IB
Union Calendar No. 377
110th CONGRESS
2d Session
H. R. 5720
[Report No. 110–606]
IN THE HOUSE OF REPRESENTATIVES
April 8, 2008
Mr. Rangel (for himself, Mr. McDermott, Mr. Lewis of Georgia, Mr. Pomeroy, Mr. Thompson of California, Mr. Emanuel, Mr. Blumenauer, Ms. Berkley, Mr. Crowley, Mr. Ellison, Ms. Giffords, Mr. Johnson of Georgia, Mr. Mahoney of Florida, Mr. Rodriguez, Ms. Shea-Porter, Mr. Sires, Mr. Welch of Vermont, and Mrs. Jones of Ohio) introduced the following bill; which was referred to the Committee on Ways and Means
April 24, 2008
Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed
Strike out all after the enacting clause and insert the part printed in italic
For text of introduced bill, see copy of bill as introduced on April 8, 2008
A BILL
To amend the Internal Revenue Code of 1986 to provide assistance for housing.
Short title; etc
Short title
This Act may be cited as the Housing Assistance Tax Act of 2008
.
Amendment of 1986 Code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; etc.
Title I—Housing tax incentives
Subtitle A—Multi-family housing
Part 1—Low-income housing tax credit
Sec. 101. Temporary increase in volume cap for low-income housing tax credit.
Sec. 102. Determination of credit rate.
Sec. 103. Modifications to definition of eligible basis.
Sec. 104. Other simplification and reform of low-income housing tax incentives.
Part 2—Modifications to tax-exempt housing bond rules
Sec. 111. Recycling of tax-exempt debt for financing residential rental projects.
Sec. 112. Coordination of certain rules applicable to low-income housing credit and qualified residential rental project exempt facility bonds.
Part 3—Reforms related to the low-income housing credit and tax-exempt housing bonds
Sec. 121. Hold harmless for reductions in area median gross income.
Sec. 122. Exception to annual current income determination requirement where determination not relevant.
Subtitle B—Single family housing
Sec. 131. First-time homebuyer credit.
Sec. 132. Additional standard deduction for real property taxes for nonitemizers.
Subtitle C—General provisions
Sec. 141. Temporary liberalization of tax-exempt housing bond rules.
Sec. 142. Repeal of alternative minimum tax limitations on tax-exempt housing bonds, low-income housing tax credit, and rehabilitation credit.
Sec. 143. Bonds guaranteed by Federal home loan banks eligible for treatment as tax-exempt bonds.
Sec. 144. Modification of rules pertaining to FIRPTA nonforeign affidavits.
Sec. 145. Modification of definition of tax-exempt use property for purposes of the rehabilitation credit.
Title II—Reforms related to real estate investment trusts
Subtitle A—Foreign currency and other qualified activities
Sec. 201. Revisions to REIT income tests.
Sec. 202. Revisions to REIT asset tests.
Sec. 203. Conforming foreign currency revisions.
Subtitle B—Taxable REIT subsidiaries
Sec. 211. Conforming taxable REIT subsidiary asset test.
Subtitle C—Dealer sales
Sec. 221. Holding period under safe harbor.
Sec. 222. Determining value of sales under safe harbor.
Subtitle D—Health care REITs
Sec. 231. Conformity for health care facilities.
Subtitle E—Effective dates
Sec. 241. Effective dates.
Title III—Revenue provisions
Sec. 301. Broker reporting of customer’s basis in securities transactions.
Sec. 302. Delay in application of worldwide allocation of interest.
Sec. 303. Time for payment of corporate estimated taxes.
Housing tax incentives
Multi-family housing
Low-income housing tax credit
Temporary increase in volume cap for low-income housing tax credit
Paragraph (3) of section 42(h) is amended by adding at the end the following new subparagraph:
Increase in State housing credit ceiling for 2008 and 2009
In the case of calendar years 2008 and 2009, the dollar amount in effect under subparagraph (C)(ii)(I) for such calendar year (after any increase under subparagraph (H)) shall be increased by $0.20.
.
Determination of credit rate
Elimination of distinction between new and existing buildings; minimum credit rate for non-federally subsidized buildings
In general
Subsection (b) section 42 is amended to read as follows:
Applicable percentage
For purposes of this section—
In general
The term applicable percentage means, with respect to any building, the appropriate percentage prescribed by the Secretary for the earlier of—
the month in which such building is placed in service, or
at the election of the taxpayer—
the month in which the taxpayer and the housing credit agency enter into an agreement with respect to such building (which is binding on such agency, the taxpayer, and all successors in interest) as to the housing credit dollar amount to be allocated to such building, or
in the case of any building to which subsection (h)(4)(B) applies, the month in which the tax-exempt obligations are issued.
