On October 3, the Emergency Economic Stabilization Act of 2008 (the “Act”) was signed into law in the US. The Act largely accomplishes two separate goals. First, the Act addresses the current capital market economic crisis by providing a troubled asset relief program along with certain related tax relief and reform provisions. This is the $700 billion “bailout” that has been discussed extensively in the press in which the U.S. Treasury Department has been granted authority to purchase and insure certain types of private sector troubled assets and make direct investments in financial institutions.
Second, and receiving less press coverage, the Act also includes alternative minimum tax relief, authorizes energy production incentives, extends a number of expiring tax provisions, and provides individual income, disaster and other miscellaneous tax relief. Unfortunately, what Congress gives with one hand, it takes away with the other. The Act “pays” for this tax relief by providing for the current inclusion of deferred compensation payable by certain tax indifferent parties and by reducing or freezing other credits and deductions available for taxpayers.
We have summarized the salient provisions of the Act into two sections: