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Percentage Depletion Deduction Preserved in Senate Tax Bill

Posted By Mark Ellis, Friday, November 10, 2017

The good news is that yesterday, the Senate Finance Committee released its version of a comprehensive tax reform bill – The Tax Cuts and Jobs Act (no bill number yet).  The Senate Finance Committee will markup the bill beginning on Monday, November 13, at 3:00 p.m.  The Senate is expected to consider its tax reform bill on the Senate floor after Thanksgiving, starting the week of November 27.

The percentage depletion tax deduction remains unchanged as current law -- no repeal or modification of the current percentage depletion tax deduction is included in the Senate tax reform bill.  The same outcome was achieved in the House Ways and Means Committee tax reform bill, H.R. 1, The Tax Cuts and Jobs Act.  The House bill was considered by the House Ways and Means Committee this week and approved by the Committee yesterday on a party-line vote, 24-16.  H.R. 1 now moves to the House floor for consideration next week.     

Some other Senate bill highlights that may be of interest to you and your company:

  1. The bill lowers the corporate tax rate to 20% – down from 35%, but the Senate bill lowers the corporate rate on delay by one year whereas the House bill calls for an immediate rate decrease;
  2. The bill allows for simple and easy-to-administer deduction for pass-through businesses of all sizes;
  3. The bill includes an enhanced Section 179 expensing to promote business investment and growth, and an enhanced cash accounting, allowing more businesses to use the simple cash-basis accounting method;
  4. The bill allows businesses to immediately write-off the full cost of new equipment to improve operations and enhance the skills of their workers (i.e., full expensing); and

      5.  The bill repeals the alternative minimum tax.

We will provide more information as the tax reform process evolves in Washington next week.  Many thanks to IMA-NA member companies for your engagement and feedback during the legislative process!

A description of the Senate tax reform bill is attached.  The Senate tax reform product is in narrative form, which is how the Senate Finance Committee marks a bill.  Legislative text is being worked on at this time and will be shared sometime next week.


A policy summary of the Senate tax reform bill also is attached.   

Download File (PDF)

 Attached Files:

Tags:  percentage depletion deduction  tax reform legislation 

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