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American Family Plan—Summary of Certain Key Tax Components

On Wednesday April 28, 2021, President Joseph R. Biden announced the American Families Plan, designed to expand access to education, child care, and health care, among other initiatives. The White House released a fact sheet outlining the plan, and Biden detailed the plan in an address to Congress. The American Families Plan would be funded by increasing tax enforcement on corporations and high-income taxpayers, enforcement of which would be supported by newly enhanced information reporting from financial institutions. The initiatives would also be funded by raising taxes on high-income taxpayers, including (i) increasing the top income tax rate to 39.6% from 37%, (ii) increasing the capital gains rate to 39.6% from 20% for those earning $1 million or more, (iii) eliminating a step-up in basis for gains in excess of $1 million, (iv) eliminating the carried interest loophole, (v) eliminating the special real estate tax break on gains greater than $500,000, (vi) extending the limitation that restricts excess business losses, (vii) and ensuring those making over $400,000 pay the same consistent 3.8% Medicare tax. These proposals are summarized in this Alert.

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NY State Bar Association Issues Report on Section 457A and Deferred Compensation Paid by Investment Funds and Other Service Recipients


Time to Read: 1 minutes Practices: Tax

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Earlier today, October 5, 2009, the Tax Section of the New York State Bar Association (NYSBA) filed with the US Department of the Treasury, the Internal Revenue Service, and Congress a comprehensive Report on Section 457A, which highlights a number of issues, interpretive matters, pitfalls, and other matters relating to the statute. The Report may become a primary point of reference for many tax advisors dealing with Section 457A.
[Read the Report's Cover Letter] | [Access the Full Report]

Section 457A was enacted last year as a part of the Emergency Economic Stabilization Act of 2008 (commonly referred to as the “recovery” or “bailout” legislation, enacted on October 3, 2008). Section 457A follows Section 409A, enacted several years ago, which became the first comprehensive codification of the rules governing the federal income taxation of nonqualified deferred compensation.

Although initially aimed at reining in substantial deferrals of compensation paid to managers of hedge funds (and other funds), Section 457A as ultimately enacted has grown in scope, potentially covering certain non-U.S. operating companies and domestic investment funds, among others. (See Ropes & Gray's previously issued alerts regarding Section 457A, including IRS Releases Further Guidance Affecting Offshore Hedge Fund And Other Pooled Investment Vehicle Deferrals, Bailout Bill Contains Many Tax-Related Provisions, and Congress Blocks Offshore Hedge Fund Deferrals.)

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