Senate Approves US Stimulus Bill

by Mike Godfrey, Tax-News.com, Washington

12 February 2009

On February 10, the United States Senate passed its version of the American Recovery and Reinvestment Act of 2009, setting the stage for reconciliation of Senate and House versions of the bill and final passage.

After days of deliberation and horse-trading over various amendments, the legislation was passed by a vote of 61 to 37, with most Republicans voting against the USD840bn spending and tax cut plan.

New, above-the-line deductions for sales tax on new cars and one year’s interest on new car loans were added to the measure during Senate debate, along with a greatly expanded homebuyer’s credit, potentially available to anyone purchasing a home in 2009, not just the 'first-time' homebuyers singled out in the original House version. There are also several other notable changes and additions to the Senate version of the bill compared with the House version. They include:

• The phase-out range of the 'Making Work Pay' Credit and inclusion of one-time payments of USD300 to individuals on fixed incomes, mainly Social Security recipients and disabled veterans;
• An alternative minimum tax (AMT) patch for 2009;
• The reduction of carryback amount for net operating losses;
• The scope of refundable credits in lieu of bonus depreciation;
• Deferral of income from certain cancellations of indebtedness;
• The size of exclusion for Qualified Small Business Stock;
• An investment tax credit for broadband investments in rural, underserved areas in 2009 and 2010;
• S Corp built-in gain period; and
• Provisions relating to the Energy Investment Credit and the Low Income Housing Credit.

“The differences between the Senate and House versions will have to be ironed out, either by a conference committee or through negotiations between leaders of the two houses,” observed Mark Luscombe CCH principal federal tax analyst.

“Even relatively minor points, such as a month’s difference in effective dates, can make a big difference to taxpayers affected by a provision," he added.

President Obama is pushing for the legislation to be approved by Congress before the Presidents' Day recess on February 13.

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