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Corporations dodged an expensive bullet when Congress deleted a provision from the final version of President Bush’s tax cut bill that would have eliminated $90 billion in tax deductions. The provision, included in the Senate version of the bill, consisted of a package of so-called revenue raisers intended to offset some of Bush’s tax cuts. The list of 59 revenue raisers included limits on deductions taken by corporations that donate intellectual property assets. The Senate bill prompted a lobbying blitz by certain industries, but many Capitol Hill insiders felt it wouldn’t survive given House opposition to the measure. “If you were on the inside you knew these revenue raisers would likely get stripped away in conference,” said James Fuller, a tax partner at Fenwick & West. “Nevertheless, there was a little nervousness. Our clients were generally slightly apprehensive to see this number of provisions, many of which were not well thought out.” The revenue raisers included 15 provisions designed to curtail tax shelters. One provision would have disallowed deductions for settlement payments while another would have virtually eliminated tax deductions on corporate donations of patents and other intellectual property to universities and nonprofit groups. The Intellectual Property Owners Association lobbied against the provision. It would “effectively end the donation of unused patents by U.S. industry,” association President John Williams wrote in a letter to Sen. Charles Grassley, R-Iowa. “A tax deduction for the donor company based on fair market value of the patents makes such donations worthwhile for the company and offsets the cost” of evaluating technologies and donations. Herbert Wamsley, the association’s executive director, says his group did not have statistics on the number of corporate donations or their value. The Senate Joint Committee on Taxation, however, estimated the value of the deductions at $4 billion over 11 years. The U.S. Chamber of Commerce, National Association of Manufacturers, American Chemistry Council and Pharmaceutical Research and Manufacturers of America also opposed the Senate measure. Lawyers and their corporate clients are grateful the lobbying paid off. “All’s well that ends well,” says Fuller.

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