Federal income tax incentives for Alaska businesses.

• Author: Pearson, Kevin
• Position: Legal Speak

Spring is a hopeful time of year. As the snow begins to melt, the days begin to get longer, and evidence of living plants begins to emerge, one's thoughts naturally turn toward summer and the possibilities it will bring. That is perhaps more true in Alaska, where the duration and darkness of the winters is legendary, than anywhere else. Unfortunately, spring also brings with it the inevitable and often painful task of preparing yet another year's federal income tax returns. It is only fitting in this season of hope--and pain--to look to the future and think about what a business might do in the coming months to reduce its income tax liability for 2014.

Expired Credits

Congress allowed to expire at the end of 2013 a significant number of popular federal income tax incentives that were available in recent years. These include the general bonus depreciation deduction, the research and development tax credit, tax credits for certain renewable energy projects, tax credits for certain biofuels, the work opportunity tax credit, mine safety-related credits, the expanded deduction for business startup expenditures, the credit for energy-efficient buildings, the special deduction for films produced primarily in the United States, and many others.

Certain members of Congress have said that they intend to take up a number of these expired provisions in the near future and may extend some or all of them. This, of course, remains to be seen, and Beltway insiders differ on whether some or all of these provisions are likely to be extended. In the meantime, however, there are a few remaining federal income tax incentives that, with careful planning, could help ease next spring's pain.

This article will touch on just a few of these incentives. This article does not address all incentives that may be available to a particular person. In addition, the rules governing each of these incentives are complex and we urge readers to consult with their individual tax advisors to help determine whether they qualify for and can utilize these or other incentives.

Bonus Depreciation

The very popular allowance for bonus depreciation, which Congress had previously extended and modified a number of times, generally expired at the end of 2013. There remains, however, a 50 percent bonus depreciation allowance for certain qualifying aircraft placed in service before the end of 2014.

To qualify for this allowance, an aircraft must meet the placed-in-service date requirement and...