The S Corporation Permanent Tax Relief Act of 2014, which consist of HR 4453 (permanent 5-year BIG period) and HR 4454 (basis adjustment for charitable contributions) is expected to be considered by the Rules Committee later today with proposed debate and vote on the bill to take place on Thursday. The Subchapter S Bank Association supports making the five-year recognition period for built in gains permanent. This week’s action marks the first time either the House or the Senate has considered a permanent fix.
The case for the shorter five-year recognition period is strong and is certain to help encourage investment. As Jim Redpath testified early this year: I find the BIG tax provision causes many S corporations to hold onto unproductive or old assets that should be replaced. Ten years is a long time and certainly not cognizant of current business-planning cycles. Many times I have experienced changes in the business environment or the economy which prompted S corporations to need access to their own capital, that if taken would trigger this prohibitive tax. This results in business owners not making the appropriate decision for the business and its stakeholders, simply because of the BIG tax.”