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Potter & Company, LLP
Home > Newsletters > October 2008 Newsletter > Other Items in the Bailout Bill
Potter & Company, LLP

 

Wonder how the Emergency Economic Stabilization Act of 2008 went from a three page proposal by Treasury Secretary Henry Paulson to the 110 page (451 letter-size pages) behemoth that was signed into law? Originally intended to promote stability in the financial markets, our friends in Washington once again complicated the process. A host of provisions, now commonly referred to as 'tax sweeteners', appear to have little to do with the intended purpose of the bill but worked to entice lawmakers to approve its passage.

The following is just a sample of some of the 'tax sweeteners' in the final bill:

Exemption from excise tax for certain wooden arrows designed for use by children

Certainly among the strangest of the tax sweeteners is this provision, which exempts manufacturers from excise taxes upon the sale of certain types of arrows. In particular the provision states that excise taxes: "shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow…" and goes on to describe the specifics of such wooden arrows.

But if you think this provision has no merit, at least one proponent would like to soften your opinion. Ikey Boykin, the President of the National Association of Manufacturers of Wooden Arrows Designed For Use By Children (NAMWADFBC) noted that the inclusion of the "wooden arrow" provision was, in his words, "…a victory for all Americans".

Oregon Senators Ron Wyden and Gordon Smith had proposed such an exemption previously. To date, both have denied any lobbying to include the provision in the bill.

Transportation fringe benefit to bicycle commuters

This provision, initially proposed by Senator Ron Wyden and Representative Earl Blumenauer (both of Oregon) provides for a 'qualified bicycle commuting reimbursement' allowing employers a tax free benefit to employees for costs associated with bicycling to work. Eligible costs include bike purchase, improvements, repair and storage. Specifically the provision notes the eligible employee "regularly uses the bicycle for a substantial portion of the travel between the employee's residence and place of employment…"

Even proponents of the provision question its inclusion in the bill. Additionally, concerns have been raised about proper documentation of the employee's 'regular use', employers' willingness to offer such a benefit, and the ultimate worth of the benefit, which at best offers a $20 per month reimbursement to the cyclist.

Income averaging for amounts received in connection with the Exxon Valdez litigation

This provision allows Exxon Valdez plaintiffs to average their punitive damages awards over a three year period rather than incur a one-time hit. The plaintiffs are also entitled to contribute punitive awards well in excess of current maximum allowable contributions to an eligible retirement plan.

Alaska U.S. Rep. Don Young, despite his support of the proposition, voted against the "Bailout Bill".

 

Other 'tax sweeteners' include the following (by title in the final bill):

  • Provisions related to film and television productions
  • Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands
  • Extension of mine rescue team training credit
  • Extension of election to expense advanced mine safety equipment
  • Tax incentives for investment in the District of Columbia
  • Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds
  • Seven-year cost recovery period for motorsports racing track facility

And the list goes on...

 

For the full text of the "Bailout Bill", click here.

 

 

 

 

 

 

 

 

 
 


 
Potter & Company, LLP
Potter & Company, LLP
For more information regarding the tax provisions of the Bailout Bill, please contact:
 
Louisville
 
W. Thomas Cooper, CPA/ABV
502.584.1101
 
Lexington
 
Paul Johnston,CPA, CVA
859.253.1100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potter & Company, LLP


 
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