HR 22.

• Author: Laffie, Lesli S.
• Position: AICPA Activities

The AICPA submitted comments to Congress on the Individual and Small Business Tax Simplification Act of 2003 (HR 22). The legislation proposes changes to the following areas:

1. Alternative minimum tax (AMT).

2. Head of household filing status.

3. Taxation of Social Security benefits.

4. Taxation of capital gains.

5. The 2% floor on miscellaneous itemized deductions.

6. Deduction for home mortgage points.

7. Taxation of minor children.

8. Dependent care credit.

9. Phaseout of the overall limit on itemized deductions.

10. Phaseout of personal exemptions.

11. Personal holding company tax.

12. Definition of child.

13. Treatment of government benefits in determining support and cost of maintaining a household.

14. Hope and Lifetime Learning Credits.

15. Definition of qualifying higher education expenses.

16. Passthrough-entity regime.

17. Sec. 179 election.

18. Collapsible corporations.

19. References to general partners.

20. References to limited partners.

21. Partnership income attributable to capital excluded from net earnings from self-employment.

22. Large-partnership reporting rules.

In a letter to Rep. Amo Hougton (R-NY), the bill's sponsor, the AICPA noted that HR 22 does an excellent job of focusing on many areas needing simplification. For example, although the AICPA supports outright repeal of the AMT, it concludes that the proposed changes are a reasonable compromise. Accelerating the repeal of the personal exemption phase-outs and the itemized deduction limit, for instance, will make tax planning easier for individuals and eliminate some of the confusing marginal rates.

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