Last week, the House Ways & Means Committee released legislative text of tax reform legislation H.R. 1, the Tax Cuts and Jobs Act. The document is 429 pages and we are still wading through details, but wanted to provide a quick snapshot of some of our priority items:

Renewable Energy Some existing incentives for renewable energy technologies were extended in the legislation, namely for geothermal, fuel cell, small wind and combined heat and power. So-called "new starts" such as the BTU Act were not included in the bill. We have reached out to our House Ways & Means Republican sponsor of the BTU Act (H.R. 3161), Rep. Mike Kelly (R-PA) to explore offering an amendment when the bill is marked up next week.  

In addition, we are doubling down on our advocacy in the Senate for inclusion of the BTU Act as tax reform legislation moves in the upper chamber. The Senate Finance Committee is expected to release legislative text of tax reform legislation in the next 10 days. 

A number of other existing renewable energy incentives were also eliminated in the bill, including the Sec. 25C credit for non-business energy property which houses the $300 pellet stove credit. Many of the champions for 25C are in the Senate and we anticipate a push to extend 25C as the Senate unveils its tax reform proposal.   

Other notable provisions include:

Estate Tax H.R. 1 doubles the basic exclusion from the current $5 million (as of 2011) to $10 million, which is indexed for inflation. This provision would apply to tax years beginning after 2017. Furthermore, beginning after 2023, the estate and generation-skipping taxes are repealed while maintaining a beneficiary's stepped-up basis in estate property. The gift tax is lowered to a top rate of 35 percent and retains a basic exclusion amount of $10 million and an annual exclusion of $14,000 (as of 2017), also indexed for inflation.

Alternative Minimum Tax AMT would be repealed under the bill. If a taxpayer has AMT credit carryforwards, the taxpayer would be able to claim a refund of 50 percent of the remaining credits (to the extent the credits exceed regular tax for the year) in tax years beginning in 2019, 2020, and 2021. Taxpayers would be able to claim a refund of all remaining credits in the tax year beginning in 2022.The provision would be effective for tax years beginning after 2017.

Business Equipment Expensing H.R. 1 allows for immediate expensing of 100 percent of the cost of qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023.

Section 179 Under the provision, the small business expensing limitation under section 179 would be increased to $5 million and the phase-out amount would be increased to $20 million. The provision would modify the expensing limitation by indexing both the $5 million and $20 million limits for inflation. Increases in dollar limitations would be effective for tax years beginning after 2017 through tax years beginning before 2023. New language would also modify the definition of section 179 property to include qualified energy efficient heating and air-conditioning property permanently. The provision to modify the definition of section 179 property to include qualified energy efficient heating and air-conditioning property would be effective for property acquired and placed in service after November 2, 2017.

S Corp and Pass Through Tax Treatment H.R. 1 allows a portion of net income distributed by a pass-through entity to an owner or shareholder to be treated as "business income" subject to a maximum rate of 25 percent, instead of ordinary individual income tax rates. The remaining portion of net business income would be treated as compensation and continue to be subject to ordinary individual income tax rates. 

What to Expect The House Ways & Means Committee has scheduled a markup for Monday, November 6 on this proposal and leadership hopes to pass it through the House by Thanksgiving. In the Senate, the Senate Finance Committee is looking to unveil its version of tax reform legislation in the next week to 10 days. 

A number of influential business groups in town are opposing the bill in its current form. These groups include the National Association of Homebuilders, National Association of Realtors and the National Federation of Independent Businesses.

This U.S. Forest Service is held a pre-application webcast on Monday, Oct. 30, at 1pm Eastern for all in the wood energy industry interested in learning more about the agency's annual Wood Innovation Grant program. Over the life of the program, the Forest Service has awarded millions of dollars to wood energy and low value wood utilization projects across the country. This year, the Forest Service has allotted $7 million - up to $250,000 per grant - for the program. 

The Wood Innovations Grants funding supports traditional wood utilization projects, expands wood energy markets, and promotes using wood as a construction material in commercial buildings. These grants and cooperative agreements support the Agricultural Act of 2014 (Pub. L. 113-79), Rural Revitalization Technologies (7 U.S.C. 6601), and the nationwide challenge of disposing of hazardous fuels and other wood residues from the National Forest System and other forest lands in a manner that supports wood energy and wood products markets. 

The Forest Service supports proposals that significantly stimulate or expand wood energy and wood products markets that support the long-term management of National Forest System and other forest lands. The 2018 Request for Proposals focuses on the following priorities:

• Reduce hazardous fuels and improve forest health on National Forest System and other forest lands;
• Reduce costs of forest management on all land types; and
• Promote economic and environmental health of communities. 

If you missed the webinar, you can watch it online. Please contact Carrie Annand with any additional questions.