WASHINGTON — The House narrowly passed the Temporary Tax Relief Act of 2007 (H.R. 3996) on Nov. 9, which included language to eliminate mortgage debt forgiveness from gross income for tax purposes.
The bill's primary purpose is to protect millions of American taxpayers from the alternative minimum tax, a key issue for the Republican administration. The AMT was put in place in the 1970s to help ensure America's wealthiest families could not completely avoid paying taxes.
Among other things, the bill adopted language from Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) to exclude mortgage debt forgiven in foreclosure or bankruptcy proceedings from taxable income as well as extending the tax deductions for mortgage insurance premiums. The standalone bill overwhelmingly passed the House last month.
The AMT bill eventually passed the House 216-193, mainly along party lines. The administration has been lobbying for a one-year AMT patch. Treasury Secretary Henry Paulson stated, "Since February, we have asked the Congress to adopt one-year AMT relief that does not raise other taxes. Unfortunately, the House has passed a bill today that raises the likelihood of confusion for millions of taxpayers."
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