Tax News

CCH (cch.taxgroup.com) reports:

  Various prescribed rates for federal income tax purposes for July 2009 have been provided by the IRS. The annual short-term, mid-term, and long-term applicable federal interest rates (AFRs) are 0.82 percent, 2.76 percent and 4.36 percent, respectively. The semiannual short-term, mid-term, and long-term AFRs are 0.82 percent, 2.74 percent and 4.31 percent, respectively. Quarterly short-term, mid-term and long-term AFRs are 0.82 percent, 2.73 percent and 4.29 percent, respectively. Finally, the monthly short-term, mid-term and long-term rates are 0.82 percent, 2.72 percent and 4.27 percent, respectively.

  The short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for July 2009 for purposes of Code Sec. 1288(b) are 0.84 percent, 2.22 percent, and 4.33 percent, respectively, when annual compounding is used.

  Additionally, the Code Sec. 382 adjusted federal long-term rate is 4.33 percent, and the long-term tax-exempt rate is 4.58 percent. The Code Sec. 42(b)(2) appropriate percentage for the 70-percent present-value, low-income housing credit is 7.82 percent, and the appropriate percentage for the 30-percent present-value, low-income housing credit is 3.35 percent. TheCode Sec. 7520 AFR for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest is 3.40 percent.

  Finally, the Code Sec. 7872(e)(2) blended annual rate for 2009 is 0.82 percent.

Rev. Rul. 2009-20, 2009FED ¶46,411

Rev. Rul. 2009-20, FINH ¶30,622

Other References:

 
Code Sec. 42

  CCH Reference - 2009FED ¶173.02

  CCH Reference - 2009FED ¶176.01

  CCH Reference - 2009FED ¶4385.03

 
Code Sec. 382

  CCH Reference - 2009FED ¶17,115.28

 
Code Sec. 1274

  CCH Reference - 2009FED ¶31,310.05

 
Code Sec. 7520

  CCH Reference - 2009FED ¶42,785.45

  CCH Reference - FINH ¶22,630.05

 
Code Sec. 7872

  CCH Reference - 2009FED ¶43,960.14

  CCH Reference - FINH ¶18,950.05

  CCH Reference - FINH ¶18,950.80

  Tax Research Consultant

  CCH Reference - TRC ACCTNG: 36,162.05

CCH (cch.taxgroup.com) reports:

  "Pay-for-Performance Success Payments" under the U.S. Government's Home Affordable Modification Program (HAMP) are excludable from gross income. Under HAMP, which was created in response to the unprecedented financial stress of 2008 and 2009, financially stressed homeowners that make timely payments on modified loans are eligible to have incentive payments made on their behalf to lenders/investors. These payments reduce the principal balance on the homeowner's mortgage loan. Absent an exclusion, these payments would constitute gross income under Code Sec. 61(a). However, the HAMP "Pay-for-Performance Success Payments" are excluded from income because they meet the definition of payments under governmental social benefit programs for the promotion of the general welfare and not for services rendered. See Rev. Rul. 74-205, 1974-1 C.B. 20 and Rev. Rul. 98-19, 1998-1 C.B. 840 for other examples of qualifying payments.

Rev. Rul. 2009-19, 2009FED ¶46,412

Other References:

 
Code Sec. 61

  CCH Reference - 2009FED ¶5504.184

  Tax Research Consultant

  CCH Reference - TRC: INDIV: 33,350

CCH (cch.taxgroup.com) reports:

  As Congress considers several health care reform proposals, President Obama said that he is "very optimistic" and hopes that federal lawmakers will make significant progress in the weeks ahead. The president, at a news conference on June 23, made his case for including a public insurance option in the legislation, but also indicated he is open to negotiations on the controversial proposal.

  Obama called the public insurance plan an important tool for keeping down private insurance costs. Nevertheless, Obama noted that Congress is in the early stages of the legislative process and that he is drawing no lines in the sand, except that a final package must lower health care costs and be paid for.

Senate Action

  The Senate Health, Education, Labor and Pensions (HELP) Committee could finish marking up its health care reform bill by the end of the week of June 22, despite the fact that major sections of the legislation remain incomplete, according to Sen. Christopher Dodd, D-Conn. Committee Democrats on June 23 approved 46 Republican amendments and a provision offered by Sen. Tom Harkin, D-Iowa, that would phase in funding for a preventative public health fund over a 10-year period.

  Senate Finance Committee Chairman Max Baucus, D-Mont., said he was uncertain when he would release his health care reform draft, but remained optimistic that it would have bipartisan support. Senate Budget Committee Chairman Kent Conrad, D-N.D., said lawmakers had brought down the overall cost of the bill to around $1.2 trillion and were still working to cut another $200 billion. A preliminary estimate by the Congressional Budget Office (CBO) of an earlier draft had pegged the cost at $1.6 trillion, setting off a firestorm of criticism and forcing the committee to rework their reform plan.

House Energy Bill

  House lawmakers are moving ahead with plans to pass the American Clean Energy and Security Bill of 2009 (HR 2454) before leaving town for the weeklong Independence Day recess. The House Rules Committee plans to hold a hearing on the energy bill on June 25 and is in the process of accepting amendments from lawmakers. If the committee approves the bill, it will likely go to the House floor for a vote on the following day.

  The measure includes a provision to modify the earned income tax credit by increasing the phaseout rate from $5,280 to $13,590, effective after December 31, 2011. The bill also includes a provision to allow the Treasury to transfer money from the general fund to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund to offset any changes in benefit costs and tax revenues caused by the energy bill.

  The president commended the House for moving forward on energy legislation, which he said will lessen U.S. dependence on foreign oil and encourage the development of clean energy sources, such as wind, solar and geothermal power. When asked if the deepening economic crisis warranted a second stimulus package, Obama responded, "not yet," and said it was important to see how the economy "evolves" and how effectively the existing package spurs economic growth.

  By Jeff Carlson, Stephen K. Cooper and Paula Cruickshank, CCH News Staff

Tax-Related Sections of the Rules Committee Draft Proposal of American Clean Energy and Security Act of 2009, HR 2454
 

Tax Analysts report: