|
Legislative Update: Ways and Means Approves Extenders Bill; Offsets Include Private Equity Provisions
The Ways and Means Committee today approved, 22-13, a $77 billion tax extenders bill, the revenue cost of which would be offset with private equity provisions affecting taxation of carried interest and deferred compensation, among others.
As modified by the committee, H.R. 3996 also would delay implementation of the worldwide interest allocation provision enacted in 2004 and increase by 63 percentage points for one calendar quarter in 2012 the corporate estimated tax due.
The Temporary Tax Relief Act of 2007 would set the alternative minimum tax
exemption amount for 2007 at $66,250 for joint filers and $44,350 for singles
and extend more than three dozen expiring provisions for one year.
Revenue-Raising Provisions
The revenue-raising provisions are drawn largely from H.R. 3970, which committee Chairman Charlie Rangel (D-NY) introduced October 25, among them:
- Current inclusion of deferred compensation paid by certain tax indifferent parties – tax individuals on a current basis if such individuals receive deferred compensation from a tax-indifferent party.
- Taxation of carried interest as ordinary income – require investment fund managers to treat carried interest as ordinary income received in exchange for the performance of services to the extent that carried interest does not reflect a reasonable return on invested capital.
- Application of section 1239 to partnership interests and tax-sharing agreements.
- Basis reporting by brokers on sales of stock – require cost basis reporting by brokers for transaction involving publicly traded securities.
Treasury Assistant Secretary Eric Solomon told the committee the Bush Administration opposes raising offsetting revenues to pay for the $50 billion AMT “patch.” Solomon said the administration had no spending reductions to propose to offset its cost.
|
The Joint Committee on Taxation posted on its Web site a description of the bill and a revenue estimate:
Committee Passes Military Benefits Bill
The Ways and Means Committee also approved unanimously H.R. 3997, a bill that would extend or increase certain tax benefits for military servicemen and firefighters.
The $2 billion Heroes Earnings Assistance and Relief Tax Act of 2007 would be offset with four revenue provisions:
- Increase in penalty for failure to file partnership returns
- Penalty for failure to file S corporation returns
- Increase in information return penalties
- Increase the minimum penalty for failure to file from $100 to $225
A description and revenue estimate are posted on the Joint Committee on Taxation Web site:
|
|
