Legislative Update
 
October 23, 2006
 

With mixed results, Congress has been working overtime this year to lock in tax benefits prior to the mid-term elections. In May, Congress enacted the Tax Increase Prevention and Reconciliation Act. The Act extended the preferential treatment afforded long-term capital gains and qualified dividends, temporarily reduced the widening net cast by the alternative minimum tax, and removed income limitations on Roth IRA conversions. In August, Congress enacted the Pension Protection Act of 2006, which impacted various aspects of retirement accounts, most notably allowing non-spouse beneficiaries to roll over IRAs in addition to permitting some taxpayers to make gifts of IRA distributions in 2006 and 2007 directly to charities. This Act also includes a number of other provisions of interest to charitable organizations and their donors. Over the past year, repeated efforts to repeal the estate tax stalled. Given the widening partisan divide in Washington, various compromise proposals calling for increased estate tax exemptions and reduced rates could not attract the 60 votes required for passage in the Senate. Only time will tell whether an agreement can be forged in the short time that remains prior to the elections.