By a 216-214 count, the House of Representatives passed a $99.5 billion GOP tax stimulus package which contains relief that could help the equipment industry. The bill now moves to the Senate. Highlights of the bill are:
By a 216-214 count, the House of Representatives passed a $99.5 billion GOP tax stimulus package which contains relief that could help the equipment industry. The bill now moves to the Senate.
Highlights of the bill are:
*A 30% depreciation bonus. The GOP measure seeks to stimulate investment by allowing an additional first-year depreciation deduction equal to 30% of the cost of capital assets acquired after Sept. 11, 2001, and before Jan. 1, 2004;
*Corporate Alternative Minimum Tax repeal. The House-passed bill would repeal the AMT for taxable years beginning after Dec. 31, 2000, and make credits refundable;
*An increase in Section 179 expensing. The House bill increases Section 179 expensing limits from $24,000 to $35,000. Current law phases out Section 179 expensing for companies with more than $200,000 in capital asset acquisition in any given year. The GOP bill would raise that limit to $325,000; and
*A five-year carryback of net operating losses. The bill would extend the general net operating loss carryback period to five years from the present two years for NOLs arising in taxable years ending on or after Sept. 11, 2001, and ending before Sept. 11, 2004.
Senate Finance Committee chairman Max Baucus (D-Mont.) has begun the process of trying to reach a compromise with the GOP by laying out his negotiating position. Baucus' proposal would provide:
*A 10% depreciation bonus (rather than the 30% in the House bill) for equipment placed in service in the next year;
*An increase in Section 179 expensing from $25,000 to $35,000 for the next 12 months; and
*An extension of the carryback period from two years to five with the five-year period applicable to losses for the next 12 months.