Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, today announced that the Committee ordered favorably reported H.R. 878, the “Armed Forces Tax Fairness Act of 2003,” as amended.
This bill contains several provisions of interest to military personnel and some federal employees. Here are several of them:
Capital Gain Exclusion on Home Sales -Under current law, individuals may exclude up to $250,000 ($500,000 if married filing a joint return) of gain from the sale of a principal residence if they resided in the property for two of the five years preceding the sale. The bill would allow military and Foreign Service personnel to ignore time transferred away from their residence on official extended duty for purposes of determining the five-year period.
Tax-Free Treatment of Death Gratuity Benefits -Under current law, survivors of members of the military receive a $6,000 death gratuity payment, but only half of it is tax-free. The bill would provide that the full $6,000 payment is tax-free.
Peace Corps Capital Gains – This provision would extend the exclusion of gains on the sale of a principal residence to members of the Peace Corps.
Individual Expatriation – The provision would strengthen the current individual expatriation rules by providing objective, as opposed to current law subjective rules, for determining whether an individual who renounces his U.S. citizenship, or a long-time resident that terminates his residency is subject to the individual expatriation alternate tax regime.
Extension of Victims’ Tax Relief to Astronauts Who Die in the Line of Duty – The Victims of Terrorism Tax Relief Act of 2001 provided tax benefits to certain victims of terrorism, including income tax relief, estate tax relief, and tax-free death benefit payments. The provision would extend these tax benefits to astronauts who lose their lives in a space shuttle mission, including those who lost their lives in the space shuttle Columbia disaster.