The bailout law passed by Congress included a number of tax provisions - some related to the bailout and some not. Some of the principal changes include:
a. Compensation Deductions Limited. The new law limits to $500,000 the compensation deduction for pay of principal officers of employers who have assets acquired by the federal government that meet the thresholds including in the new law. The golden parachute nondeduction rules and the excise tax on golden parachute payments are also being expanded to include golden parachutes to such employers.
b. Mortgage Debt Forgiveness Relief Extended. The exclusion from gross income for up to $2 million of mortgage debt relief has been extended for 3 more years.
c. Alternative Minimum Tax Relief. AMT exemption amounts are increased, but only for 2008. Absent further legislative changes, in 2009 the exemptions will return to 2000 levels.
d. Various Tax Provisions are Extended. The deduction for state and local sales taxes has been retroactively extended through 2009. Also extended is the above-the-line deduction for higher education expenses and educator expenses, the additional standard deduction for state and local property taxes, the allowance of nontaxable transfer of IRAs to charities has been extended two years, the research credit has been extended and modified, the tax credit for new markets has been extended one year, the Subpart F extension for active financing income has been extended for one year, and various charitable deduction enhancements have been extended, along with many other narrowly focused extensions.