One issue senators have with the House-passed bill is taxing the gain of a sale in an investment partnership as ordinary income instead of as a capital gain. Subjecting all profits from S corporations to withholding tax is another issue, as is taxing carried interest at something other than at capital gains rates.
"There are a number of issues with the extender bill," said Sen. Olympia Snowe (R-Maine), whose vote could be crucial to advancing it from the chamber as Senate Majority Leader Harry Reid (D-Nev.) needs at least some Republican support for the bill.
Senators would also prefer to see more of the bill paid for. They aren't comfortable with deeming almost every spending initiative in the bill an emergency, which under pay-as-you-go rules exempts if from having to be offset.
"Priorities are priorities, but emergencies are emergencies," said Sen. Ben Nelson (D-Neb.). "They're not always the same."
Nelson said he hadn't seen the Senate version of the extender bill and would wait to make a final judgment on it until he had seen the entire package.
"I'm waiting to see what they put together," he said.