Pillars on a Government building

Senate Passes Tax, Climate, & Healthcare Bill


Senate Democrats rallied together and passed the Inflation Reduction Act of 2022 over the weekend. The House is expected to return to D.C. (they’re technically on recess) this week to vote and pass the bill into law. Note, this may be a bit more difficult if the July inflation numbers, which are expected to be released this week, are grim. 

There were a few changes to the reconciliation bill that ultimately passed the Senate, including: 

  • Carried interest is out. Per Sen. Kyrsten Sinema’s request, the provision closing a carried interest provision was removed from the bill. This provision would have strengthened existing provisions by taxing additional income of portfolio managers at ordinary tax rates versus at capital gains rates. 
  • Stock buyback tax is in. Democrats brought back the 1% excise tax on corporate stock repurchases that was part of original Build Back Better negotiations. This provision would apply only to public companies.
  • Changes to 15% corporate minimum tax. A last-minute amendment proposes to allow a portfolio company to be counted separately from its owner to avoid potentially subjecting small and midsize businesses to this minimum tax. 
  • Business loss extension. A proposed amendment to extend the SALT cap failed and was replaced by an amendment to extend the limitation on excess business loss for pass-through entities for two years. 

The Congressional Budget Office issued its report on the Inflation Reduction Act of 2022, finding that the proposed legislation would result in a net decrease in the deficit totaling $102 billion between 2022 and 2031 (note, this is for the original legislative text of this bill, not for the version that ultimately passed in the Senate).

IN CASE YOU MISSED IT

  • A group of chief human resources officers of major semiconductor chip makers wrote a letter to Congress asking for “green-card reform” as a follow up to the passage of the CHIPS Act. The companies say they need a workforce to help make semiconductors. 
  • The IRS released final regulations amending how to make elections to adjust basis of partnership properties upon a distribution of property by the partnership or a transfer of a partnership interest.
  • Storm victims in parts of Kentucky now have until November 15, 2022 to file various individual and business tax returns and make tax payments.
  • The IRS released a draft Form 1040 for tax year 2022. A notable change is that the cryptocurrency question now says: “At any time during 2022, did you (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
  • A group of senators introduced the Digital Commodities Consumer Protection Act of 2022, which proposes to give the Commodity Futures Trading Commission new tools and authorities to regulate digital commodities. 
  • Sens. Rob Portman, Pat Toomey, Mark Warner, Cynthia Lummis, and Kyrsten Sinema introduced legislation to clarify the digital asset reporting requirements signed into law as part of last year’s Infrastructure Investment and Jobs Act.
  • Notice 2022-33 extends the deadline for amending retirement plans and individual retirement arrangements (IRAs) under the SECURE Act of 2019.
     

This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein. 
 

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