Notable Amendments to Chairman’s Mark of Senate Proposal

The Senate Finance Committee approved its version of the Tax Cuts and Jobs Act, passing the measure on a party-line vote.  The final version of the bill that passed included an amendment from the Finance Committee Chairman, Senator Orrin Hatch, that included a few notable changes. November 17, 2017
The Finance Committee passage of the bill comes on the same day as the House passed their version of the bill, less than two weeks after its introduction.  Senate leadership is planning to deliver the text of the bill to the Senate floor on Tuesday, November 28.  In the meantime, the conceptual Chairman’s Mark will be reduced to legislative text over the next week and will be scored by the Senate parliamentarian to confirm the bill is within the bounds of the “Byrd Rule” and permit a vote on the bill under the budget rules of reconciliation (only requiring a simple majority vote).

Notable changes in last night’s amendment include:
  • A three-year holding period requirement for long-term capital gains with respect to carried interest, which is conceptually similar to the requirement included in the version of the bill that passed the House.
  • REITs would be relieved from including untaxed foreign earnings in their gross income tests, and REITs would be permitted to elect to make distributions to shareholders in respect of the deemed repatriated foreign earnings over an eight-year period.
  • RICs (such as mutual funds) would be excepted from the proposed FIFO rule with respect to the sales of securities.
  • The proposed rules to limit NOL deductions would be effective for tax years beginning after 2022 (instead of after 2023).
  • The proposed rules to limit the deduction for employer-provided meals would be effective for tax years beginning after 2025.