American Taxpayer Relief Act of 2012 Part 2
January 31, 2013

The 2012 American Taxpayer Relief Act also extended many popular business provisions. Estate and gift tax rules are impacted as well.

Business Tax Extenders
Increased expensing amounts under Sec. 179 have been extended for tax years 2012 and 2013. The 2012 deduction limit jumps from $139,000 to $500,000. The 2013 deduction limit will also be $500,000. Fifty percent first-year bonus depreciation was also extended through 2013. In addition, the research expense credit was extended for 2012 and 2013 and modified slightly. The credit has changed to allow partial inclusion of qualified research expenses and gross receipts of an acquired trade or business or major portion of one. The following is a list of other popular business provisions that were extended through 2013:

  • Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Work opportunity tax credit
  • Employer wage credit for employees who are active duty members of the uniformed services
  • Temporary exclusion of 100% of gain on certain small business stock
  • Basis adjustment to stock of S corporations making charitable contributions of property
  • Cellulosic biofuel producer credit (Sec. 40(b))

Estate and Gift Taxes

The estate and gift tax exclusion of $5 million (indexed for inflation) does not change. However, the top rate increases to 40% effective January 1, 2013. Also, the estate tax "portability" election whereby the surviving spouse's exemption amount is increased by the deceased spouse's unused exemption amount was made permanent.