Daily Tax Update - April 11, 2008

IRS TO ISSUE GUIDANCE ON SPECIAL 50-PERCENT DEPRECIATION ALLOWANCE:  Today, the IRS announced that it will issue guidance for businesses on how the special 50 percent depreciation allowance that was included in the Economic Stimulus Act of 2008 can be used to make capital investments this year. Until the guidance is issued, businesses may rely on the regulations previously issued regarding bonus depreciation. According to the IRS, “The Economic Stimulus Act of 2008 provided a significant tax incentive for businesses to make capital investments by adding a special 50 percent depreciation allowance for qualifying purchases. This special “bonus depreciation” allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2008. It allows taxpayers to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.” The IRS added, “Because the special 50 percent depreciation allowance contained in the Economic Stimulus Act of 2008 is generally patterned after prior bonus depreciation statutes, the Treasury Department and the IRS intend to issue guidance allowing taxpayers generally to rely on Treas. Reg. Sec. 1.168(k)-1 for purposes of the bonus depreciation provision of the Economic Stimulus Act of 2008. . .The upcoming guidance will also cover the new increased limits that businesses can expense under the Economic Stimulus Act of 2008. Generally, the new law set a limit of $250,000 that a business can expense during 2008, up from the limit previously set for 2008 of $128,000.”

TREASURY, IRS ISSUE FUNDING GUIDANCE FOR SINGLE-EMPLOYER DEFINED PENSION PLANS: Today, the Treasury Department and the IRS issued regulations under section 430 of the Internal Revenue Code that provide employers sponsoring single-employer defined benefit plans with guidance regarding the determination of minimum required contributions under the new funding rules enacted as part of the Pension Protection Act of 2006. 

TAX BILLS INTRODUCED APRIL 10TH:
H.R.5764: To amend the Internal Revenue Code of 1986 to allow a continuous levy on payments to Medicaid providers and suppliers.
Sponsor: Rep Emanuel, Rahm [IL-5] (introduced 4/10/2008)      Cosponsors (1)

H.R.5776: To amend the Internal Revenue Code of 1986 to exclude from gross income certain distributions from qualified retirement plans used for mortgage payments.
Sponsor: Rep Shadegg, John B. [AZ-3] (introduced 4/10/2008)      Cosponsors (16)

H.R.5779: To amend the Internal Revenue Code of 1986 to impose a tax on the amount of wages in excess of the contribution and benefit base, and for other purposes.
Sponsor: Rep Wexler, Robert [FL-19] (introduced 4/10/2008)      Cosponsors (None)

S.2843: A bill to amend the Internal Revenue Code of 1986 to allow a continuous levy on payments to Medicaid providers and suppliers.
Sponsor: Sen Coleman, Norm [MN] (introduced 4/10/2008)      Cosponsors (1)

S.2846: A bill to amend the Internal Revenue Code of 1986 to allow a $1,000 refundable credit for individuals who are bona fide volunteer members of volunteer firefighting and emergency medical service organizations.
Sponsor: Sen Schumer, Charles E. [NY] (introduced 4/10/2008)      Cosponsors (None)

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
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.