To amend the Internal Revenue Code of 1986 to adjust for inflation the dollar limitation for the principal residence gain exclusion.

SA 4407. Mr. KYL submitted an amendment intended to be proposed by
him to the bill H.R. 3221, moving the United States toward greater
energy independence and security, developing innovative new
technologies, reducing carbon emissions, creating green jobs,
protecting consumers, increasing clean renewable energy production, and
modernizing our energy infrastructure, and to amend the Internal
Revenue Code of 1986 to provide tax incentives for the production of
renewable energy and energy conservation;

At the end add the following:

TITLE _--PRINCIPAL RESIDENCE GAIN EXCLUSION

SEC. _01. INFLATION ADJUSTMENT FOR PRINCIPAL RESIDENCE GAIN
EXCLUSION DOLLAR LIMITATION.

(a) In General.--Section 121(b) of the Internal Revenue
Code of 1986 (relating to limitations) is amended by adding
at the end the following new paragraph:
``(4) Inflation adjustment.--In the case of any calendar
year after 2008, the dollar amount contained in paragraph (1)
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year, determined by
substituting `calendar year 2007' for `calendar year 1992' in
subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $1,000.''.
(b) Conforming Amendment.--So much of subparagraph (A) of
section 121(b)(2) of the Internal Revenue Code of 1986 as
precedes clause (i) thereof is amended to read as follows:
``(A) Limitation for certain joint returns.--Paragraph (1)
shall be applied by doubling the dollar amount specified in
such paragraph if--''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2008.
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