By J.C. Hobbs, Extended Forecast
Enid News and Eagle
ENID, Okla. —
Recently, the Senate Finance Committee released information on the Family and Business Tax Cut Certainty Act of 2012.
As it currently reads, the bill would extend several of the already expired and expiring income tax provisions. This article discusses some of the major business and individual items that are expected to be extended that may impact agricultural taxpayers.
The major individual provisions that will be reinstated, if the bill passes, include the alternative minimum tax patch, increased contribution limits of capital gain for real property made for conservation purposes and tax-free contribution from an IRA for charitable purposes.
The alternative minimum tax (AMT) patch will prevent this provision from impacting millions of taxpayers. This provision raises the 2012 and the 2013 exemption amounts for taxpayers filing individual and married filing joint tax returns. This provision is effective for tax years beginning after Dec. 31, 2011, and before Jan. 1, 2014.
Also included in the bill is the two-year extension of the increased contribution limits and carry forward period for the donation of real property made for conservation purposes. This proposal reinstates this tax benefit for both the 2012 and 2013 tax years.
This bill also will extend the ability of an individual to make a charitable donation in the form of a tax-free distribution to a charity from their individual retirement account (IRA). The individual making the donation must be age 701⁄2 or older with a $100,000 annual donation limit in a taxable year.
There are several business provisions that have been included in this extender bill. Only one provision will directly impact agricultural producers, but it will have a significant impact.
The Code Section 179 expensing amount was scheduled to be a maximum of $139,000 for 2012 and a maximum of $25,000 for 2013 of business property purchased and placed in service in each of those tax years. With this bill, the amount allowed to be expensed will revert back to the 2011 maximum amount of $500,000 with a $2,000,000 investment limit for both the 2012 and 2013 tax years.
It will most likely be after the November elections before this bill is brought to a vote before the Senate and House. Many amendments also can be made before final passage occurs as well.
This article is for informational purposes, and for a more complete discussion of the provisions contained in the Family and Business Tax Cut Certainty Act of 2012 go to www.finance.senate.gov/news room and search for information on this proposed legislation.
Many other provisions have been excluded from this extenders bill. These may be added later through amendments to this bill but do not expect this to occur quickly. For additional information concerning the tax impact of these and other income tax items, be sure to consult with your tax preparer or adviser.
Hobbs is Oklahoma State University assistant extension specialist.