Pardon Our Dust
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House: Permanent Bonus Depreciation Bill Passes. The House voted 258-160 on July 11, 2014, to pass H.R. 4718, a bill that would renew and make permanent “bonus depreciation” — one of the currently expired tax “extenders.” The legislation allows businesses to write off 50 percent of the cost of qualifying investments in the first year, and it extends the tax break to retail stores, both owner-operated and leased. Most Democrats voted against the $287 billion measure due to objections over its lack of budget offsets. The White House has threatened to veto the measure if it makes it through Congress, although it’s not likely to make it through the Senate, where Finance Committee Chairman Ron Wyden (D-OR) is still hoping to get a two-year extension of nearly 60 expired extenders after the November elections.
Anti-Inversion Provision Passes in Spending Bill. An amendment to an energy appropriations bill, which passed the House on July 11, prohibits certain government contracts with businesses that have redomiciled in Bermuda and the Cayman Islands. The amendment bars contracts by the Department of Energy or Army Corps of Engineers with corporations once incorporated in the U.S. and now reincorporated in Bermuda and the Caymans.
House & Senate: On the Road Again. The House and Senate moved closer last week to resolving a short-term funding fix for the dwindling Highway Trust Fund, which is expected to run dry by the end of this month. Both the House Ways & Means Committee and the Senate Finance Committee marked up legislation on Thursday, July 10. Although the bills are not identical, they both contain “pension smoothing” and extensions of customs user fees as offsets, and both would prop up the HTF through next May. The House is expected to vote on its version of the legislation this week.
IRS Partially Withdraws Proposed Rule on IRA Rollovers.The IRS announced July 10 that it is partially withdrawing a notice of proposed rulemaking in light of the U.S. Tax Court’s January ruling in Bobrow v. Commissioner. In that case, the Tax Court held that an individual couldn’t make an IRA-to-IRA rollover if such a rollover had been made in the preceding one-year period. The IRS has now clarified that taxpayers can have only one rollover per year from an individual retirement account to another IRA, rather than one rollover per IRA per year.
COURTS & LEISURE
No Jail Time for Tax Evasion Was “Unreasonable.” The U.S. Court of Appeals for the 2nd Circuit ruled July 9 that a district court’s sentencing of a taxpayer convicted of filing a false corporate tax return to probation, with no jail time, was procedurally and substantively unreasonable. The 2nd Circuit vacated Young C. Park’s sentence for violating tax code Section 7206, and remanded the case to the U.S. District Court for the Eastern District of New York to resentence Park based on the relevant sentencing factors of 18 U.S.C. Section 3553.
House: In addition to a vote on the highway funding bill, the House will vote on a series of tax measures related to charitable giving this week.
H.R. 2807 would make the enhanced tax benefit for donation of conservation easements permanent; H.R. 4619 would make the ruleallowing certain tax-free distributions from individual retirement accounts for charitable purposes permanent; and H.R. 4719 would permanently extend and expand the charitable deduction for contributions of food inventory.
The other two charitable bills aren’t traditional extenders. One (H.R. 3134) would apply donations, upto April 15 in any given year, to the previous tax year; the other (H.R. 4691) would set a flat 1 percent excise tax rate on private foundations’ investment earnings.
The House is also expected to vote tomorrow, July 15, on the Permanent Internet Tax Freedom Act (H.R. 3086). The legislation permanently extends the ban on state and local taxes on Internet access.
Senate: A U.S. Senate investigative panel will hold a hearing next week, July 22, to probe tax maneuvers by Renaissance Technologies LLC, the hedge fund started by billionaire James Simons, according to Bloomberg BNA’s Daily Tax Report.
The hearing will focus on a trading strategy Renaissance used that converted its profits from rapid trading into lower-taxed, long-term capital gains. The strategy, which involved transactions with banks such as Barclays Plc and Deutsche Bank AG, is also being questioned by the Internal Revenue Service.