Method of prescribing percentages
In general
For purposes of paragraph (1), the percentages prescribed by the Secretary for any month shall be—
in the case of any building which is not federally subsidized for the taxable year, the greater of—
the average percentage determined under subclause (II) for months in the preceding calendar year, or
the percentage which will yield over a 10-year period amounts of credit under subsection (a) which have a present value equal to 70 percent of the qualified basis of such building, and
in the case of any other building, the percentage which will yield over a 10-year period amounts of credit under subsection (a) which have a present value equal to 30 percent of the qualified basis of such building.
Method of discounting
The present value under subparagraph (A) shall be determined—
as of the last day of the 1st year of the 10-year period referred to in subparagraph (A),
by using a discount rate equal to 72 percent of the average of the annual Federal mid-term rate and the annual Federal long-term rate applicable under section 1274(d)(1) to the month applicable under subparagraph (A) and compounded annually, and
by assuming that the credit allowable under this section for any year is received on the last day of such year.
Cross references
For treatment of certain rehabilitation expenditures as separate buildings, see subsection (e).
For determination of applicable percentage for increases in qualified basis after the 1st year of the credit period, see subsection (f)(3).
For authority of housing credit agency to limit applicable percentage and qualified basis which may be taken into account under this section with respect to any building, see subsection (h)(7).
.
Conforming amendments
Subparagraph (B) of section 42(e)(3) is amended by striking subsection (b)(2)(B)(ii)
and inserting subsection (b)(2)(A)(ii)
.
Subparagraph (A) of section 42(i)(2) is amended by striking new building
and inserting building
.
Modifications to definition of Federally subsidized building
In general
Subparagraph (A) of section 42(i)(2) is amended by striking , or any below market Federal loan,
.
Conforming amendments
Subparagraph (B) of section 42(i)(2) is amended—
by striking balance of loan or
in the heading thereof,
by striking loan or
in the matter preceding clause (i), and
by striking subsection (d)—
and all that follows and inserting subsection (d) the proceeds of such obligation.
.
Subparagraph (C) of section 42(i)(2) is amended—
by striking or below market Federal loan
in the matter preceding clause (i),
in clause (i)—
by striking or loan (when issued or made)
and inserting (when issued)
, and
by striking the proceeds of such obligation or loan
and inserting the proceeds of such obligation
, and
by striking , and such loan is repaid,
in clause (ii).
Paragraph (2) of section 42(i) is amended by striking subparagraphs (D) and (E).
Effective date
The amendments made by this subsection shall apply to buildings placed in service after the date of the enactment of this Act.
Modifications to definition of eligible basis
Increase in credit for certain State designated buildings
Subparagraph (C) of section 42(d)(5) (relating to increase in credit for buildings in high cost areas), before redesignation under subsection (f), is amended by adding at the end the following new clause:
Buildings designated by State housing credit agency
Any building which is designated by the State housing credit agency as requiring the increase in credit under this subparagraph in order for such building to be financially feasible as part of a qualified low-income housing project shall be treated for purposes of this subparagraph as located in a difficult development area which is designated for purposes of this subparagraph. The preceding sentence shall not apply to any building if paragraph (1) of subsection (h) does not apply to any portion of the eligible basis of such building by reason of paragraph (4) of such subsection.
.
Modification to rehabilitation requirements
In general
Clause (ii) of section 42(e)(3)(A) is amended—
by striking 10 percent
in subclause (I) and inserting 20 percent
, and
by striking $3,000
in subclause (II) and inserting $6,000
.
Inflation adjustment
Paragraph (3) of section 42(e) is amended by adding at the end the following new subparagraph:
Inflation adjustment
In the case of any expenditures which are treated under paragraph (4) as placed in service during any calendar year after 2009, the $6,000 amount in subparagraph (A)(ii)(II) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting calendar year 2008
for calendar year 1992
in subparagraph (B) thereof.
.
Conforming amendment
Subclause (II) of section 42(f)(5)(B)(ii) is amended by striking if subsection (e)(3)(A)(ii)(II)
and all that follows and inserting if the dollar amount in effect under subsection (e)(3)(A)(ii)(II) were two-thirds of such amount.
.
Increase in allowable community service facility space for small projects
Clause (ii) of section 42(d)(4)(C) (relating to limitation) is amended by striking 10 percent of the eligible basis of the qualified low-income housing project of which it is a part. For purposes of
and inserting
the sum of—
15 percent of so much of the eligible basis of the qualified low-income housing project of which it is a part as does not exceed $5,000,000, plus
10 percent of so much of the eligible basis of such project as is not taken into account under subclause (I).
