More than four months after it was initially approved, the FY 2006 tax reconciliation bill remains in seemingly deadlocked negotiations. With conferees continuing to postpone a compromise package due to uncertainty over its final approval in both chambers, the pending approval of the FY 2007 budget resolution - and an end to the tax bill's filibuster-proof status - looms large. The tax reconciliation bill is protected from filibuster for up to $70 billion in tax cuts over the next five years, but neither chamber approved that much in their original versions. The Senate version contained a net of $60.2 billion in cuts, half of which was used by a one-year extension of a patch to the Alternative Minimum Tax (AMT). The House passed $56 billion in cuts, with the major item being a two-year extension of capital gains and dividend cuts. The House bill does not include the AMT patch. Despite holding conference committee meetings and extended negotiation sessions among the GOP conferees, there has been no breakthrough. House conferees still insist on including capital gains and dividend extensions, while their Senate counterparts seem unwilling to give up the AMT patch. It even appears conferees and their staffs are getting desperate to find a solution amenable to all parties using misleading budget gimmicks. Conferees are rumored to be considering lifting the income limits on conversions of traditional Individual Retirement Accounts (IRAs) to Roth IRAs, in order to circumvent a Senate budget enforcement rule prohibiting increasing the deficit outside the budget window, a result of the two-year extension of capital gain and dividend tax cuts. This was quickly criticized by a number of budget watchdog groups. Capital gains and dividend extension language was removed from the Senate version in the Finance Committee, because it was opposed by all Democrats, as well as Republican Sen. Olympia Snowe (R-ME). It's unclear whether sufficient votes can be garnered in the Senate to pass the tax cut bill with capital gains and dividends included, regardless of inclusion of the AMT patch. With an upcoming two-week congressional recess, it is unlikely the tax cut bill will pass before May. If Congress cannot pass the bill before the FY 2007 budget resolution is approved, the tax bill will lose its filibuster protection, and any hope the GOP has of extending the capital gains and dividend tax cuts will be lost for this year.