Vol. 2, No. 10 October 3, 2003
AGC Construction Tax News
Current News from the Associated General Contractors of America for
Construction Financial Professionals
Editors: Ken Simonson, Chief Economist, 703-837-5313, simonsonk@agc.org
Heidi Blumenthal, Director, Congressional Relations,
Tax and Fiscal Affairs, 202-547-8892, blumenthalh@agc.org

Senate Finance Passes "JOBS" Bill with Provisions Affecting Contractors - The Senate Finance Committee on October 1 approved the Jumpstart Our Business Strength (JOBS) Act (S. 1637). The main thrust of the bill is a change in the treatment of export and foreign-source income. However, there is also a variety of provisions affecting domestic taxpayers, including contractors. On the favorable side: Companies with net operating losses in 2003 would be allowed to carry the losses back 3 years instead of 2. Also, the phase-out rate for equipment expensing under sec. 179 would be lowered to 50 cents instead of $1 per dollar of investment for taxpayers buying more than the maximum qualifying amount ($400,000 in 2003), so that a taxpayer buying $500,000 of equipment would be allowed to expense $50,000 instead of $0 as at present. Construction would be affected also by at least three revenue raisers: Sports utility vehicles (but not trucks) weighing 14,000 pounds or less, instead of the present 6000-lb. limit, would be subject to limits on depreciation under sec. 280F. The 10% tax credit for rehabilitation of buildings placed in service before 1936 would be repealed, although the 20% tax credit for historic structures would be retained. Clearing and grading costs for electric and gas utility lines would be assigned 20- and 15-year depreciation lives, instead of the 7-year write-offs that can be claimed now.

No timetable has been set for Senate floor action. In the House, Ways and Means Committee Chairman Bill Thomas has said he hopes to mark up a bill in the next week or so but he faces opposition from a competing bill. For details on the bills and timing of further action contact the editors.

IRS Issues Guidance on Bonus Depreciation, Vehicles - The Internal Revenue Service on Oct. 2 issued Revenue Procedure 2003-75, providing limitations and tables for depreciation of business automobiles, trucks and vans. For details contact the editors or go to www.irs.gov. On Sept. 8 the IRS published temporary and proposed regulations in the Federal Register, detailing information about the 30% and 50% "bonus depreciation" enacted in 2002 and 2003. For more information go to the above sources or www.depreciationbonus.org, a website established by the Assn. of Equipment Manufacturers and Associated Equipment Distributors.

AGC Marshals Opposition to FAS 150 - Earlier this year the staff of the Financial Accounting Standards Board (FASB) proposed Statement of Financial Accounting Standards No. 150 (FAS 150), which would require companies to classify mandatorily redeemable shares as a liability. This standard would be devastating to many closely held construction companies that have provisions requiring them to buy back shares of owners who leave the company. AGC held a meeting last month to inform other associations of the severe problems FAS 150 may create and is working to arrange a meeting with FASB. AGC is also encouraging members of Congress to write to FASB. For more information contact Heidi.

Congress Defers Action on Highway Taxes; Mobile Machinery Bill Introduced - Congress passed and President Bush signed a five-month extension of Highway Trust Fund provisions, maintaining all taxes without change through Feb. 29. The authorizing committees for transportation spending have yet to consider their portion of a 6-year replacement for "TEA-21," the highway and transit bill that expired Sept. 30. As a result, the tax committees are unlikely to take up a revenue title for several months. Yesterday Rep. Paul Ryan (R-WI) and 80 cosponsors introduced H.R. 3246, to put into law the longstanding regulatory exemption from highway taxes for "mobile machinery" that the IRS proposed to repeal. AGC first contacted Rep. Ryan about the issue last year and is working with a coalition to preserve the exemption. For more information contact the editors.

State Tax Changes Take Effect Oct. 1 - Illinois, Kansas and North Dakota began tax amnesties, joining amnesties that end Oct. 31-Nov. 3 in Arizona, Florida, Maine, Missouri, and Virginia. New York City will join the parade on Oct. 20. For links and updates on state-local amnesties, go to the Federation of Tax Administrators' website, www.taxadmin.org. Nevada imposed a new payroll tax on employers and Clark County, Nevada, raised its sales tax 0.25 cents per dollar to fund highway improvements and bus purchases in greater Las Vegas. For details go to gov.state.nv.us and www.leg.state.nv.us. Nebraska began imposing sales tax on the full value of remodeling and repair contracts.

Last Chance to Register for AGC-CFMA Construction Financial Management Conference - The 7th annual version of this acclaimed conference will be held at Caesar's Palace in Las Vegas Oct. 23-24. For full program and online registration go to https://www.agc.org/Member_Resources/agccfma.asp. Attendees can receive up to 17 continuing professional education credits. For more information contact Heidi.

To automatically subscribe, send a blank e-mail to join-ctn@e-forums.agc.org

Copyright © 2002 Mike Holt Enterprises,Inc.
1-888-NEC-CODE (1-888-632-2633)