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For the third time in three weeks, House Republicans chose a candidate to run for Speaker only for him to drop out when it became apparent he wouldn't be able to win the 217 votes required in a vote of the full House. This time it was current House Republican Whip Tom Emmer (R-MN), who had the support of former Speaker Kevin McCarthy (R-CA) — whose ouster began the tumultuous process of selecting a successor — and who bested Rep. Mike Johnson (R-LA) after six other candidates were eliminated. Politico reported of Emmer: "He's the first candidate that former President Donald Trump publicly opposed, bashing Emmer's bid just hours after he won the nomination, hardening the stances of the roughly two dozen members who already opposed him. Emmer's nomination lasted only four hours … "

Last night, voting began anew with two candidates from the prior round — Johnson and Rep. Byron Donalds (R-FL) — plus, newly, Homeland Security Committee Chairman Mark Green (R-TN), Rep. Chuck Fleischmann (R-TN), and Small Business Committee Chair Roger Williams (R-TX). (Ways & Means member Kevin Hern, R-OK, was slated to be among the candidates but withdrew.) Ballot #3 was between Johnson and Donalds. Johnson won with 128 votes. There may be a test vote among Republicans today to gauge House floor support and a vote on the floor could come as early as mid-day. Some media reports this morning expressed optimism that Johnson can become Speaker as soon as today given that he has conservative credentials but has not been a polarizing figure, and lack of a groundswell of opposition thus far.

A Washington Post editorial said "productive options" for Democrats to help the process could involve some or all voting "present" rather than for Democratic Leader Hakeem Jeffries (D-NY) as they have done in full House votes.

There hasn't been any legislation being sent over from the Senate during the time the House has been without a Speaker and there has been no visible progress on regular-order appropriations bills, the absence of which and resulting need for a continuing resolution (CR) was the genesis of Speaker McCarthy's ouster three weeks ago. That all could soon change. Senate Majority Leader Chuck Schumer (D-NY) October 23 announced an agreement on 40 amendment votes to the appropriations minibus that has been stuck for weeks, comprising the Military Construction-VA, Agriculture, and Transportation-HUD bills. The agreement likely means the Senate will vote on amendments through the rest of this week and into next.

The Senate last night confirmed 98-0 Michael Whitaker to be Administrator of the Federal Aviation Administration.

Tax — An October 24 Wall Street Journal (WSJ) story on the IRC Section 174 five-year amortization requirement for R&D expenses (15-year for foreign research) rather than expensing that took effect in 2022 described tax liabilities for businesses small and large and resulting layoffs. "At best, it is a cash flow challenge, costing large public companies hundreds of millions or billions of dollars, which finance chiefs have said could dent their R&D spending," the story said of the change. "At worst, business owners wonder if their companies will make it, with some who run small and medium-size firms slowing growth, laying off workers or dipping into personal savings to cover tax bills due this month." The story noted the oft-described bipartisan support for reversing the policy, impeded by differences over whether to pair it with a child tax credit expansion. It also said, "The weekslong effort to name a House Speaker isn't expediting any change."

The WSJ previously wrote about the issue in the September 12 print edition, as "Bipartisan Support Isn't Enough to Change Tax Law."

An EY Tax Alert, "Final regulations on supporting organizations modify proposed regulations," is available here.

Global tax — Both Tax Notes and the Bloomberg Daily Tax Report (DTR) reported OECD official Juan Carlos Perez Peña as saying the Inclusive Framework on BEPS is considering issuing Pillar 2 guidance on the treatment of deferred tax assets in jurisdictions with federal and subnational taxes. Tax Notes reported that Perez Peña, at an International Fiscal Association event in Cancun, Mexico, said that the GLOBE rules on which Pillar 2 is based create a deferred tax asset in the jurisdiction in which the entity records a loss, instead of using a loss carryforward mechanism. Upon the suggestion that it may be possible to recast the deferred tax asset at 15% accounting for both the federal and subnational level, because GLOBE rules do not distinguish between the two, he said, "We are working on this issue … The result has to be equivalent to a 15 percent [rate]."

DTR reported Perez Peña as saying that, regarding additional guidance on its treatment of deferred losses in countries that have multiple levels of taxation, "This is something we're already working with the Inclusive Framework on." The story explained: "If a company has a 'deferred tax asset' — in this case, a loss that a company can carry forward and use to lower a taxpayer's liability in the future — in a country that imposes a tax rate below 15%, the Pillar Two rules 'recast' the loss at a 15% rate. That means it is treated as a deferred loss under the new minimum rate. However, the Pillar Two rules don't address how a deferred tax asset is recast under the 15% rate when a company is in a jurisdiction that taxes differently at the state and federal levels, such as in the Swiss cantons or the US."

Congress — Today (October 25) at 10 a.m., the House Ways & Means Committee is scheduled to hold a hearing on education tax policy, likely to focus on K-12 issues rather than higher education. On Thursday, October 26 (at 9 a.m.), the Ways & Means Social Security Subcommittee will hold a hearing on improving the disability adjudication process.

Ahead of the education hearing, the staff of the Joint Committee on Taxation described present law provisions related to primary and secondary education and presented data about primary and secondary school enrollment trends and the Federal government's role in primary and secondary education finance.

The Senate Finance Committee is holding a hearing today, October 25 (at 10 a.m.), on "Exploring Paid Leave: Policy, Practice, and Impact on the Workforce."

On October 26, the OECD will hold a technical webinar on the Multilateral Convention to Implement Amount A of Pillar One.

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