While most of us are still focused on filing our 2013 tax returns, there are many considerations that may affect 2014 spending. On December 31, 2013, there were 55 tax provisions that expired. The most notable expiring provisions relate to depreciation. Section 179 expense was reduced from $500,000 in 2013 to just $25,000 in 2014. Bonus depreciation has been steadily decreasing over the last few years. In 2012, companies could take 100% of cost as bonus; in 2013, it was 50%; in 2014, it is zero. In addition, Qualified Leasehold Improvements can no longer be depreciated over a 15-year life. There is no longer 100% gain exclusion for Qualified Small Business Stock purchased by 12/31/13 and held for five years. In 2014, it reverted to 50% with no preferential AMT treatment. Some other notable expiring provisions for individuals include the deduction for state and local sales tax (those who live in states without state taxes like FL and TX can no longer deduct sales tax on Schedule A of their 1040), energy-efficient credits (the $500 credit that was taken for energy-efficient-qualifying home improvements can no longer be taken), and tax-free charitable IRA deductions (a qualifying $100,000 distribution for individuals over age 70½ can no longer be donated directly to a charity tax-free). Notable business provisions include the expiration of the R&D Credit, the Work Opportunity Tax Credit, and the five-year waiting period to avoid S Corp Built-In Gain tax reverts back to 10 years. A full list can be found at https://www.jct.gov/publications.html?func=startdown&id=4499.
With so many changes, you should review this list and contact your tax advisor if you see anything that may impact your 2014 tax return. Remember, tax planning is a year-round process that maximizes your year-end benefit!