The draft small business tax reforms address several key components of interest to SEMA member companies:
- Makes permanent “Section 179” expensing, allowing small businesses to immediately deduct investments in new equipment up to $250,000 (phased-out for investments exceeding $800,000). These levels will revert to $25,000 and $200,000 in 2014 without legislation.
- Replaces small business tax-accounting rules with a uniform rule allowing small businesses with gross receipts of $10 million or less to use the cash method of accounting.
- Amends current law to establish a single deduction for start-up and organizational expenses. The bill increases the threshold for start-up expenses to $10,000 (from $5,000) and expands the deduction on organizational expenses.
- Modifies the current schedule for tax return filing to assist business owners in filing tax returns accurately. Partnerships would file by March 15, S Corporations by March 31, and C Corporations by April 15. Individuals would still be required to file by April 15, and all taxpayers would still be eligible for a six-month extension.
These initial steps toward a final comprehensive tax reform legislative package are promising and indicate a bipartisan effort to enact meaningful changes for small businesses. SEMA will remain engaged in these efforts toward a simpler tax code and provide updates as reform efforts continue.
For more information, contact Dan Sadowski at email@example.com.