WorldWide Drilling Resource

67 WorldWide Drilling Resource ® MARCH 2015 Drilling Into Money Not Boring by Mark E. Battersby The Tax Increase Prevention Act of 2014 Congress passed, and the President signed into law, the Tax Increase Prevention Act of 2014 which retroac- tively extended some 54 expired tax breaks, for one year. The so-called “tax extenders” effectively allow water well drilling and irrigation businesses to claim a number of popular but temporary tax incentives on their 2014 tax returns filed in 2015. The Tax Increase Prevention Act does not make permanent any exten- ders - nor extend any of them for the usual two-year period as has been cus- tomary. Instead, under the new law, these extenders are for the 2014 tax year only. The Act extended the following busi- ness-related tax credits and deductions through 2014: • Bonus depreciation has been ex- tended through 2014, allowing an additional first year deduction of 50% of the cost of the equipment. • The Section 179 rules have been extended, allowing for the expense of $500,000 on acquired property for business use. • The exclusion from capital gains tax of 100% of small business stock sold by an individual. • The practice of making a reduc- tion in S Corporation basis equal to the shareholders’ share of the adjusted basis of a charitable con- tribution. • Reduction in S Corporation recog- nition period for built-in gains tax to 5 years rather than 10 years. • The Work Opportunity Tax Credit for hiring of military veterans and other qualified individuals. Under the new law, the extended provisions are for the 2014 tax year only. Obviously, coming so late in 2014 left little time for planning and may, in fact, require changes to already filed 2014 tax returns. Fortunately, once a drilling business’s tax returns have been filed, changes can be made on an amended tax return. Since the Tax Increase Prevention Act of 2014 is all about reducing a drilling operation’s tax bill, extended provisions such as the 50% bonus depreciation, the increased dollar limits for Section 179 expensing is back at $500,000, with a $2.5 million investment ceiling and the law’s other provisions can only reduce the bite on previously or late- filed tax returns. Will your drilling business seek the professional assistance necessary to reap a lower tax bill thanks to the Tax Increase Prevention Act of 2014? Mark Mark E. Battersby may be contacted via e-mail at michele@ worldwidedrillingresource.com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rotect your employees by providing up-to-date personal protective gear such as hard hats, safety goggles, ear plugs, and dust masks.