United States: Senate Finance Committee Passes Bill To Extend Certain Lapsed Tax Breaks

Last Updated: April 8 2014

Article by Amy E. Drake and Chelsea Hess

The Senate Finance Committee passed the Expiring Provisions Improvement Reform and Efficiency Act (EXPIRE Act) on April 3, 2014.  The legislation would renew through 2015 more than 50 tax incentives that either have lapsed or will lapse at the end of 2014.  The EXPIRE Act is not yet scheduled for consideration by the full Senate.  The legislation includes a number of energy-related tax credits, including extensions for the renewable electricity production tax credit (PTC) and the new markets tax credit (NMTC).  The legislation also modifies the bonus depreciation rules under Section 168(k).

The EXPIRE ACT extends the PTC and the election to claim the energy investment tax credit (ITC) in lieu of the electricity production credit for two years, through December 31, 2015. The PTC expired for qualifying renewable energy facilities at the end of 2013 if construction of such facilities did not begin before January 1, 2014.  The PTC provided a credit that ranged from 1.1 cents to 2.3 cents per kilowatt-hour of renewable electricity produced, depending on the type of renewable energy.  If passed, the proposal would be effective as of January 1, 2014.

The legislation also includes an extension for bonus depreciation under Section 168(k).

  • The proposal extends the 50 percent additional first-year depreciation deduction through 2015 (and through 2016 for certain longer-lived and transportation property), and applies to property placed in service after December 31, 2013, in taxable years ending after such date.
  • The legislation also makes a conforming change to the percentage of completion rules under Section 460(b)(1)(A) for certain long-term contracts.
  • The EXPIRE Act extends the election to increase the alternative minimum tax (AMT) credit limitation in lieu of bonus depreciation for two years to property placed in service before January 1, 2016 (January 1, 2017, in the case of certain longer-lived property and transportation property).

The EXPIRE Act also extends the NMTC (which expired at the end of 2013) for two years, through 2015, permitting up to $3.5 billion in qualified equity investments for each of the 2014 and 2015 calendar years. The proposal extends for two years, through 2020, the carryover period for unused NMTCs. The proposal applies to calendar years beginning after December 31, 2013.

The EXPIRE Act also contains a variety of other energy extenders, including:

  • The  Section 30C credit for alternative fuel refueling property is extended for two years (one year in the case of hydrogen refueling property, the credit which continues under present law through 2014), through December 31, 2015.
  • The Section 30D credit for electric motorcycles and three-wheeled vehicles is extended for electric motorcycles for two years, through December 31, 2015. The credit for electric three-wheeled vehicles is not extended.
  • The Section 40(b)(6) second generation biofuel producer credit is extended for two years, through December 31, 2015.  The proposal is effective for fuel sold or used after December 31, 2013.
  • The Section 40A biodiesel fuel and renewable diesel fuel credit and the Section 6426 excise tax credit for biodiesel mixtures are extended for two years (through December 31, 2015).
  • The Section 45L credit for energy efficient new homes is extended to homes that are acquired prior to January 1, 2016.
  • The Section 30B credit for new qualified fuel cell motor vehicles is extended for one year to vehicles purchased prior to January 1, 2016.  The credit is currently available through the end of 2014.
  • The Section 25C credit for nonbusiness energy property is extended through December 31, 2015.  The EXPIRE Act also expands qualifying property for purposes of the credit to include all roof and roof products that meet the Energy Star program guidelines, and modifies the efficiency standards for certain other qualifying property.

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.

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