Expiring Tax Provisions

[Snaggletoof]

A week ago I had a brief conversation with a man whom I believe to be as knowledgeable as any. He routinely researches emerging tax law as part of his job.

Some 4-5 weeks ago there was this furor about extending unemployment benefits, which ultimately did happen. The legislation contained the extensions of typical stuff that expires at the end of the year such as tuition fringes, itemized sales tax deductions, and many other provisions. Some of these have been extended several times, as many of you will recall.

But surprise!! When the bill actually passed, these extensions had been stripped OUT of the legislation? Wonder who did this, and whether it is the intention of congress to restore them for 2011?

[Lion]

Politicians

I try not to listen to politicians, just what to watch for and then pay close attention when a law is finally passed. Think the "extenders" were stalled, and then split into two bills for potential ease of passage, and then stalled, and then only the items agreed as urgent -- such as the extended UI benefits or the later closing date for primary home sales already in contract -- made it out to a vote. We'll see what if anything happens after Congress reconvenes and before the fall elections. Expect more action after the elections. Fun year for planning, huh?!

[Nashville]

Deficit

There is a real chance that tax breaks will be allowed to expire, possibly even the AMT. The smart people (certainly not me) think those who are financing the deficit are finally telling the govt "NO MORE."

It is politically much easier to raise revenue by allowing tax deductions and credits to simply expire than to push through a tax increase. The strategy to allow expiration requires them to do nothing, whereas a tax increase puts them on record for voting.

The AMT has a different political landscape. If the exemptions are allowed to drop the big fallout will be on the "blue" states. Even though the AMT hits high-income taxpayers, middle-income taxpayers who will feel it the most would be those in states where property taxes and income taxes are the highest. Regionally, this would be the Northeast and Industrial Midwest.

[Edsel]

Bump

eight character required to bump.

[JON]

Had a client

who wanted to contribute out of the IRA to a charity. It was attached to the uc bill, extenders, and we watched it. The bill passed, it was not easy, surprise at some midnight meeting in the closet it cut out all the extenders that had hung in their since May. Worse, it was hard to find out they had gotten rid of the extenders.

[Burke]

I have two of those as well, waiting.....waiting....waiting....