Pelosi Backs Extending Bonus Depreciation, NOL Carryback Through 2010
By Brett Ferguson
Publication date: 10/22/2009
House Speaker Nancy Pelosi (D-Calif.) Oct. 21 called for a one-year extension of accelerated depreciation and the net operating loss carryback provisions approved early this year, and left the door open to expanding the NOL provision to include more than just small businesses.
“It has to be something that will have the job-creating impact that it is intended to have and build confidence. We're listening to people as to the suggestions they have,” Pelosi told reporters.
Both provisions were included in the American Recovery and Reinvestment Act (Pub. L. No. 111-5) signed into law in February, but are set to expire at the end of 2009.
The accelerated, or “bonus,” depreciation provision allows businesses to deduct 50 percent of eligible investments—typically equipment—at the time they are incurred. The net operating loss carryback in the law gives small businesses the ability to claim refunds of taxes paid within the last five years to offset losses incurred during 2008. The NOL provision was originally intended to aid all businesses that did not receive money from the federal government's Troubled Asset Relief Program, but was scaled back during late House-Senate conference negotiations so it would apply only to firms with $15 million or less in gross receipts.
Ways and Means Committee Chairman Charles Rangel (D-N.Y.) confirmed that he is considering extensions of the provisions through 2010, but said there are no plans yet to expand the NOL carryback to all businesses.
Democratic Support
Nonetheless, the idea remains popular with other senior House Democrats and President Obama, who proposed in his fiscal year 2010 budget that the NOL carryback be extended and broadened to cover all non-TARP recipients.
Rep. Richard Neal (D-Mass.), chairman of the Ways and Means Select Revenue Measures Subcommittee, said he remains a staunch advocate of extending the NOL carryback for all businesses, saying retailers, in particular, are suffering.
“The retailers are having a real problem. And if the retailers are having problems, it won't be long until the commercial developments are having problems, which creates problems for community bankers,” Neal said, adding that the idea has broad bipartisan support.
Neal said the NOL carryback is especially attractive to lawmakers because it is a simple way to administer aid to companies that need it.
“You are not setting up a bureaucracy. You are not setting up an agency. You are allowing retailers, community bankers and a host of others… to go back five years and address some of the losses they've had. The fact that it is so concise strikes me as a very reasonable approach,” Neal said.
Neal said lawmakers are currently trying to determine how and whether the extensions should be paid for. “It should have been in the stimulus bill. [Paying for the extension is] one of the things we're going through right now,” he said.
Costs of Home Buyer Credit Extension
Pelosi and other House Democrats also said they favor an extension of the $8,000 home buyer tax credit, although questions remain about how long it should be extended and whether it should be paid for.
“I think the first-time homebuyer tax credit should be extended into mid-next year to help support the housing market, which is still incredibly fragile,” Pelosi said, without addressing the cost of an extension. Several members in both houses of Congress have also suggested expanding the home buyers tax credit to all purchasers, not just first-time buyers, though the outlook for such a broad expansion seems dim.
Rep. Earl Pomeroy (D-N.D.), who serves on the Ways and Means Committee and is a member of the anti-deficit Blue Dog Caucus, said he supports a simple modification of the home buyer tax credit to make clear that contracts signed—rather than purchases completed—by Dec. 1 should warrant the credit.
Any other change to extend the credit, however, should be paid for in the legislation, Pomeroy said.
The challenge, he said, is that finding the revenues needed to offset the extension are likely to have the effect of scaling it back to include a smaller pool of people eligible to apply for the credit.
The complete text of this article can be found in the BNA Daily Tax Report, October 22, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2009, The Bureau of National Affairs, Inc.
Pelosi Backs Extending Bonus Depreciation, NOL Carryback Through 2010
By Brett Ferguson
Publication date: 10/22/2009
House Speaker Nancy Pelosi (D-Calif.) Oct. 21 called for a one-year extension of accelerated depreciation and the net operating loss carryback provisions approved early this year, and left the door open to expanding the NOL provision to include more than just small businesses.
“It has to be something that will have the job-creating impact that it is intended to have and build confidence. We're listening to people as to the suggestions they have,” Pelosi told reporters.
Both provisions were included in the American Recovery and Reinvestment Act (Pub. L. No. 111-5) signed into law in February, but are set to expire at the end of 2009.
The accelerated, or “bonus,” depreciation provision allows businesses to deduct 50 percent of eligible investments—typically equipment—at the time they are incurred. The net operating loss carryback in the law gives small businesses the ability to claim refunds of taxes paid within the last five years to offset losses incurred during 2008. The NOL provision was originally intended to aid all businesses that did not receive money from the federal government's Troubled Asset Relief Program, but was scaled back during late House-Senate conference negotiations so it would apply only to firms with $15 million or less in gross receipts.
Ways and Means Committee Chairman Charles Rangel (D-N.Y.) confirmed that he is considering extensions of the provisions through 2010, but said there are no plans yet to expand the NOL carryback to all businesses.
Democratic Support
Nonetheless, the idea remains popular with other senior House Democrats and President Obama, who proposed in his fiscal year 2010 budget that the NOL carryback be extended and broadened to cover all non-TARP recipients.
Rep. Richard Neal (D-Mass.), chairman of the Ways and Means Select Revenue Measures Subcommittee, said he remains a staunch advocate of extending the NOL carryback for all businesses, saying retailers, in particular, are suffering.
“The retailers are having a real problem. And if the retailers are having problems, it won't be long until the commercial developments are having problems, which creates problems for community bankers,” Neal said, adding that the idea has broad bipartisan support.
Neal said the NOL carryback is especially attractive to lawmakers because it is a simple way to administer aid to companies that need it.
“You are not setting up a bureaucracy. You are not setting up an agency. You are allowing retailers, community bankers and a host of others… to go back five years and address some of the losses they've had. The fact that it is so concise strikes me as a very reasonable approach,” Neal said.
Neal said lawmakers are currently trying to determine how and whether the extensions should be paid for. “It should have been in the stimulus bill. [Paying for the extension is] one of the things we're going through right now,” he said.
Costs of Home Buyer Credit Extension
Pelosi and other House Democrats also said they favor an extension of the $8,000 home buyer tax credit, although questions remain about how long it should be extended and whether it should be paid for.
“I think the first-time homebuyer tax credit should be extended into mid-next year to help support the housing market, which is still incredibly fragile,” Pelosi said, without addressing the cost of an extension. Several members in both houses of Congress have also suggested expanding the home buyers tax credit to all purchasers, not just first-time buyers, though the outlook for such a broad expansion seems dim.
Rep. Earl Pomeroy (D-N.D.), who serves on the Ways and Means Committee and is a member of the anti-deficit Blue Dog Caucus, said he supports a simple modification of the home buyer tax credit to make clear that contracts signed—rather than purchases completed—by Dec. 1 should warrant the credit.
Any other change to extend the credit, however, should be paid for in the legislation, Pomeroy said.
The challenge, he said, is that finding the revenues needed to offset the extension are likely to have the effect of scaling it back to include a smaller pool of people eligible to apply for the credit.
The complete text of this article can be found in the BNA Daily Tax Report, October 22, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2009, The Bureau of National Affairs, Inc.
| Sign up to receive news and updates from BNA Software |