For purposes of
.
Clarification of treatment of Federal grants
Subparagraph (A) of section 42(d)(5) is amended to read as follows:
Federal grants not taken into account in determining eligible basis
The eligible basis of a building shall not include any costs financed with the proceeds of a Federally funded grant.
.
Simplification of related party rules
Clause (iii) of section 42(d)(2)(D), before redesignation under subsection (f)(2), is amended—
by striking all that precedes subclause (II),
by redesignating subclause (II) as clause (iii) and moving such clause two ems to the left, and
by striking the last sentence thereof.
Repeal of deadwood
Clause (ii) of section 42(d)(2)(B) is amended by striking the later of—
and all that follows and inserting the date the building was last placed in service,
.
Subparagraph (D) of section 42(d)(2) is amended by striking clause (i) and by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively.
Paragraph (5) of section 42(d) is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B).
Effective date
The amendments made by this subsection shall apply to buildings placed in service after the date of the enactment of this Act.
Other simplification and reform of low-income housing tax incentives
Repeal prohibition on moderate rehabilitation assistance
Paragraph (2) of section 42(c) (defining qualified low-income building) is amended by striking the flush sentence at the end.
Modification of time limit for incurring 10 percent of project’s cost
Clause (ii) of section 42(h)(1)(E) is amended by striking (as of the later of the date which is 6 months after the date that the allocation was made or the close of the calendar year in which the allocation is made)
and inserting (as of the date which is 1 year after the date that the allocation was made)
.
Repeal of bonding requirement on disposition of building
Paragraph (6) of section 42(j) (relating to no recapture on disposition of building (or interest therein) where bond posted) is amended to read as follows:
No recapture on disposition of building which continues in qualified use
In general
The increase in tax under this subsection shall not apply solely by reason of the disposition of a building (or an interest therein) if it is reasonably expected that such building will continue to be operated as a qualified low-income building for the remaining compliance period with respect to such building.
Statute of limitations
If a building (or an interest therein) is disposed of during any taxable year and there is any reduction in the qualified basis of such building which results in an increase in tax under this subsection for such taxable or any subsequent taxable year, then—
the statutory period for the assessment of any deficiency with respect to such increase in tax shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of such reduction in qualified basis, and
such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
.
Energy efficiency and historic nature taken into account in making allocations
Subparagraph (C) of section 42(m)(1) (relating to plans for allocation of credit among projects) is amended by striking and
at the end of clause (vii), by striking the period at the end of clause (viii) and inserting a comma, and by adding at the end the following new clauses:
the energy efficiency of the project, and
the historic nature of the project.
.
Continued eligibility for students who received foster care assistance
Clause (i) of section 42(i)(3)(D) is amended by striking or
at the end of subclause (I), by redesignating subclause (II) as subclause (III), and by inserting after subclause (I) the following new subclause:
a student who was previously under the care and placement responsibility of the State agency responsible for administering a plan under part B or part E of title IV of the Social Security Act, or
.
Treatment of rural projects
Section 42(i) (relating to definitions and special rules) is amended by adding at the end the following new paragraph:
Treatment of rural projects
For purposes of this section, in the case of any project for residential rental property located in a rural area (as defined in section 520 of the Housing Act of 1949), any income limitation measured by reference to area median gross income shall be measured by reference to the greater of area median gross income or national non-metropolitan median income. The preceding sentence shall not apply with respect to any building if paragraph (1) of section 42(h) does not apply by reason of paragraph (4) thereof to any portion of the credit determined under this section with respect to such building.
.
Effective date
In general
Except as otherwise provided in this subsection, the amendments made by this section shall apply to buildings placed in service after the date of the enactment of this Act.
Repeal of bonding requirement on disposition of building
The amendment made by subsection (c) shall apply to—
interests in buildings disposed after the date of the enactment of this Act, and
interests in buildings disposed of on or before such date if—
it is reasonably expected that such building will continue to be operated as a qualified low-income building (within the meaning of section 42 of the Internal Revenue Code of 1986) for the remaining compliance period (within the meaning of such section) with respect to such building, and
the taxpayer elects the application of this subparagraph with respect to such disposition.
Energy efficiency and historic nature taken into account in making allocations
The amendments made by subsection (d) shall apply to allocations made after December 31, 2008.
Continued eligibility for students who received foster care assistance
The amendments made by subsection (e) shall apply to determinations made after the date of the enactment of this Act.
Treatment of rural projects
The amendment made by subsection (f) shall apply to determinations made after the date of the enactment of this Act.
