Daily Tax Update - December 10, 2007

HOUSE MAY CONSIDER REVISED AMT PATCH BILL WEDNESDAY:  On December 12th, the House is expected to take up a modified one-year revenue neutral AMT patch bill. The modified bill would not include the extenders but the cost of the bill is likely to be offset by two provisions that were part of the previously House-passed package: new limits on hedge fund managers' ability to defer offshore compensation, and a delay of new interest expense allocation rules that benefit multinational firms.

  • Senate Finance Chairman Max Baucus (D-MT) said Friday that he did not think the Senate would back down from its position seeking an AMT patch without offsets. The Senate passed an AMT patch bill December 6th without offsets or the extenders. Baucus said, “I think it's unlikely. I think we should pay for virtually everything, but I think it's unlikely for the AMT to be paid for.” Congress is expected to adjourn for the year at the end of this week. Democratic leaders have insisted that they will patch the AMT bill before the end of this year.

IRS, TREASURY WILL ALLOW CREDITING OF MEXICAN FLAT TAX:  The Internal Revenue Service and the Treasury Department announced today that they are evaluating the single rate business tax recently adopted by Mexico (to become effective in 2008) to determine whether it is a creditable income tax, according to Notice 2008-03 issued December 10 and that, pending the outcome of that study, the IRS will not challenge the creditability of the tax  for taxable years beginning before any guidance is published.

McCRERY ANNOUNCES RETIREMENT:  Today, ranking House Ways and Means Committee member Jim McCrery (R-LA) announced that he would not seek reelection. Reps. Wally Herger (R-CA) and Dave Camp (R-MI) announced plans to seek the top Republican slot on the committee.

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.

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