of expiring tax provisions are some widely used incentives, such as the research and experimentation tax credit and 50 percent "bonus" depreciation. The list of expiring tax provisions also contains a raft of energy incentives, including the production tax credit for wind energy, incentives for alternative and renewable fuels and credits for energy-efficient appliances and houses. Provisions important to individuals—such as the deduction for out-of-pocket expenses for teachers, higher exclusions for mass-transit benefits and the deduction for state and local sales taxes—will sunset at the end of this year. The same is true for provisions important to US companies with cross-border activities (for example, the "active financing exception" and the subpart F exception for dividends, interest, rents and royalties paid between related controlled foreign corporations) and businesses operating in certain designated or distressed areas. Despite their diversity, these expiring tax provisions have one thing in common: Taxpayers who use them are about to enter months of uncertainty as to their availability.

If the past is prologue, some—but not all—of these provisions will be extended, but we will not know until much later in 2014 which ones will be extended, whether they will be extended with modifications, how long they will be extended, whether the extension will be retroactive and who will be stuck "paying" for any such extension. Still, despite the history of on-again, off-again extensions, it is risky to assume that any particular provision will be extended simply because it has been extended in the past. Some in Congress have argued for postponing action on the expiring tax provisions, believing that Congress should resolve their fate as part of tax reform. For example, the staff discussion draft on "Energy Tax Reform" released on December 18, 2013, by Senate Finance Committee Chairman Baucus would replace many of the expiring energy tax provisions with a smaller set of energy tax incentives. While the wait-for-tax-reform approach is understandable, the fact remains that tax reform will be a contentious process, and even if tax reform starts to move through the House Ways and Means and Senate Finance committees in 2014, it is a long way from enactment. In addition, although there will be attempts by proponents of particular expiring tax provisions to have their expiring tax provisions considered separately, the expiring tax provisions have historically been addressed as a group. Accordingly, unless the expiring tax provisions are severed from tax reform or their historical treatment as a pack, affected taxpayers may be in for a reprise of 2010 and 2012, with a long period of uncertainty.

So, for planning purposes, let's hope that dealing with these expiring tax provisions early in 2014 makes it on Congress' list of new year resolutions.