Modifications to tax-exempt housing bond rules
Recycling of tax-exempt debt for financing residential rental projects
In general
Subsection (i) of section 146 (relating to treatment of refunding issues) is amended by adding at the end the following new paragraph:
Treatment of certain residential rental project bonds as refunding bonds irrespective of obligor
In general
If, during the 6-month period beginning on the date of a repayment of a loan financed by an issue 95 percent or more of the net proceeds of which are used to provide projects described in section 142(d), such repayment is used to provide a new loan for any project so described, any bond which is issued to refinance such issue shall be treated as a refunding issue to the extent the principal amount of such refunding issue does not exceed the principal amount of the bonds refunded.
Limitations
Subparagraph (A) shall apply to only one refunding of the original issue and only if—
the refunding issue is issued not later than 4 years after the date on which the original issue was issued,
the latest maturity date of any bond of the refunding issue is not later than 34 years after the date on which the refunded bond was issued, and
the refunding issue is approved in accordance with section 147(f) before the issuance of the refunding issue.
.
Low-income housing credit
Clause (ii) of section 42(h)(4)(A) is amended by inserting or such financing is refunded as described in section 146(i)(6)
before the period at the end.
Effective date
The amendments made by this section shall apply to repayments of loans received after the date of the enactment of this Act.
Coordination of certain rules applicable to low-income housing credit and qualified residential rental project exempt facility bonds
Determination of next available unit
Paragraph (3) of section 142(d) (relating to current income determinations) is amended by adding at the end the following new subparagraph:
Exception for projects with respect to which affordable housing credit is allowed
In the case of a project with respect to which credit is allowed under section 42, the second sentence of subparagraph (B) shall be applied by substituting building (within the meaning of section 42)
for project
.
.
Students
Paragraph (2) of section 142(d) (relating to definitions and special rules) is amended by adding at the end the following new subparagraph:
Students
Rules similar to the rules of 42(i)(3)(D) shall apply for purposes of this subsection.
.
Single-room occupancy units
Paragraph (2) of section 142(d) (relating to definitions and special rules), as amended by subsection (b), is further amended by adding at the end the following new subparagraph:
Single-room occupancy units
A unit shall not fail to be treated as a residential unit merely because such unit is a single-room occupancy unit (within the meaning of section 42).
.
Effective date
The amendments made by this section shall apply to determinations of the status of qualified residential rental projects for periods beginning after the date of the enactment of this Act, with respect to bonds issued before, on, or after such date.
Reforms related to the low-income housing credit and tax-exempt housing bonds
Hold harmless for reductions in area median gross income
In general
Paragraph (2) of section 142(d), as amended by section 112, is further amended by adding at the end the following new subparagraph:
Hold harmless for reductions in area median gross income
In general
Any determination of area median gross income under subparagraph (B) with respect to any project for any calendar year after 2008 shall not be less than the area median gross income determined under such subparagraph with respect to such project for the calendar year preceding the calendar year for which such determination is made.
Special rule for certain census changes
In the case of a HUD hold harmless impacted project, the area median gross income with respect to such project for any calendar year after 2008 (hereafter in this clause referred to as the current calendar year) shall be the greater of the amount determined without regard to this clause or the sum of—
the area median gross income determined under the HUD hold harmless policy with respect to such project for calendar year 2008, plus
any increase in the area median gross income determined under subparagraph (B) (determined without regard to the HUD hold harmless policy and this subparagraph) with respect to such project for the current calendar year over the area median gross income (as so determined) with respect to such project for calendar year 2008.
HUD hold harmless policy
The term HUD hold harmless policy means the regulations under which a policy similar to the rules of clause (i) applied to prevent a change in the method of determining area median gross income from resulting in a reduction in the area median gross income determined with respect to certain projects in calendar years 2007 and 2008.
HUD hold harmless impacted project
The term HUD hold harmless impacted project means any project with respect to which area median gross income was determined under subparagraph (B) for calendar year 2007 or 2008 if such determination would have been less but for the HUD hold harmless policy.
.
Effective date
The amendment made by this section shall apply to determinations of area median gross income for calendar years after 2008.
Exception to annual current income determination requirement where determination not relevant
In general
Subparagraph (A) of section 142(d)(3) is amended by adding at the end the following new sentence: The preceding sentence shall not apply with respect to any project for any year if during such year no residential unit in the project is occupied by a new resident whose income exceeds the applicable income limit.
.
Effective date
The amendment made by this section shall apply to years ending after the date of the enactment of this Act.
Single family housing
First-time homebuyer credit
In general
Subpart C of part IV of subchapter A of chapter 1 is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:
First-time homebuyer credit
Allowance of credit
In the case of an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to 10 percent of the purchase price of the residence.
