Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2015

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Accelerated Deductions from Gross Income

Fiscal Year 2015 Resource Summary (in Millions)
TAX EXPENDITURE FY2011 FY2012 FY2013 FY2014 FY2015
Accelerated Deductions from Gross Income 98.1 93.6 92.2 91.6 91.0

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item description amount
Accelerated Deductions from Gross Income 91.0
1.301 Modified Accelerated Depreciation on Rental Housing 18.7
1.303 Modified Accelerated Depreciation on Buildings (other than Rental Housing) 6.1
1.304 Modified Accelerated Cost Recovery System (MACRS) for Equipment 53.1
1.305 Deduction for Excess First-Year Depreciation 11.1
1.306 Election to Deduct and Amortize Business Start-up Costs 0.4
1.308 Expensing Exploration and Development Costs Negligible
1.309 Expensing Research and Experimental Expenditures in One Year 1.2
1.310 Five-Year Amortization of Pollution Control Facilities N.A.
1.311 Seven-Year Amortization for Reforestation N.A.
1.312 Expensing Certain Capital Outlays of Farmers 0.4


IRCFederal Internal Revenue Code (26 U.S.C.)
U.S.C United States Code
M.G.L. Massachusetts General Laws
Rev. Rul.; C.B. Revenue Ruling; Cumulative Bulletin of the U.S. Treasury
ESTIMATES All estimates are in $ millions.


1 1 This item and others citing this endnote cover employee fringe benefits. We accept as standard the following treatment of these benefits: the expense incurred by the employer in providing the benefit is properly deductible as a business expense and the benefit is taxed as compensation to the employee as if the employee had received taxable compensation and then used it to purchase the benefit. Of course, there are problems with this analysis. In some cases, the "benefit" is more a condition of employment than a true benefit. For example, a teacher required to have lunch in the school cafeteria may prefer to eat elsewhere even if the school lunch is free. On the other hand, in many cases the provision of tax-free employee benefits is clearly a substitution for taxable compensation.

2 2 This item and others citing this endnote cover contributory pension plans. The standard tax treatment of these plans is as follows: Component Standard Treatment Contributions: Made out of income that is currently taxed to employees. Investment Income: Taxed to the employee as "earned" income. Distributions from Pension Funds: Tax-free to the extent they are made out of dollars previously taxed to the employees as contributions or investment income. The non-standard treatment of contributions, investment income, or distributions as described in items 1.006, 1.101, 1.104, and 1.402, results in either nontaxation or deferrals of tax.

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