On February 26, 2014, House Ways & Means Committee Chairman Dave Camp released a discussion draft of the “Tax Reform Act of 2014.” The draft bill proposes a host of significant revisions to the Internal Revenue Code, including changes to the MLP qualifying income rules of Section 7704. The proposal would eliminate income derived from
- real property rent and gains
- timber and
- transportation or storage of alternative fuels, such as alcohol and biodiesel
from the definition of qualifying income, effective for tax years beginning after December 31, 2016. The Joint Committee on Taxation projects that these revisions would raise $4.3 billion through 2023.
Although tax reform legislation is unlikely to be enacted this Congress, this bill is important because it shows the Ways & Means Committee intends to move legislation forward. It will be the starting point for future revisions and anyone who seeks to amend it needs to start building their substantive case and political support now.
The text of the bill can be found here. The relevant provision (Section 3620) appears on page 660.
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