Looking first at the estate tax issue, the budget called for a permanent repeal of the estate tax, citing the difficulties the current law has on estate planning.

But an attempt by Sen. Jon Kyl, R-Ariz., to tie repeal to a pending economic stimulus package failed when Senate Majority Leader Tom Daschle, D-S.D., effectively killed the package.

Maria Berthoud, senior vice president of federal affairs for the Alexandria, Va.-based Independent Insurance Agents of America, said that IIAA supported Sen. Kyl's effort. Unfortunately, she said, partisan bickering pulled the entire stimulus package down.

Under the current law, the estate tax will phase out on Jan. 1. 2010. However, the current law has a sunset provision. If it does sunset, the estate tax will come back into being, exactly as it existed prior to the enactment of the current law, on Jan. 1. 2011.

Critics of the current law argue that the uncertainty surrounding the estate tax and its scheduled comeback on Jan. 1, 2011 makes long-term estate planning nearly impossible.

As for Subpart F, the president proposed a two-year extension of the law as it stood on Dec. 31, 2001. On the date, the investment income at issue was not subject to U.S. taxation until received by the parent.

However, that treatment, which is supported by insurance companies, expired. Currently, the income is immediately taxable when earned by the subsidiary, even if the U.S. parent has not received it.

Melissa Shelk, vice president of federal affairs for the Washington-based American Insurance Association, said that while AIA would prefer a permanent extension, the association appreciates the fact that the administration recognizes that at least a multiyear extension is necessary.

Ms. Shelk added that even though the economic stimulus package has died, the belief is that certain pieces of it can still be enacted into law, and extension of Subpart F is one of those pieces.

She said that supporters of Subpart F extension will look at every opportunity to move it forward.

Currently, Ms. Shelk said, AIA is trying to gather information on the impact of the current law on its member companies. A lot depends on whether an extension can be enacted before the end of the first quarter, she said.

Apparently, Ms. Shelk said, the current law will have to be reflected in the first quarter estimated tax returns filed by businesses.

So while there is still time to get an extension enacted, she said, the sooner, the better.