S. 2826

A bill to amend the Internal Revenue Code of 1986 to extend and expand relief from the alternative minimum tax and to repeal the extension of the lower rates for capital gains and dividends for 2009 and 2010.

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II

109th CONGRESS

2d Session

S. 2826

IN THE SENATE OF THE UNITED STATES

May 17, 2006

Mr. Kerry introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to extend and expand relief from the alternative minimum tax and to repeal the extension of the lower rates for capital gains and dividends for 2009 and 2010.

1.

Extension and increase in minimum tax relief to individuals

(a)

In general

Section 55(d)(1) of the Internal Revenue Code of 1986, as amended by the Tax Increase Prevention and Reconciliation Act of 2005, is amended—

(1)

by striking $62,550 in the case of taxable years beginning in 2006 in subparagraph (A) and inserting $66,100 in the case of taxable years beginning in 2007, and

(2)

by striking $42,500 in the case of taxable years beginning in 2006 in subparagraph (B) and inserting $45,900 in the case of taxable years beginning in 2007.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

2.

Allowance of nonrefundable personal credits against regular and alternative minimum tax liability

(a)

In general

Paragraph (2) of section 26(a) of the Internal Revenue Code of 1986, as amended by the Tax Increase Prevention and Reconciliation Act of 2005, is amended—

(1)

by striking 2006 in the heading thereof and inserting 2007, and

(2)

by striking or 2006 and inserting 2006, or 2007.

(b)

Conforming Provisions

(1)

Section 30B(g) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(3)

Special rule for 2007

For purposes of any taxable year beginning during 2007, the credit allowed under subsection (a) (after the application of paragraph (1)) shall not exceed the excess of—

(A)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under subpart A and this subpart (other than this section and section 30C).

.

(2)

Section 30C(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(3)

Special rule for 2007

For purposes of any taxable year beginning during 2007, the credit allowed under subsection (a) (after the application of paragraph (1)) shall not exceed the excess of—

(A)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under subpart A and this subpart (other than this section).

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

3.

Repeal of extension of lower rates for capital gains and dividends

The amendment made by section 102 of the Tax Increase Prevention and Reconciliation Act of 2005 is repealed and the Internal Revenue Code of 1986 shall be applied as if such amendment had never been enacted.