WASHINGTON BUREAU — The Senate has voted to proceed with debate on the tax deal President Obama worked out with top Republicans.
Snow slowed voting to a glacial pace, but Senate Majority Leader Harry Reid, D-Nev., rounded up enough support to prevent a filibuster, or endless round of debate by opponents of the deal, which is taking the form of an amendment that would be added to H.R. 4853, a bill that was originally an airport and airways trust fund tax bill.
Reid needed at least 60 votes to pass a motion for cloture, or limit on debate, that would hold debate on the tax measure to 30 hours. Senators took more than 3 hours to vote 83-15 for cloture.
A final vote on the tax measure could take place sometime this week, according to aides in Reid’s office.
INSURANCE COMPANY TAXES
Section 750 of the tax measure would extend the active financing income sections in Internal Revenue Code sections 953 and 954 for 2 years.
The rules would affect how U.S. shareholders with large stakes in foreign life and annuity operations calculate their U.S. taxable income.
In some cases, if the Internal Revenue Service (IRS) thinks foreign life and annuity reserve rules are appropriate, the IRS will let a life company use the foreign statement life and annuity reserve figures as the reserve figure for U.S. tax purposes, according to an Obama tax deal summary provided by the congressional Joint Committee on Taxation.
Section 750 of the Obama tax deal would extend “the present-law temporary exceptions from subpart F foreign personal holding company income, foreign base company services income, and insurance income for certain income that is derived in the active conduct of a banking, financing, or similar business, or in the conduct of an insurance business,” officials say.
The provision would be effective for taxable years of foreign corporations beginning after Dec. 31, 2009, officials say.
Because of the quirks of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), current law states that people who die this year will pay no federal estate taxes, but estates would lose use of a provision that normally would let estate beneficiaries who sell inherited property pay taxes based on the value of property on the date of death.
Estate taxes are supposed to return to 2001 levels Jan. 1, 2011, with a $1 million exemption and a 55% top rate.