House Committee on Ways and Means

Passive Loss Limitations Exemption

Passive business activity refers to any activity in which a taxpayer has an economic interest but does not “materially participate.” Normally, taxpayers are allowed to deduct the losses they incur from passive activities (passive losses), but only an amount equal to income generated from the activity. Any excess of passive losses over passive income in […]

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Alternative Fuel Mixture Credit

The Alternative Fuel Mixture Credit is a $0.50 per gallon credit for producers of P-Series fuels, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, or liquid fuel derived from biomass with gasoline, diesel or kerosene. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the credit through the end of […]

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Amortization and Expensing of Reforestation Expenditures

The amortization and expensing of reforestation expenditures provision of the tax code allows for the deduction of up to $10,000 per year ($5,000 for married individuals filing separately from their spouses; no limit for trusts) of qualifying reforestation costs paid or incurred after Oct. 22, 2004, for each qualified timber property. The remaining costs in […]

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Amortization for Certain Pollution Control Facilities

Amortization for certain pollution control facilities provides an option to amortize investments in pollution control equipment for coal-fired electric generation plants over seven years. Amortization is a method of depreciation that recovers investment costs evenly (i.e., straight line depreciation) over the recovery period. The standard recovery period for the conventional type of electric generating equipment […]

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Amortization of Geological and Geophysical Expenditures

Geological and geophysical expenditures are the costs oil and gas companies incur when gathering data used to determine where oil and gas is located, and in what amounts, as well as where drilling may be most appropriate. They include seismic surveys, electromagnetic surveys, other types of remote sensing, shallow test drilling and bottom sampling. Amortization […]

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Capital Gains Treatment for Income from Qualified Timber

Individual owners, as opposed to companies, are allowed to treat income from dispositions of timber held for more than one year before disposal as a capital gain, rather than ordinary income, thus allowing them to be taxed at a lower rate. Income from cutting timber which has been owned, or the right to cut which […]

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Industrial Carbon Capture and Sequestration Tax Credit

Carbon capture and sequestration involves separating carbon oxides (COX) from combusted fossil fuels or capturing them directly from the atmosphere. The carbon oxides are then stored (“sequestered”) by either pumping them into underground geologic formations or using them to produce some other product. The technology is predominantly designed to be used with coal, coal-to-liquid or […]

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Last In, First Out Accounting

Last-in, first-out (LIFO) is a method for estimating the value of a company’s inventory against the value of goods sold in a given year. A taxpayer’s gross profit from the sale of goods is determined by subtracting the cost of goods sold from gross receipts. Cost of goods sold generally is determined by adding the […]

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