Last week, the House Ways and Means Committee authored legislation that would protect millions of taxpayers from paying the Alternative Minimum Tax for 2007. The bill is to be funded by raising taxes in other areas so that the net effect of the legislation will be revenue neutral. The bill is not expected to pass in its current form.

One of the features of the House AMT bill is to change the method of taxation on carried interest of private equity fund managers from the current capital gain tax rates to ordinary income tax rates.

Senator Max Baucus, D-MO, chairman of the Senate Finance Committee, has indicated he is against this aspect of the legislation and will prevent the legislation from becoming law.

"Chairman Baucus' comments clearly indicate that such a bill is dead on arrival in the Senate," said Ways and Means ranking member Jim McCrery, R-LA.

The House legislation, known as the Temporary Tax Relief Act of 2007, is designed to provide a bandaid by protecting an estimated 21 million people from paying the higher AMT tax this year while Congress hashes out a more definitive tax bill in 2008.

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You can read the complete text of the House legislation.