Limitations
Dollar limitation
In general
Except as otherwise provided in this paragraph, the credit allowed under subsection (a) shall not exceed $7,500.
Married individuals filing separately
In the case of a married individual filing a separate return, subparagraph (A) shall be applied by substituting $3,750
for $7,500
.
Other individuals
If two or more individuals who are not married purchase a principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe, except that the total amount of the credits allowed to all such individuals shall not exceed $7,500.
Limitation based on modified adjusted gross income
In general
The amount allowable as a credit under subsection (a) (determined without regard to this paragraph) for the taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which is so allowable as—
the excess (if any) of—
the taxpayer’s modified adjusted gross income for such taxable year, over
$70,000 ($140,000 in the case of a joint return), bears to
$20,000.
Modified adjusted gross income
For purposes of subparagraph (A), the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
Definitions
For purposes of this section—
First-time homebuyer
The term first-time homebuyer means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.
Principal residence
The term principal residence has the same meaning as when used in section 121.
Purchase
In general
The term purchase means any acquisition, but only if—
the property is not acquired from a person related to the person acquiring it, and
the basis of the property in the hands of the person acquiring it is not determined—
in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or
under section 1014(a) (relating to property acquired from a decedent).
Construction
A residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence.
Purchase price
The term purchase price means the adjusted basis of the principal residence on the date such residence is purchased.
Related persons
A person shall be treated as related to another person if the relationship between such persons would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants).
Exceptions
No credit under subsection (a) shall be allowed to any taxpayer for any taxable year with respect to the purchase of a residence if—
a credit under section 1400C (relating to first-time homebuyer in the District of Columbia) is allowable to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year,
the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,
the taxpayer is a nonresident alien, or
the taxpayer disposes of such residence (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the close of such taxable year.
Reporting
If the Secretary requires information reporting under section 6045 by a person described in subsection (e)(2) thereof to verify the eligibility of taxpayers for the credit allowable by this section, the exception provided by section 6045(e) shall not apply.
Recapture of credit
In general
Except as otherwise provided in this subsection, if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 62/3 percent of the amount of such credit for each taxable year in the recapture period.
Acceleration of recapture
If a taxpayer disposes of the principal residence with respect to which a credit was allowed under subsection (a) (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the end of the recapture period—
the tax imposed by this chapter for the taxable year of such disposition or cessation, shall be increased by the excess of the amount of the credit allowed over the amounts of tax imposed by paragraph (1) for preceding taxable years, and
paragraph (1) shall not apply with respect to such credit for such taxable year or any subsequent taxable year.
Limitation based on gain
In the case of the sale of the principal residence to a person who is not related to the taxpayer, the increase in tax determined under paragraph (2) shall not exceed the amount of gain (if any) on such sale. Solely for purposes of the preceding sentence, the adjusted basis of such residence shall be reduced by the amount of the credit allowed under subsection (a) to the extent not previously recaptured under paragraph (1).
Exceptions
Death of taxpayer
Paragraphs (1) and (2) shall not apply to any taxable year ending after the date of the taxpayer’s death.
Involuntary conversion
Paragraph (2) shall not apply in the case of a residence which is compulsorily or involuntarily converted (within the meaning of section 1033(a)) if the taxpayer acquires a new principal residence during the 2-year period beginning on the date of the disposition or cessation referred to in paragraph (2). Paragraph (2) shall apply to such new principal residence during the recapture period in the same manner as if such new principal residence were the converted residence.
Transfers between spouses or incident to divorce
In the case of a transfer of a residence to which section 1041(a) applies—
paragraph (2) shall not apply to such transfer, and
in the case of taxable years ending after such transfer, paragraphs (1) and (2) shall apply to the transferee in the same manner as if such transferee were the transferor (and shall not apply to the transferor).
Joint returns
In the case of a credit allowed under subsection (a) with respect to a joint return, half of such credit shall be treated as having been allowed to each individual filing such return for purposes of this subsection.
Recapture period
For purposes of this subsection, the term recapture period means the 15 taxable years beginning with the second taxable year following the taxable year in which the purchase of the principal residence for which a credit is allowed under subsection (a) was made.
Application of section
This section shall only apply to a principal residence purchased by the taxpayer on or after April 9, 2008, and before April 1, 2009.
.
Conforming amendments
Section 26(b)(2) is amended by striking and
at the end of subparagraph (U), by striking the period and inserting , and
and the end of subparagraph (V), and by inserting after subparagraph (V) the following new subparagraph:
section 36(f) (relating to recapture of homebuyer credit).
