On September 16, Senate Finance Committee Chairman Max Baucus (D-MT) released a revised draft of tax extension legislation that has been stuck in the Senate for several months. The House passed tax extension legislation in May 2010. The Senate is expected to consider the measure during a lame duck session of Congress in November.

The new package extends a variety of provisions that expired at the end of 2009 for one year. Attempts to pass prior versions of tax extension legislation stalled over methods to offset the costs of extending expiring tax cuts.

The recent bill developed by Baucus is fully offset and contains a total of $50 billion in tax cuts and $65 billion in offsets.

Included in the bill is a one-year extension of the New Energy Efficient Home Tax Credit (section 45L of the tax code), which provides a $1,000 tax credit to manufacturers of new Energy Star-qualified manufactured homes and $2,000 to manufacturers of modular homes.

Offsets to the bill include increased taxes in carried interest. To the extent that carried interest reflects a return on invested capital, the bill would continue to tax carried interest at capital gain tax rates. However, to the extent that carried interest does not reflect a return on invested capital, the bill would require investment fund managers to treat 75 percent of the remaining carried interest as ordinary income beginning on January 1, 2011. The amount that will be treated as ordinary income is reduced to 50 percent for carried interest that does not reflect a return on invested capital but which is attributable to the sale of assets which are held for five or more years. The change would provide nearly $13.5 billion over 10 years in increased revenue, which is used to help offset the bill’s final price tag.

For more information, click here to visit the Senate Finance Committee website.

For more information, contact MHI Vice President of Government Affairs Jason Boehlert at 703-558-0660 or jboehlert@mfghome.org.