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Date: 5/29/2014

Title: House Committee on Ways and Means Approves Extension of Bonus Depreciation and Conservation Easement Tax Credit

Today the House Committee on Ways and Means approved two pieces of legislation that are important provisions of the tax code for farmers and ranchers: H.R. 2807, the Conservation Easement Incentive Act of 2013, and H.R. 4718 to make permanent bonus depreciation. Both pieces of legislation address sections of the tax code that expired at the end of 2013 and have traditionally been addressed in tax extenders packages and were considered as part of the tax reform proposals in the House and Senate.

H.R. 2807 would make permanent the conservation easement tax credit. NCBA views conservation easements as a valuable tool for estate planning and making this provision permanent will provide much needed stability in the tax code for families who choose to employ this tax credit in their estate plan. NCBA supports this legislation and has a long history of supporting previous attempts to make permanent the conservation easement tax credit.

H.R. 4718 would make permanent the fifty percent bonus depreciation of new capital purchases that was created in the American Taxpayer Relief Act of 2012. How does the depreciation bonus work? According to the Associated Equipment Distributors, companies that bought new equipment in 2013 could depreciate 50 percent of the cost in the first year, plus the percentage of the remaining basis in the equipment that would ordinarily be depreciable under the Modified Accelerated Cost Recovery System (MACRS). For a $100,000 piece of equipment with a five-year MACRS life, the first year depreciation under the ATRA would be $60,000: $50,000 depreciation bonus, plus 20 percent of the remaining $50,000 in basis.

Both pieces of legislation are now ready for consideration on the House floor along with legislation to permanently extend Section 179 expensing. These measures will likely become part of a tax extenders package that is currently awaiting further consideration on the Senate floor. NCBA will continue to be actively engaged in the tax extenders process to help provide greater certainty in the tax code for America’s ranching families.