Several popular business provisions that had already expired were reinstated retroactively and temporarily extended, including:
R&D tax credit – The credit for increasing research and development activities, which expired at the end of 2011, is extended through 2013. A modification allows for partial inclusion of research expenses and gross receipts of an acquired business.
Higher expensing limit – The enhanced Section 179 small business expensing election is extended through 2013. The dollar limit for 2012 and 2013 is $500,000, with a $2 million investment limitation. The rule allowing off-the-shelf computer software is also extended.
Bonus depreciation – 50 percent bonus depreciation is extended through 2013. This extension allows for an increase of the first-year limit for luxury autos to $8,000 (not yet adjusted for inflation). In addition, the act extends the ability for taxpayers to forgo bonus depreciation in order to increase AMT credit limitations. Some transportation and longer production period property is eligible through 2014.
Work Opportunities Tax Credit – This provision provides a credit of up to $2,400 (up to $9,600 for qualified veterans) to employers hiring workers from a variety of difficult-to-employ groups. The credit is extended for workers hired through 2013.
Qualified leasehold improvements – The 15-year recovery period for qualified leasehold improvements, qualified retail improvements and qualified restaurant property is extended through 2013.
Other business extenders – A number of other business provisions that expired at the end of 2011 have been extended through 2013, including:
- New Markets Tax Credit
- 100 percent exclusion for gain on the sale of small business stock
- Extension of reduced recognition period (five years) for S corporation built-in gains
- Enhanced deduction for contributions of food inventory
Energy tax extenders – The act also extends through 2013, and in some cases modifies, a number of energy credits and provisions that expired at the end of 2011, including credits for:
- Energy-efficient existing homes
- Alternative fuel vehicle refueling property
- Energy-efficient new homes
- Energy-efficient appliances