Daily Tax Update - December 24, 2009

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RECONVENES ON JANUARY 19TH.

SENATE PASSES $871 BILLION HEALTH CARE REFORM BILL: Early this morning, the Senate passed the “Patient Protection and Affordable Health Care Act” by a vote of 60 to 39. Republican Senate Finance Committee member Jim Bunning did not vote.

  • The revenue provisions in the Senate bill include increasing the Medicare Hospital Insurance tax for individuals who earn more than $200,000 and couples who earn more than $250,000. The bill also includes a fee on insurance companies when they sell high-cost health insurance plans. Changes to health care tax incentives include capping FSA contributions, conforming definitions of deductible medical expenses and changing penalties for HSA spending that is not devoted to health care. The bill also assesses a small excise tax on indoor tanning services.
  • Although Finance Chairman Max Baucus wants the House–Senate conference completed by the President’s State of the Union address in late January, Republicans have vowed to continue to fight against the bill.
  • Additional information on the Senate bill can be accessed here
  • Republicans also blocked several Treasury Department nominees, including that of Michael Mundaca to be Assistant Secretary for Tax Policy, from being voted on before they adjourned today. It is unclear when the Senate will vote on the nominees.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2010-11, Pursuant to § 163(e)(5)(F)(iii), the notice extends the suspension of the applicability of § 163(e)(5) for certain applicable high yield discount obligations (“AHYDOs”) to December 31, 2010. Under § 163(e)(5), a corporate issuer’s interest deduction for original issue discount on an AHYDO is deferred or disallowed.

Revenue Ruling 2010-03 holds that the London International Financial Futures and Options Exchange, which is a United Kingdom derivatives market, is a qualified board or exchange within the meaning of section 1256(g)(7)(C) of the Code. 

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.