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https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20130&cosponId=14544
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Senate of Pennsylvania
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted: April 15, 2014 09:19 AM
From: Senator Mike Folmer and Sen. Mike Brubaker, Sen. Scott E. Hutchinson
To: All Senate members
Subject: Small Business Tax Reform Package
 
An important part of improving our economy is small business. Giving small business the tax strategies to allow them to grow in Pennsylvania will allow our economy to grow for future generations.

In the near future, we will be introducing a tax package focused on helping small business to include: like-kind exchanges; net-operating loss; and, 179 expense deduction.

Below is a listing of each with a brief description.



Document #1

Introduced as SB1416

Description: Like-Kind Exchanges - Prime Sponsor, Sen. Mike Folmer 
 
A like-kind exchange, or IRC Section 1031, refers to property that has been exchanged for similar property. A like-kind exchange can include like-kind property exclusively, or it can include like-kind property along with cash, liabilities and property that are not like-kind. There can be both deferred and recognized gain in the same transaction when a taxpayer exchanges for like-kind property of lesser value. Finally, the Internal Revenue Code does not allow exchanges of partnership interest in a like-kind exchange. 
 
Currently, Pennsylvania tax law contains no such provision. My legislation would allow for like-kind exchanges for businesses in Pennsylvania and would mirror the current Internal Revenue Code Section 1031 provisions.
 

Document #2

Introduced as SB1417

Description: Net Operating Loss – Prime Sponsor, Sen. Mike Brubaker                                              
 
The Tax Reform Code of 1971 allows corporate taxpayers to deduct PA losses from one year from PA Income in subsequent years. Since 1991 there have been several changes in the carry forward period for Net Operating Losses and the limitations on the amount of Net Operating Loss that can be used in given tax period.
 
Since small businesses don’t have access to the capital larger companies have, their ability to use tax strategies helps them have greater control over their financial position.
 
My legislation would allow a small business to take a net loss from other sources. An example: If an owner sells some personal items to help his business make payroll, he can take the business loss against the tax bill he creates selling the personal items.
 

Document #3

Introduced as SB1418

Description: Section 179 Expense Deduction – Prime Sponsor, Sen. Scott Hutchinson 
 
The Section 179 expensing deduction is an incentive for small business owners to grow their business by making it easier to purchase new equipment. This deduction is limited to such items as cars, office equipment, business machinery and computers but can provide substantial tax relief for business owners who are purchasing startup equipment that in some cases can cost thousands of dollars. This deduction is a one-time elected expense limited to the amount of active income of the business reported in Pennsylvania or $25,000 whichever is less.  The current maximum amount per business entity is $25,000.
 
My legislation would increase the maximum amount to expense for assets in service from $25,000 to $100,000 per taxable year. This increase will help small businesses grow their business in an economy that is still struggling to get back on its feet.