Daily Tax Update - June 16, 2010

REID TO OFFER SCALED-DOWN EXTENDERS BILL: Today, Senate Democrats were unable to obtain enough votes to pass the $140 billion substitute extenders package. The procedural vote, which would have waived a budget point of order against the substitute amendment, failed by a vote of 45 to 52.

  • In an effort to try to secure a sufficient number of votes for passage, Senate Democrats plan to offer a smaller extenders package – a substitute to the substitute. While the exact timing for consideration and details are sparse, reports indicate that the newest version would be fully offset and is expected to contain many of the same expiring tax provisions but with modifications to the Medicare “doc fix” provision and a reduction to the unemployment benefits extension and possibly a modification to the S corporation/employment tax provision. Additional changes to the carried interest provision are also being considered. The Senate is hoping to complete action by the end of this week.

HOUSE PASSES SMALL BUSINESS TAX BILL: Yesterday, by a vote of 247 to 170, the House passed a small business tax relief bill (H.R. 5486). The bill includes a 100 percent exclusion for capital gains from the sale of some section 1202 small business stock that is held for more than five years and acquired between March 15, 2010, and January 1, 2012 and a provision that would increase for 2010 and 2011 the deduction for business start-up expenses from $5,000 to $20,000. The offsets include a provision that would remove crude tall oil from the section 40 cellulosic biofuel producers credit and a provision requiring a 10-year minimum term for grantor retained annuity trusts.

  • A summary of the bill can be accessed here
  • The Joint Committee on Taxation’s description of the bill can be accessed here.

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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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