The Senate passed an amendment to the compromise housing bill that will allow money-losing businesses to elect to use accumulated alternative minimum tax credits and research and development credits early.
With the amendment, such businesses will be able to make new investments in lieu of the bonus depreciation provision in the recently enacted economic stimulus bill. The amendment, sponsored by Senators George Voinovich (pictured), R-Ohio, and Debbie Stabenow, D-Mich., passed by a vote of 76-2. The provision aims to help companies that cannot benefit from bonus depreciation because they do not have any taxable income against which to tax the deductions.
The full housing bill is expected to be voted on by the Senate this week and then go to the House. The bipartisan bill is intended to help homeowners and businesses cope with the crisis in the mortgage and credit markets. It includes a $6 billion tax break for homebuilders and other businesses that lets them count net operating losses against tax returns from prior profitable years, permitting carrybacks for four years instead of the current period of two years.
The bill provides a new standard property tax deduction of $500 for individual taxpayers and $1,000 for couples who don't itemize. Also included is $10 billion for tax-exempt bonds that local housing authorities can use to refinance sub-prime mortgages and offer new mortgages to first-time homeowners. In addition, the bill offers a $7,000 tax credit for purchasers of foreclosed homes and a tax break for struggling homebuilders.
