Daily Tax Update - March 15, 2010

DEMOCRATS CURRENTLY LACK VOTES ON HEALTH CARE BILL: Today, House Democratic Whip James Clyburn said that, as of today, there are not sufficient votes in the House to pass the health care reform bill. However, both Administration and Democratic leaders were confident that the bill would pass. Clyburn said, “We don't have [the votes] as of this morning, but we've been working this thing all weekend. We'll be working it going into the week. I'm also very confident that we'll get this done." House Democratic leaders want the House to pass the Senate-approved version of the bill before passing another bill containing changes under reconciliation procedures. The Senate would need 51 votes to pass the reconciliation bill while the House would need 216 votes.

  • White House Press Secretary Robert Gibbs said yesterday, “This is the climactic week for health care reform. The House will have passed the Senate bill a week from today."
  • House Minority Leader Rep. John Boehner said, "If they had the votes, then it would be law. We're going to do everything we can to make it difficult for them, if not impossible to pass the bill."

LEVIN CIRCULATES DRAFT SMALL BUSINESS AND INFRASTRUCTURE JOB CREATION BILL: Today, House Ways and Means Committee Chairman Sander Levin released a discussion draft of the "Small Business and Infrastructure Jobs Tax Act," which is intended to provide tax relief to small businesses and extend effective financing measures to create jobs and improve America’s cities and towns. A mark up is expected on March 17.

  • The bill includes (1) a 100-percent exclusion of capital gains taxes for small businesses, (2) an extension of Build America Bonds, (3) language excluding bonds financing facilities that furnish water and sewage facilities from state volume caps, and (4) a provision allowing the new markets tax credit to be claimed against the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012.
  • The bill’s offsets include: (1) a limitation on treaty benefits for certain deductible payments, (2) modifying the treatment of securities of a controlled corporation exchanged for assets in certain reorganizations, (3) repealing special rules for interest and dividends received from persons meeting the 80-percent foreign business requirements, (4) increased reporting on expenses related to rental property, and (5) a clarification that current law allowing the IRS to levy 100 percent of any payment due to a vendor for goods or services sold or leased to the federal government would include payments made for the sale or lease of real estate and other types of property not considered “goods or services.”
  • A summary of the bill can be accessed here.

TAX BILLS INTRODUCED MARCH 12TH:
H.R.4839: To amend the Internal Revenue Code of 1986 to exclude from gross income contributions to the capital of a partnership, and for other purposes.
Sponsor: Rep Davis, Danny K. [IL-7] (introduced 3/12/2010)      Cosponsors (2)

H.R.4841: To amend the Internal Revenue Code of 1986 to provide tax relief for small businesses.
Sponsor: Rep Velazquez, Nydia M. [NY-12] (introduced 3/12/2010)      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
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