.
Section 6211(b)(4)(A) is amended by striking 34,
and all that follows through 6428
and inserting 34, 35, 36, 53(e), and 6428
.
Section 1324(b)(2) of title 31, United States Code, is amended by inserting , 36,
after section 35
.
The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by redesignating the item relating to section 36 as an item relating to section 37 and by inserting before such item the following new item:
.
Effective date
The amendments made by this section shall apply to residences purchased on or after April 9, 2008, in taxable years ending on or after such date.
Additional standard deduction for real property taxes for nonitemizers
In general
Section 63(c)(1) (defining standard deduction) is amended by striking and
at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting , and
, and by adding at the end the following new subparagraph:
in the case of any taxable year beginning in 2008, the real property tax deduction.
.
Definition
Section 63(c) is amended by adding at the end the following new paragraph:
Real property tax deduction
For purposes of paragraph (1), the real property tax deduction is the lesser of—
the amount allowable as a deduction under this chapter for State and local taxes described in section 164(a)(1), or
$350 ($700 in the case of a joint return).
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
General provisions
Temporary liberalization of tax-exempt housing bond rules
Temporary increase in volume cap
In general
Subsection (d) of section 146 is amended by adding at the end the following new paragraph:
Increase and set aside for housing bonds for 2008
Increase for 2008
In the case of calendar year 2008, the State ceiling for each State shall be increased by an amount equal to $10,000,000,000 multiplied by a fraction—
the numerator of which is the population of such State, and
the denominator of which is the total population of all States.
Set aside
In general
Any amount of the State ceiling for any State which is attributable to an increase under this paragraph shall be allocated solely for one or more qualified housing issues.
Qualified housing issue
For purposes of this paragraph, the term qualified housing issue means—
an issue described in section 142(a)(7) (relating to qualified residential rental projects), or
a qualified mortgage issue (determined by substituting 12-month period
for 42-month period
each place it appears in section 143(a)(2)(D)(i)).
.
Carryforward of unused limitations
Subsection (f) of section 146 is amended by adding at the end the following new paragraph:
Special rules for increased volume cap under subsection (d)(5)
No amount which is attributable to the increase under subsection (d)(5) may be used—
for any issue other than a qualified housing issue (as defined in subsection (d)(5)), or
to issue any bond after calendar year 2010.
.
Temporary rule for use of qualified mortgage bonds proceeds for subprime refinancing loans
In general
Section 143(k) (relating to other definitions and special rules) is amended by adding at the end the following new paragraph:
Special rules for subprime refinancings
In general
Notwithstanding the requirements of subsection (i)(1), the proceeds of a qualified mortgage issue may be used to refinance a mortgage on a residence which was originally financed by the mortgagor through a qualified subprime loan.
Special rules
In applying subparagraph (A) to any refinancing—
subsection (a)(2)(D)(i) shall be applied by substituting 12-month period
for 42-month period
each place it appears,
subsection (d) (relating to 3-year requirement) shall not apply, and
subsection (e) (relating to purchase price requirement) shall be applied by using the market value of the residence at the time of refinancing in lieu of the acquisition cost.
Qualified subprime loan
The term qualified subprime loan means an adjustable rate single-family residential mortgage loan made after December 31, 2001, and before January 1, 2008, that the bond issuer determines would be reasonably likely to cause financial hardship to the borrower if not refinanced.
Termination
This paragraph shall not apply to any bonds issued after December 31, 2010.
.
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Repeal of alternative minimum tax limitations on tax-exempt housing bonds, low-income housing tax credit, and rehabilitation credit
Tax-exempt interest on certain housing bonds exempted from alternative minimum tax
In general
Subparagraph (C) of section 57(a)(5) (relating to specified private activity bonds) is amended by redesignating clauses (iii) and (iv) as clauses (iv) and (v), respectively, and by inserting after clause (ii) the following new clause:
Exception for certain housing bonds
For purposes of clause (i), the term private activity bond shall not include any bond issued after the date of the enactment of this clause if such bond is—
an exempt facility bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)),
a qualified mortgage bond (as defined in section 143(a)), or
a qualified veterans’ mortgage bond (as defined in section 143(b)).
.
No adjustment to adjusted current earnings
Subparagraph (B) of section 56(g)(4) is amended by adding at the end the following new clause:
Tax exempt interest on certain housing bonds
Clause (i) shall not apply in the case of any interest on a bond to which section 57(a)(5)(C)(iii) applies.
.
