United States: Congress Recesses With Hope Of Tax Deliberations In Lame Duck Session

Congress agreed to temporarily extend government funding through Dec. 9, allowing a recess for the elections in anticipation of returning for a lame duck session to wrap up final unresolved issues.

The lame duck agenda should include several potential tax issues. Congressional leaders have said they will try to reach agreement to extend some of the energy provisions left off of last year's big tax agreements. This effort could expand to include many of the 30-plus other provisions that were not made permanent as part of that deal and are set to expire at the end of the year. Some of the most popular provisions expiring on Dec. 31 include:

  • Above the line deduction for tuition
  • Mortgage insurance deduction
  • Exclusion for home debt forgiveness
  • Accelerated depreciation for racehorses and motorsport tracks
  • Empowerment zones
  • Credits for alternative fuel and biofuel, energy efficient new homes and home improvements, and the deduction for energy efficient commercial buildings.

Many lawmakers from both sides of the aisle are also expected to make last-ditch efforts to push their pet project tax bills through before Congress adjourns. Some of the bills that could be considered include:

  • Mobile Workforce State Income Tax Simplification Act of 2015 (H.R. 2315) – Bars states from taxing the income of nonresident employees who stay less than 30 days.
  • Empowering Employees through Stock Ownership Act (H.R. 5719) – Allows qualifying employees of certain private companies to generally defer income on stock awards until the stock is sold, the company goes public or it's seven years after the stock vests.
  • Emergency Citrus Disease Response Act of 2016 (H.R. 3957) – Expands expensing for replacing damaged citrus trees to allow investors who own less than half a grove to qualify as well as taxpayers who buy a blighted grove.
  • United States Appreciation for Olympians and Paralympians Act (H.R. 5946 and S. 2650) – Excludes Olympic and Paralympic medals and prize money from income (House version limits the benefit to medal winners with income of $1 million or less).
  • Stop Taxing Death and Disability Act (H.R. 5204) – Excludes student loan forgiveness from income for students who have died or become disabled.
  • Water and Agriculture Tax Reform Act of 2015 (H.R. 4220) – Relaxes the governance rules and income limitations for tax-exempt mutual ditch or irrigation companies.
  • Modify the Credit for Production from Advanced Nuclear Power Facilities (H.R. 5879) – Extends the advanced nuclear power production tax credit and allows public entities to pass the credit on to certain taxable partners.

Lawmakers could also make progress on long-term tax projects in the lame duck session. Senate Finance Committee Chair Orrin Hatch, R-Utah, is expected to release a long-awaited discussion draft on corporate integration. Finance Committee ranking minority member Ron Wyden, D-Ore., has released discussion drafts on depreciation and retirement accounts and could offer additional proposals. House Republican tax writers, meanwhile, are working on fleshing out the framework for a tax overhaul offered earlier this year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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