Expiring provision Section of Internal Revenue Code Provision will no longer apply to the following
Credit for certain nonbusiness energy property Section 25C(g) Property placed in service after 12/31/13
Alternative fuel vehicle refueling property (non-hydrogen refueling property) Section 30C(g)(2) Property placed in service after 12/31/13
Credit for two- or three-wheeled plug-in electric vehicles Section 30D(g) Property acquired after 12/31/13
Second generation biofuel producer credit Section 40(b)(6)(J) Production after 12/31/13
Incentives for biodiesel and renewable diesel Sections 40A, 6426(c)(6) and 6427(e)(6)(B) Fuel sold or used after 12/31/13
Research and experimentation tax credit Section 41(h)(1)(B) Amounts paid or incurred after 12/31/13
Determination of applicable percentage of low income housing tax credit Section 42 Allocations made after 12/31/13
Placed-in-service date for wind and certain other renewable resource facilities eligible to claim electricity production credit Section 45(d) Construction beginning after 12/31/13
Credit for production of Indian coal Section 45(e)(10)(A) Coal produced after 12/31/13
Indian employment tax credit Section 45A(f) Taxable years beginning after 12/31/13
New markets tax credit Section 45D(f)(1) New allocations for calendar years beginning after 12/31/13
Credit for certain expenditures for maintaining railroad tracks Section 45G(f) Expenditures paid or incurred during taxable years beginning after 12/31/13
Credit for construction of new energy-efficient homes Section 45L(g) Qualified new energy efficient homes acquired after 12/31/13
Credit for energy-efficient appliances Section 45M(b) Appliances purchased after 12/31/13
Mine rescue team training credit Section 45N Taxable years beginning after 12/31/13
Employer wage credit for activated military reservists Section 45P Payments made after 12/31/13
Work opportunity tax credit Section 51(c)(4) Wages paid or incurred for individuals beginning work after 12/31/13
Allocation of bond limitation on Qualified Zone Academy Bonds Section 54E(c)(1) Obligations issued after 12/31/13
Deduction for certain expenses of elementary and secondary school teachers Section 62(a)(2)(D) Taxable years beginning after 12/31/13
Discharge of indebtedness on principal residence Section 108(a)(1)(E) Discharges of indebtedness beginning after 12/31/13
Parity for exclusion for employer-provided mass transit and parking benefits Section 132(f) Months after 12/31/13
Treatment of military basic housing allowances under low income housing credit Section 142(d) Distributions after 12/31/13
Deduction for mortgage insurance premiums Section 163(h)(3)(E) Amounts paid or accrued after 12/31/13
Deduction for state and local general sales taxes Section 164(b)(5) Taxable years beginning after 12/31/13
Three-year depreciation for race horses two-years old or younger Section 168(e)(3)(A) Horses placed in service after 12/31/13
15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements and qualified retail improvements Section 168(e)(3)(E) Qualified retail improvement property placed in service after 12/31/13
Seven-year recovery period for motorsports entertainment complexes Section 168(i)(15) Property placed in service after 12/31/13
Accelerated depreciation for business property on an Indian reservation Section 168(j)(8) Property placed in service after 12/31/13
50 percent "bonus" depreciation and election to accelerate alternative minimum tax (AMT) credits in lieu of bonus depreciation Sections 168(k) and 460(c)(6)(B) Property acquired after 12/31/13
Special depreciation allowance for cellulosic biofuel plant property Section 168(l) Property placed in service after 12/31/13
Special rules for contributions of capital gain real property made for conservation purposes Sections 170(b)(1)(E) and (b)(2)(B) Taxable years beginning after 12/31/13
Enhanced charitable deduction for contributions of food inventory Section 170(e)(3)(C) Contributions made after 12/31/13
Increase in expensing to US$500,000/US$2 million, and expansion of definition of section 179 property Sections 179(b)(1), (b)(2) and (f) Taxable years beginning after 12/31/13
Election to expense advanced mine safety equipment Section 179E(a) Property placed in service after 12/31/13
Special expensing rules for certain film and television productions Section 181(f) Qualified film and television productions commencing after 12/31/13
Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico Section 199(d)(8) Taxable years beginning after 12/31/13
Above-the-line deduction for qualified tuition and related expenses Section 222(e) Taxable years beginning after 12/31/13
Above-the-line deduction for qualified tuition and related expenses Section 222(e) Taxable years beginning after 12/31/13
Tax-free distributions from individual retirement plans for charitable purposes Section 408(d)(8) Distributions made in taxable years beginning after 12/31/13
Special rule for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy Section 451(i) Taxable years beginning after 12/31/13
Modification of tax treatment of certain payments to controlling exempt organizations Section 512(b)(13)(E)(iv) Payments received or accrued after 12/31/13
Favorable treatment of certain dividends of regulated investment companies (RICs) to foreign investors Sections 871(k)(1)(C) and (k)(2)(C) Dividends with respect to any taxable year of the RIC beginning after 12/31/13
RIC qualified investment entity treatment under the Foreign Investment in Real Property Tax Act (FIRPTA) Section 897(h)(4) After 12/31/13
Exceptions under subpart F for active financing income Sections 953(e)(10) and 954(h)(9) Taxable years beginning after 12/31/13
Look-through treatment of payments between controlled foreign corporations (CFCs) under the foreign personal holding company rules Section 954(c)(6) Taxable years beginning after 12/31/13
100 percent exclusion for qualified small business stock Section 1202(a)(4) Stock acquired after 12/31/13
Basis adjustment to stock of S corporations making charitable contributions of property Section 1367(a) Contributions made after 12/31/13
Reduction in S corporation recognition period for built-in gains tax Section 1374(d)(7) Taxable years beginning after 12/31/13
Empowerment zone tax incentives Sections 1202(a)(2), 1391, 1394, 1396, 1397A and 1397B Taxable years beginning after 12/31/13
Incentives for alternative fuel and alternative fuel mixtures (other than liquefied hydrogen) Sections 6426(d)(5) and (e)(3) and 6427(e)(6)(C) Fuel sold or used after 12/31/13
Temporary increase in limit on cover over of rum excise tax revenues (from US$10.50 to US$13.25 per proof gallon) to Puerto Rico and the Virgin Islands Section 7652(f) Articles brought into the United States after 12/31/13
Economic development credit for American Samoa Section 119 of P.L.109-432 Taxable years beginning after 12/31/13
New York Liberty Zone tax-exempt bond financing Section 1400L(d)(2)(D) Bonds issued after 12/31/13

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions