It sometimes feels like the little boy who cried wolf. He cried wolf so often that the villagers stopped running to his aid, and when the wolf finally did come? Well, you know the story. We seem to warn every other year that the expired provisions have expired and there is no assurance that they will be renewed, so don't automatically assume they will be. And, for the most part, they have been retroactively renewed and the people who ignored our cautions and assumed they would be renewed have been rewarded for their actions.

Now we are once again in a similar quandary. The growing list of regularly expiring provisions expired once again at the end of 2013. Those still pushing for tax reform this year, such as Ways and Means Chairman Dave Camp, R-Mich., do not want to address expired provisions except in the context of tax reform. This seems to mean that expired provisions will not get addressed this year until everyone gives up on tax reform for the year. And that means expired provisions are not likely to be addressed, if at all, until toward the end of the year, after the mid- term elections.

The new head of the Senate Finance Committee, Sen. Ron Wyden, D-Ore., seems to have given up on tax reform for the year and has put forward a chairman's mark of an extenders bill before putting forward any new tax reform proposals as chair. He does state that he hopes that this will be the last temporary extension of the expired provisions, but his mark looks like a lot of the other extensions - i.e., a two-year extension, albeit with a few more provisions than usual dropped from the bill.

If we relied on the Camp proposal, most of the expired provisions would be gone, as would many tax breaks that are a permanent part of the Tax Code, all in the name of simplification and lowering rates as the main ten-et of tax reform. If we relied on the Wyden mark, most of the expired provisions would be around through 2015. The betting at this point is that the Wyden mark will come closer to reality, although there will still be a lot of fights in the Senate over what was dropped and fights in the House over not only what to include but also over how to pay for it.

The most caution should be exercised at this point as to the regularly expiring provisions that are currently left out of the Wyden mark.



Most of the individual tax extenders have been picked up in the Wyden mark. These include the deduction for expenses of school teachers, the exclusion for discharge of qualified principal residence indebtedness, parity for the exclusion for employer-provided mass transit and parking benefits, the deduction for mortgage insurance premiums, the deduction for state and local sales taxes, the deduction for tuition and fees, and the tax-free charitable distributions from IRAs for people over age 70-1/2.

The expired provision not picked up in Wyden's list and that taxpayers might want to be especially cautious about relying on is the extension of the special rule for contributions of capital gain real property made for conservation purposes. This is the rule that put in a higher 50 percent limit of the taxpayer's contribution base and a 100 percent limit in the case of a qualified farmer or rancher. Perhaps many of the affected taxpayers have already been able to take advantage of this provision in the years that it has been available.



The Wyden mark includes extensions of 29 business tax provisions. The likelihood, therefore, is that your tax provision is included for extension, especially if it's one of the very popular provisions, such as the research and experimentation tax credit, the New Markets Tax Credit, the Work Opportunity Tax Credit, bonus depreciation, enhanced Code Section 179 expensing, Subpart F active financing income, 100 percent exclusion for qualified small-business stock, and the 15-year recovery for leasehold, restaurant and retail improvements.

The expired provisions not included in the Wyden mark are:

  • Extension of the seven-year recovery period for motorsports entertainment complexes;
  • Extension of empowerment zone tax incentives; and,
  • Extension of tax-exempt financing for the New York Liberty Zone.

It is probably not too surprising that the New York Liberty Zone provision would be allowed to expire at some point. Those hoping for an extension with respect to motorsport complexes or empowerment zones might want to contact their member of Congress or lobbyist.


There are a higher percentage of provisions proposed to be dropped in the Wyden mark in the energy area than in the individual and business area. Seven energy provisions are proposed to be extended for two years basically intact. These include the credit for alternative fuel vehicle refueling property, the cellulosic biofuel producer credit, the incentives for biodiesel and renewable diesel, the production credit for Indian coal facilities, the credit for energy-efficient new homes, the special allowance for cellulosic biofuel plant property, and the alternative fuels excise tax credits.

The credit for new fuel cell motor vehicles, which does not expire until the end of 2014, would be extended under the Wyden mark for one year through 2015.

Expired energy-related provisions not picked up in the Wyden mark include:

  • The credit for energy-efficient existing homes. This is the individual-focused credit that was also allowed to expire for the year 2008 and otherwise has been extended in several different forms since 2006. Individuals may not want at this point to assume that this credit will be available for 2014. Since, in its most recent form, it was a $500 lifetime credit, many individuals may have already used up their lifetime credit in any event.
  • The plug-in electric vehicle credit. This credit is proposed to be extended for two-wheeled motorcycles but not for three-wheeled vehicles.
  • Credits with respect to facilities producing energy from certain renewable resources. These credits seemed to get more and more renewable resources added to them over the years, and the reason for its exclusion, especially in a Democratic draft, is not clear.
  • Credit for energy-efficient appliances. This was a credit focused on the manufacturer but may have resulted in a passthrough of savings to the consumer. Perhaps this credit is viewed as having served its purpose in moving most appliances in current production toward greater energy efficiency.
  • Utility sales and dispositions. The special rule for sales or dispositions to implement restructuring policies for qualified electric utilities imposed by the Federal Energy Regulatory Commission or state policies may have already served its purpose.


We are once again left in the position of trying to decide whether to cry wolf with respect to these expired provisions. Even with the threat that tax reform would eventually result in many of these provisions going away, it is increasingly looking like 2014 may look a lot like 2012, with taxpayers going through the year with these provisions having expired but with the hope that, by the end of the year, most of them will somehow be retroactively renewed.

Taxpayers and tax practitioners should keep a careful watch on the process, especially the fate of those provisions highlighted herein that have been at least initially targeted for expiration in Wyden's chairman's mark, to see if their expired provision is likely to be revived for another year or two.

George G. Jones, JD, LL.M, is managing editor, and Mark A. Luscombe, JD, LL.M, CPA, is principal analyst, at CCH Tax and Accounting, a part of Wolters Kluwer.

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