WASHINGTON — The House last Friday narrowly passed the Temporary Tax Relief Act of 2007 (H.R. 3996), 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. Among other things, the bill adopted language from Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) to exclude mortgage debt forgiven in bankruptcy proceedings from taxable income. The mortgage forgiveness legislation previous passed the House by a wide margin as a standalone bill.
The 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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