Daily Tax Update - March 03, 2006

SENATE PROCEDURAL ISSUE NEEDS TO BE RESOLVED ON TAX RECONCILIATION CONFERENCE BILL:
Senate Finance Committee Chairman Charles Grassley (R-IA) is conferring with ranking member Max Baucus (D-MT) to try to resolve a parliamentary issue related to the extension of the capital gains and dividends provision before the conference committee convenes. If the two-year capital gains extension is included in the reconciliation package, it would exceed the $70 billion cap set by the budget resolution. Baucus and other Senate Democrats are opposed to the reduced capital gains and dividends rate provision. If the conferees cannot come to an agreement on the parliamentary issue, then $30 billion in additional revenue raisers would be needed to offset the cost. Republican leaders are also exploring the option of moving the business extenders in the bill separately, which would allow for the capital gains and dividend extension and a one-year renewal of protection from the alternative minimum tax. No date for the conference committee to convene has been scheduled.

TAX BILLS INTRODUCED MARCH 2:

  • H.R. 4853 sponsored by Rep. Major Owens (D-NY) would impose an additional tax on taxable income attributable to contracts with the United States for goods and services for the war in Iraq.
  • H.R. 4854 sponsored by Rep. Ron Lewis (R-KY) would exclude from gross income interest received on loans secured by agricultural real estate and rural housing. 
  • H.R. 4856 sponsored by Rep. Melissa Bean (D-IL) would allow a credit to homeowners for Energy Star qualified homes.
  • H.R. 4969 sponsored by Rep. Bart Gordon (R-TN) would allow certain agricultural employers a credit against income tax for a portion of wages paid to nonimmigrant H-2A workers.
  • H.R. 4872 sponsored by Rep. Ron Paul (R-TX) would allow medical care providers a credit against income tax for uncompensated emergency medical care and allow hospitals a deduction for such care.
  • H.R. 4873 sponsored by Rep. Jim Ramstad (R-MN) would encourage investment in affordable housing.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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