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Tax consequences of bailout
Posted: Thu Oct 02, 2008 7:47 pm
by Arthur Rubin
I heard (on the radio) that the Senate-passed bailout had tax components, as well as the financial components. Anyone know what they are?
Re: Tax consequences of bailout
Posted: Thu Oct 02, 2008 8:02 pm
by Demosthenes
From taxprof blog.
The three tax provisions in the bailout portion of the bill would:
Treat gain or loss from the sale or exchange of preferred stock by financial institutions as ordinary income or loss
Impose special rules for tax treatment of executive compensation of employers participating in the Troubled Assets Relief Program (TARP)
Exclude discharges of acquisition indebtedness on principal residences from gross income
The revenue offsets in the tax extenders portion of the bill would:
Limit the deduction for income attributable to domestic production of oil and gas
Eliminate the different treatment of foreign oil and gas extraction income and foreign oil-related income for foreign tax credit purposes
Require broker reporting of customer’s basis in securities transactions
Extend the 0.2% FUTA surtax
Increase and extend the Oil Spill Liability Trust Fund tax
Impose a new tax on the nonqualified deferred compensation from certain offshore tax indifferent parties
Re: Tax consequences of bailout
Posted: Thu Oct 02, 2008 8:07 pm
by Arthur Rubin
Demosthenes wrote:From taxprof blog.
Exclude discharges of acquisition indebtedness on principal residences from gross income
...
Require broker reporting of customer’s basis in securities transactions
I thought both of those were already in existing tax law?
Re: Tax consequences of bailout
Posted: Sat Oct 11, 2008 12:17 am
by MSA
Arthur Rubin wrote:Demosthenes wrote:From taxprof blog.
Exclude discharges of acquisition indebtedness on principal residences from gross income
...
Require broker reporting of customer’s basis in securities transactions
I thought both of those were already in existing tax law?
Yes and no.
Regarding the "discharges of acquisition indebtedness" provision: yes, this is already in effect. But the provision was originally scheduled to expire at the end of 2009; the bailout bill pushes that expiration date back to 2012.
Broker reporting of basis: The law currently requires that brokers report the sales price of securities, but does
not require that they track and report basis. (A lot of brokers track basis for the customers anyway; but they don't report it to the IRS.)
There are actually a lot more tax provisions in the bailout bill than these two. One source for these is CCH's free summary analysis of the tax provisions of the bailout bill at
http://tax.cchgroup.com/Legislation/200 ... on-Act.pdf.
Re: Tax consequences of bailout
Posted: Sat Oct 11, 2008 2:32 am
by Arthur Rubin
MSA wrote:
Regarding the "discharges of acquisition indebtedness" provision: yes, this is already in effect. But the provision was originally scheduled to expire at the end of 2009; the bailout bill pushes that expiration date back to 2012.
Broker reporting of basis: The law currently requires that brokers report the sales price of securities, but does not require that they track and report basis. (A lot of brokers track basis for the customers anyway; but they don't report it to the IRS.)
Actually, I thought there was already an existing law which required broker reporting of basis for assets
purchased after 2010, but the date kept getting pushed back.