Allowance of low-income housing credit against alternative minimum tax
Subparagraph (B) of section 38(c)(4) (relating to specified credits) is amended by redesignating clauses (ii) through (iv) as clauses (iii) through (v) and inserting after clause (i) the following new clause:
the credit determined under section 42 to the extent attributable to buildings placed in service after December 31, 2007,
.
Allowance of rehabilitation credit against alternative minimum tax
Subparagraph (B) of section 38(c)(4), as amended by subsection (b), is amended by striking and
at the end of clause (iv), by redesignating clause (v) as clause (vi), and by inserting after clause (iv) the following new clause:
the credit determined under section 47 to the extent attributable to qualified rehabilitation expenditures properly taken into account for periods after December 31, 2007, and
.
Effective date
Housing bonds
The amendments made by subsection (a) shall apply to bonds issued after the date of the enactment of this Act.
Low income housing credit
The amendments made by subsection (b) shall apply to credits determined under section 42 of the Internal Revenue Code of 1986 to the extent attributable to buildings placed in service after December 31, 2007.
Rehabilitation credit
The amendments made by subsection (c) shall apply to credits determined under section 47 of the Internal Revenue Code of 1986 to the extent attributable to qualified rehabilitation expenditures properly taken into account for periods after December 31, 2007.
Bonds guaranteed by Federal home loan banks eligible for treatment as tax-exempt bonds
In general
Subparagraph (A) of section 149(b)(3) (relating to exceptions for certain insurance programs) is amended by striking or
at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , or
and by adding at the end the following new clause:
any guarantee by a Federal home loan bank made in connection with the original issuance of a bond during the period beginning on the date of the enactment of this Act and ending on December 31, 2010 (or a renewal or extension of a guarantee so made).
.
Safety and soundness requirements
Paragraph (3) of section 149(b) is amended by adding at the end the following new subparagraph:
Safety and soundness requirements for Federal home loan banks
Clause (iv) of subparagraph (A) shall not apply to any guarantee by a Federal home loan bank unless such bank meets safety and soundness collateral requirements for such guarantees which are at least as stringent as such requirements which apply under regulations applicable to such guarantees by Federal home loan banks as in effect on April 9, 2008.
.
Effective date
The amendments made by this section shall apply to guarantees made after the date of the enactment of this Act.
Modification of rules pertaining to FIRPTA nonforeign affidavits
In general
Subsection (b) of section 1445 (relating to exemptions) is amended by adding at the end the following:
Alternative procedure for furnishing nonforeign affidavit
For purposes of paragraphs (2) and (7)—
In general
Paragraph (2) shall be treated as applying to a transaction if, in connection with a disposition of a United States real property interest—
the affidavit specified in paragraph (2) is furnished to a qualified substitute, and
the qualified substitute furnishes a statement to the transferee stating, under penalty of perjury, that the qualified substitute has such affidavit in his possession.
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this paragraph.
.
Qualified substitute
Subsection (f) of section 1445 (relating to definitions) is amended by adding at the end the following new paragraph:
Qualified substitute
The term qualified substitute means, with respect to a disposition of a United States real property interest—
the person (including any attorney or title company) responsible for closing the transaction, other than the transferor’s agent, and
the transferee’s agent.
.
Exemption not To apply if knowledge or notice that affidavit or statement is false
In general
Paragraph (7) of section 1445(b) (relating to special rules for paragraphs (2) and (3)) is amended to read as follows:
Special rules for paragraphs (2), (3), and (9)
Paragraph (2), (3), or (9) (as the case may be) shall not apply to any disposition—
if—
the transferee or qualified substitute has actual knowledge that the affidavit referred to in such paragraph, or the statement referred to in paragraph (9)(A)(ii), is false, or
the transferee or qualified substitute receives a notice (as described in subsection (d)) from a transferor’s agent, transferee’s agent, or qualified substitute that such affidavit or statement is false, or
if the Secretary by regulations requires the transferee or qualified substitute to furnish a copy of such affidavit or statement to the Secretary and the transferee or qualified substitute fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations.
.
Liability
Notice
Paragraph (1) of section 1445(d) (relating to notice of false affidavit; foreign corporations) is amended to read as follows:
Notice of false affidavit; foreign corporations
If—
the transferor furnishes the transferee or qualified substitute an affidavit described in paragraph (2) of subsection (b) or a domestic corporation furnishes the transferee an affidavit described in paragraph (3) of subsection (b), and
in the case of—
any transferor’s agent—
such agent has actual knowledge that such affidavit is false, or
in the case of an affidavit described in subsection (b)(2) furnished by a corporation, such corporation is a foreign corporation, or
any transferee’s agent or qualified substitute, such agent or substitute has actual knowledge that such affidavit is false,
.
