Small Business Jobs Bill Stalls in Senate

A stalemate over a small business jobs bill (H.R. 5297) continued this week in the Senate.  The Senate had adjourned for the July 4^th recess after beginning debate on the measure, which includes a package of tax cuts and provisions to increase access to capital for community banks and small businesses. Senate Democrats have not been able to reach agreement within their own caucus and with Republicans on amendments for floor consideration.  One issue that is causing disagreement is a proposal offered by Senators Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) that would make permanent changes to the now-expired estate tax.  The proposal would set the top rate at 35 percent with a $5 million exemption level for individuals ($10 million for couples) phased in over 10 years and indexed for inflation.  It also would provide a stepped up basis for inherited assets.  The Senators' plan would allow the estates of taxpayers who die in 2010 to choose between the current rate of zero with a modified carryover basis or their proposal establishing a top rate of 35 percent.  There is also pressure for the Senate to consider extensions of the expiring 2001 and 2003 tax cuts on which Senators are wary to vote prior to the November elections, as well as on other pieces of stalled legislation, including the annual tax extenders package. AGC supports a provision in the small business jobs bill that would extend enhanced section 179 expensing and bonus depreciation through 2010.  AGC is working with Senator Landrieu on an amendment that would allow for the modification of the bonus depreciation extension to allow contractors engaged in long-term contracts that use the percentage-of-completion (PCM) method of accounting and purchase 7-year depreciable property to take bonus depreciation.  AGC submitted a statement for the record of a House Small Business Committee hearing Wednesday on bonus depreciation in support of the one-year extension and the modification under consideration in the Senate.  AGC has also advocated in support of another provision in the bill that would provide relief from section 6707A penalties for taxpayers who failed to timely and properly disclose a transaction the Internal Revenue Service (IRS) characterizes as a "listed transaction."