Last night Chairman Brady released the first set of amendments to the Chairman’s Mark released last Friday. We have incorporated these amendments into the text of the Chairman’s Mark and have generated a PDF comparison showing the revised sections, which you can find here. Click here for a comparison that shows the entirety of the bill’s text.
In addition to modifying the earned income tax credit, the Chairman’s amendment limits the favorable taxation of “carried interest,” so that long-term capital gains rates will apply only to gains from investments that have been held for more than 3 years. To address concerns around the House bill’s treatment of deferred compensation in the context of start-ups, the amendment also adds a provision that would defer the recognition of income on the exercise of compensatory options or the settlement of restricted stock units issued to certain employees of private companies for up to five years (in limited circumstances).
On the international side, the amendment:
- Modifies the “mini-BAT” provisions that apply a 20% excise tax to certain payments made to foreign affiliates to expand the deduction allowed to a foreign corporation that elects to treat a payment as effectively connected income (in lieu of paying the excise tax) to include a margin on its deemed expenses, in addition to a handful of other changes (read more here);
- Revises the foreign minimum tax provisions to exclude income of certain local dealers in the calculation of “tested income,” as well as to clarify the treatment of commodities income; and
- Revises the deemed repatriation provisions to provide that the deemed repatriation is grossed-up for foreign taxes deemed paid on the earnings and profits deemed repatriated.
Lastly, the amendment modifies the excise tax applicable to investment income of certain private colleges and universities to apply only to institutions with an endowment of at least $250,000 per student (as opposed to $100,000 per student in the Chairman’s Mark).