Daily Tax Update - December 14, 2009

EXTENSION OF 2009 ESTATE TAX RATES MAY BE ATTACHED TO DEFENSE APPROPRIATIONS BILL: House Majority Leader Steny Hoyer said Friday that a one-year extension of the 45-percent estate tax rate and the $3.5 million individual exemption level may be attached to the Defense Appropriations Bill. The current estate tax rate expires December 31. Congress must pass the Defense Appropriations Bill by the end of the year. The House passed a separate estate tax bill (H.R. 4154) on December 3, but the Senate has not acted. The House is expected to adjourn for the year on December 18, while the Senate adjournment timetable is unclear. Hoyer said, “We're talking to the Senate about how we can reach agreement…There are some options.”

  • Finance Chairman Max Baucus supports a longer than one-year estate tax extension. Baucus said recently, “The House makes it permanent and the House doesn't pay for it, and that's not going to sit too well over here. It has to be a somewhat shorter extension and we'll deal with permanence later ... we'll do it as long as we can, but I don't think we'll be able to pass a permanent [extension]." Baucus said that he didn’t want the estate tax rate to lapse. Baucus added, “The main thing is, clearly, an extension to stop this yo-yo effect of the estate tax going up and down, and zero and then back up to some obscene amount. I will do all I can to prevent that from happening."
  • House Ways and Means Chairman Charles Rangel said late last week that an extension lasting a few months is also an option.

TAX BILLS INTRODUCED DECEMBER 11th:
H.R.4292: To amend the Internal Revenue Code of 1986 to allow a refundable credit to the issuers of qualified zone academy bonds and qualified school construction bonds.
Sponsor: Rep Childers, Travis [MS-1] (introduced 12/11/2009)      Cosponsors (None)

H.R.4296: To amend the Internal Revenue Code of 1986 to provide a tax incentive for the installation and maintenance of mechanical insulation property.
Sponsor: Rep Halvorson, Deborah L. [IL-11] (introduced 12/11/2009)      Cosponsors (None)

S.2873: A bill to amend the Internal Revenue Code of 1986 to deny the deduction for direct to consumer advertising expenses for prescription pharmaceuticals and to provide a deduction for fees paid for the participation of children in certain organizations which promote physical activity.
Sponsor: Sen Begich, Mark [AK] (introduced 12/11/2009)      Cosponsors (None)

S.2876: A bill to amend the Internal Revenue Code of 1986 to clarify the capital gain or loss treatment of the sale or exchange of mitigation credits earned by restoring wetlands, and for other purposes.
Sponsor: Sen Landrieu, Mary L. [LA] (introduced 12/11/2009)      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.

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