Tax Provisions Moving Through Congress

[kcjenkins]

I've written up a summary of the tax provisions in the unemployment benefits extension that came out of the Senate Finance Committee this week and appears headed rapidly towards near unanimous passage in Congress. The write up is at:

http://ascpa.wordpress.com/2009/11/04/comi...tax-provisions/

One interesting aside--Congress goes back to the well and ups (this time *really ups*) the penalties for late filing partnership and S corporation returns. Would become $195 per partner/shareholder per month.

--

Ed Zollars, CPA

Phoenix, Arizona

[TAXBILLY]

We'll need to make sure we have enough liability insurance.

taxbilly

[BulldogTom]

Can someone explain the new long term buyer reduced credit?

Are they saying that anyone who purchased a home in the 8 years preceeding the date of the act (when obama signs it presumably?) and lived in the home as their principal residence for 5 years will get a refundable credit of 6,500?

But if you purchased the home 4 years and 11 months prior to the date of the act, no credit?

Is this what that thing says?

I just saw this on the news, and I know it has not gone to the house yet, but I am very confused on the reporting I am seeing on the news.

Thanks,

Tom

Lodi, CA

[TAXBILLY]

Hard to explain something that's not officially law yet but it involves a credit for present home owners to replace their present personal residence and receive a credit of up to $6500. All this is very general and we will have to wait until the bill is finalized and voted on by the house which will be soon.

taxbilly

[Jake]

Tom,

I have had three impatient clients contact me this morning regarding the availability of the cedit to them. I read the amended legislation and in regards to your questions it says:

Special Rule for Long-time Residents of Same Principal Residence.—Subsection © of section 36 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

“(6) Exception for long-time residents of same principal residence .—In the case of an individual (and, if married, such individual's spouse) who has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.”.

It does go on to say that the credit is reduced to $6,500 for this class of homebuyer.

Lots of question still need to be answered.

[BulldogTom]

OK, I get it. It will change the credit from a first time homebuyer to either a first time homebuyer, or a homebuyer who has lived in their current home for at least 5 of the last 8 years.

Thanks for the clarification.

Tom

Lodi, CA

[kcjenkins]

That's right, Tom. It will still require buying a new home, just letting some new group qualify, at a reduced amount. And yes, if you purchased the home 4 years and 11 months prior to the date of the act, no credit.