II
113th CONGRESS
2d Session
S. 2237
IN THE SENATE OF THE UNITED STATES
April 10, 2014
Mr. Hoeven (for himself and Ms. Cantwell) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide an elective safe harbor for the expensing by small businesses of the costs of acquiring or producing tangible property.
Short title
This Act may be cited as the Farm and Small Business Expensing Tax Relief Act
.
Safe harbor for expensing by small businesses of acquisition or production costs of tangible property
In general
Section 263 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
Election for small businesses To expense certain acquisition and production costs
In general
If the amount paid or incurred by an eligible taxpayer to acquire or produce any item of tangible property does not exceed $5,000 (or such higher amount as the Secretary may prescribe by regulations), then, notwithstanding subsection (a), the taxpayer may elect to treat such amount as an expense which is not chargeable to capital account nor treated as a material or supply. Any amount so treated shall be allowed as a deduction for the taxable year in which the property is acquired or produced.
Eligible taxpayer
For purposes of this subsection—
In general
The term eligible taxpayer means, with respect to any taxable year, a taxpayer—
who meets the gross receipts test of subparagraph (B) for the taxable year, and
who, as of the beginning of the taxable year, has in effect written accounting procedures meeting such requirements as the Secretary may prescribe with respect to the expensing of amounts described in paragraph (1).
Gross receipts test
A taxpayer meets the gross receipts test of this subparagraph for any taxable year if the average annual gross receipts of such taxpayer for the 3-taxable-year period ending with the taxable year which precedes such taxable year does not exceed $10,000,000.
Rules relating to gross receipts test
For purposes of subparagraph (B)—
the rules of paragraphs (2) and (3) of section 448(c) shall apply, and
in the case of a partnership, S corporation, trust, estate, or other pass-thru entity, the gross receipts test shall apply at the entity level.
Election
Any election under this subsection for any taxable year shall—
specify the items of tangible property to which the election applies, and
be made, in such manner as the Secretary may prescribe, on the taxpayer's return of the tax imposed by this chapter for the taxable year.
Coordination with section 179
This subsection shall be applied before section 179.
Regulations
The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this subsection, including regulations providing for—
exceptions for property which is inventory or land or for which the taxpayer makes an election for optional treatment under section 162; and
the aggregation of all amounts paid or incurred with respect to any item of tangible property.
Rule of construction
If, for any taxable year, a taxpayer is not an eligible taxpayer (or is an eligible taxpayer who does not elect to have this subsection apply), nothing in this subsection shall be construed as prohibiting the expensing of any amount paid or incurred during the taxable year to acquire or produce any item of tangible property if such expensing is permitted under any safe harbor or other provision of the regulations prescribed under this section.
Cross reference
For capitalization of certain expenses where a taxpayer produces property or acquires property for resale, see section 263A.
.
Effective date
The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2013.