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Ahead of the Curve Auto Supplier Blog

January 08, 2013

Business Tax Provisions of 'Fiscal Cliff' Resolution

While most of the automotive- related media attention in the recent “fiscal cliff” debate focused on individual income tax issues and their potential impact on vehicle sales, the recently enacted legislation (the American Taxpayer Relief Act), contains many provisions that will impact businesses, including those in the auto industry. 

 These provisions include the following:

  • The Act extends the Code Sec. 179 business expensing through 2013.  The Code Sec. 179 dollar limit for years 2012 and 2013 is $500,000 with a $2 million investment limit.  This extension postpones significant reductions to the dollar limit and investment limit that would have applied to these tax years.
  • The Act extends 50% bonus depreciation through 2013.  Certain transportation and longer period production property will be eligible for 50% bonus depreciation through 2014.
  • The Act extends the Code Sec. 41 research tax credit through 2013.  The credit would have expired after 2011 without this extension under the Act.
  • The Act extends the Work Opportunity Tax Credit through 2013.  This credit generally rewards employers who hire employees from certain targeted groups, including disabled veterans, Long-Term Family Assistance recipients and others.
  • Other business tax extenders that expired after 2011 have been extended through 2013 under the Act, including the following:
    • New Markets Tax Credit
    • Employer wage credit for activated military reservists
    • 100 percent exclusion for gain on sale of “qualified small business stock”
    • Reduced recognition period for S Corporation built-in gains tax
    • Tax incentives for empowerment zones

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