$858-Billion Tax Relief Bill Passed By Congress, Signed By President Obama

$858-Billion Tax Relief Bill Passed By Congress, Signed By President Obama

December 17, 2010
FEI Summary

On Thurs., Dec. 16, 2010, the United States House of Representatives voted 277 to 148 to pass a 10-year, $858 billion tax relief and unemployment insurance extension bill, clearing the measure to go to the White House to be signed into law by President Barack Obama.

Prior to the vote on final passage of H.R. 4853, the House voted 233 to 194 to defeat a House amendment to modify the estate and gift tax provisions in the Senate-passed measure. The U.S. Senate had voted on Dec. 15 to approve the measure, with an 81 to 19 vote. 

President Signs Act
President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 into law at 3:50 p.m. on Fri., Dec. 17.

Two-Year Extension of Tax Cuts
The centerpiece of H.R. 4853 is a two-year extension of the 2001 and 2003 individual tax cuts through 2012. The legislation also provides a two-year, retroactive extension of individual AMT relief through 2011 and reinstates the estate and gift tax through 2012 with a 35-percent top tax rate and a $5 million per-person exemption. In addition, the bill provides a temporary, 2 percentage point reduction in the employee share of Social Security payroll taxes for 2011.

Other Major Provisions
For businesses, the bill contains a two-year, retroactive extension through 2011 of business (and individual) tax provisions that expired at the end of 2009, including the research tax credit, "look-through" treatment for payments between related CFCs, and the subpart F active financing exception. In addition, the bill provides 100-percent "bonus" depreciation for property placed in service after Sept. 8, 2010 and before Jan. 1, 2012, and 50-percent bonus depreciation for property placed in service in 2012. The bill does not contain any revenue-raising tax provisions.

Other provisions include a 13-month extension of unemployment insurance benefits through 2011; extension through 2011 of certain expiring energy tax incentives; two-year extension (through 2012) of certain 2009 economic stimulus tax relief provisions (i.e., enhanced child credit and EITC, and American Opportunity Tax Credit); and one-year extension (through 2011) of certain disaster tax relief.

FEI Advocacy Makes A Difference
This is a great victory for FEI and its membership. FEI and its technical committees have drafted letters and worked with various other associations on this legislation.

Prepared Dec. 17, 2010 by Tyler Roberts (troberts@financialexecutives.org) policy analyst, Financial Executives International (FEI). This summary does not represent FEI opinion unless specifically noted above.