The House of Representatives voted 378–46 on Dec. 3 to approve a one-year agreement that would retroactively restore nearly all of the 50-plus tax provisions that expired at the end of 2013. The legislation would give taxpayers immediate relief for 2014 but would quickly leave them in limbo again for 2015.

The Tax Increase Prevention Act of 2014 (H.R. 5771) includes one-year retroactive extensions of many significant expired provisions, including:

  • The research credit
  • Bonus depreciation
  • The deduction for state and local sales taxes
  • The reduced five-year holding period for S corporation built-in gains
  • Tax-free individual retirement account distributions for taxpayers 70½ and older
  • Subpart F exception for active financing
  • Subpart F look-through rule for controlled foreign corporation income
  • 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements

The one-year agreement is basically a straight extension of current law and generally doesn't include any of the enhancements or modifications from the Senate Finance Committee's two-year package, or the series of permanent extensions the House approved earlier in the year. The agreement was crafted by House Republicans after negotiations fell apart on a deal that would have made several provisions permanent and extended the rest for two years.

Talks over the proposed $450 billion agreement collapsed last week when the administration threatened a veto because the agreement wouldn't have included extensions or enhancements for the child tax credit and the earned income tax credit.

Most lawmakers in the Senate appeared resigned to accepting the one-year deal from the House. Should the Senate follow through and pass the House bill, President Obama is expected to sign the legislation.

Read more about the tax extender legislation and the ABLE Act.

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