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December 2017
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AED Leading Campaign to enhance 2015 bonus depreciation

AED’s Washington office is wearing out the shoe leather walking the halls of Congress to encourage lawmakers to reinstate bonus depreciation and higher section Sec. 179 expensing levels for at least 2015 and 2016. The association is also urging the House and Senate tax committees to adopt a minor modification to bonus depreciation to increase its impact this year.

The two capital investment incentives have historically been included in a broader bill that extends more than 50 tax provisions that expire on an annual basis. The Senate Finance Committee has approved a comprehensive extenders bill for 2015 and 2016 that includes bonus depreciation and Sec. 179. The House however has chosen to deal with several of the items in the extenders bill individually and has passed separate bills to make both 50 percent bonus depreciation and increased Sec. 179 expensing levels permanent.

AED still believes the most likely scenario is that Congress will approve a 2015 and 2016 extenders package sometime before the end of this year. With that in mind, beyond merely encouraging Congress to get the bill done sooner rather than later, AED is also pressing lawmakers to adjust the 2015 bonus depreciation rules to give AED members and their customers more time to take advantage of the law.

Traditionally, to claim bonus depreciation, a taxpayer must purchase a new piece of equipment and put it in service in the year for which the taxpayer is claiming the special tax treatment. However, long lead times for equipment and inventory issues at the end of the year could prevent many companies from physically acquiring the equipment before Dec. 31, rendering them ineligible for bonus.

AED’s proposal would change the placed in service cutoff day from Dec. 31, 2015 to March 31, 2016, giving equipment purchasers an additional three months to take delivery. Assuming the tax payer purchased the asset in 2015, they would still be eligible for bonus deprecation.

A number of AED members around the country have weighed in with representatives and senators on the tax committees in support of the AED proposal. In early October, more than 50 attendees at the Ohio Equipment Distributors Association signed a letter to Ohio’s four tax committee members urging them to support AED’s proposed change. Significantly, one of the four members of Congress who received the letter was Rep. Pat Tiberi (R-Ohio) the lead sponsor of the bonus and Sec. 179 bills in the House.

AED’s Washington team is still optimistic that Congress will get an extenders bill done before year end that reinstates 50 percent bonus depreciation and increases Sec. 179 expensing and phase-out levels to $500,000 and $2 million respectively. However, the outlook for AED’s bonus depreciation enhancement proposal is murkier.

“The extenders package is like a carefully crafted Jenga tower that’s been negotiated on a bipartisan basis in a very difficult political environment,” AED Vice President of Government Affairs Christian Klein said. “Even with the support of leading tax committee members, congressional leaders may be reluctant to tinker with the extenders bill in any way lest the precarious tower collapse. But that’s not going to stop us from giving it our all and trying to persuade Congress it’s the right thing to do.”

Help AED’s lobbying on your behalf by taking a minute to weigh in with your elected representatives on bonus depreciation and Sec.179. Click here to send an email to the Hill.