Washington–House legislation to allow purchasers of eligible small businesses a tax write-off of as much as $5 million of intangible assets over a five-year period is getting a big push from an insurance agents group.
The bill introduced yesterday, known as the “Tax Fairness for Small Business Act,” has the strong support of the Independent Insurance Agents and Brokers of America.
The measure was introduced by Chief Deputy Majority Whip Eric Cantor, R-Va., and Rep. Earl Pomeroy, D-N.D.
Among other provisions, the bill would allow purchasers to more accurately amortize intangible assets acquired through the purchase of small businesses and provide better liquidity to small businesses, officials of the IIABA said.
Under current law, intangible assets must be depreciated over 15 years. The IIABA said this conflicts with the fact that these specific assets have much shorter shelf lives. This type of asset includes customer lists.
In fact, IIABA officials say, “experience has shown that these types of intangible assets have shelf lives closer to five years.” IIABA said it has consistently supported shortening the depreciation schedule.
“The IIABA has been a longtime proponent of common-sense tax reform on intangible assets acquired through the purchase of one small business by another,” said Charles E. Symington Jr., IIABA senior vice president for government affairs and federal relations.
“Shortening the depreciation schedule would allow companies to amortize intangible assets more accurately after the purchase of another company,” said Brendan Reilly, IIABA director of federal government relations. “A quicker depreciation schedule also would allow Main Street businesses to reinvest more cash in their operations.”
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