Failure to furnish notice
Paragraph (2) of section 1445(d) (relating to failure to furnish notice) is amended to read as follows:
Failure to furnish notice
In general
If any transferor’s agent, transferee’s agent, or qualified substitute is required by paragraph (1) to furnish notice, but fails to furnish such notice at such time or times and in such manner as may be required by regulations, such agent or substitute shall have the same duty to deduct and withhold that the transferee would have had if such agent or substitute had complied with paragraph (1).
Liability limited to amount of compensation
An agent’s or substitute’s liability under subparagraph (A) shall be limited to the amount of compensation the agent or substitute derives from the transaction.
.
Conforming amendment
The heading for section 1445(d) is amended by striking or transferee’s agents
and inserting , transferee’s agents, or qualified substitutes
.
Effective date
The amendments made by this section shall apply to dispositions of United States real property interests after the date of the enactment of this Act.
Modification of definition of tax-exempt use property for purposes of the rehabilitation credit
In general
Subclause (I) of section 47(c)(2)(B)(v) is amended by striking section 168(h)
and inserting section 168(h), except that
.50 percent
shall be substituted for 35 percent
in paragraph (1)(B)(iii) thereof
Effective date
The amendments made by this section shall apply to expenditures properly taken into account for periods after December 31, 2007.
Reforms related to real estate investment trusts
Foreign currency and other qualified activities
Revisions to REIT income tests
Addition of permissible income categories
Section 856(c) (relating to limitations) is amended—
by striking and
at the end of paragraph (2)(G) and by inserting after paragraph (2)(H) the following new subparagraphs:
passive foreign exchange gains; and
any other item of income or gain as determined by the Secretary;
, and
by striking and
at the end of paragraphs (3)(H) and (3)(I) and by inserting after paragraph (3)(I) the following new subparagraphs:
real estate foreign exchange gains; and
any other item of income or gain as determined by the Secretary; and
.
Rules regarding foreign currency transactions
Section 856 (defining real estate investment trust) is amended by adding at the end the following new subsection:
Rules regarding foreign currency transactions
With respect to any taxable year—
Real estate foreign exchange gains
For purposes of subsection (c)(3)(J), the term real estate foreign exchange gains means—
foreign currency gains (as defined in section 988(b)(1)) which are attributable to—
any item described in subsection (c)(3) (other than in subparagraph (J) thereof),
the acquisition or ownership of obligations secured by mortgages on real property or on interests in real property (other than foreign currency gains attributable to any item described in clause (i)), or
becoming or being the obligor under obligations secured by mortgages on real property or on interests in real property (other than foreign currency gains attributable to any item described in clause (i)),
gains described in section 987 attributable to a qualified business unit (as defined by section 989) of the real estate investment trust, but only if such qualified business unit meets the requirements under—
subsection (c)(3) (without regard to subparagraph (J) thereof) for the taxable year, and
subsection (c)(4)(A) at the close of each quarter that the real estate investment trust has directly or indirectly held the qualified business unit, and
any other foreign currency gains as determined by the Secretary.
Passive foreign exchange gains
For purposes of subsection (c)(2)(I), the term passive foreign exchange gains means—
real estate foreign exchange gains,
foreign currency gains (as defined in section 988(b)(1)) which are not described in subparagraph (A) and which are attributable to any item described in subsection (c)(2) (other than in subparagraph (I) thereof), and
any other foreign currency gains as determined by the Secretary.
.
Addition to REIT hedging rule
Subparagraph (G) of section 856(c)(5) is amended to read as follows:
Treatment of certain hedging instruments
Except to the extent as determined by the Secretary—
any income of a real estate investment trust from a hedging transaction (as defined in clause (ii) or (iii) of section 1221(b)(2)(A)) which is clearly identified pursuant to section 1221(a)(7), including gain from the sale or disposition of such a transaction, shall not constitute gross income under paragraphs (2) and (3) to the extent that the transaction hedges any indebtedness incurred or to be incurred by the trust to acquire or carry real estate assets, and
any income of a real estate investment trust from a transaction entered into by the trust primarily to manage risk of currency fluctuations with respect to any item described in paragraph (2) or (3), including gain from the termination of such a transaction, shall not constitute gross income under paragraphs (2) and (3), but only if such transaction is clearly identified as such before the close of the day on which it was acquired, originated, or entered into (or such other time as the Secretary may prescribe).
.
Authority to exclude items of income from REIT income tests
Section 856(c)(5) is amended by adding at the end the following new subparagraph:
Secretarial authority to exclude other items of income
The Secretary is authorized to determine whether any item of income or gain which does not otherwise qualify under paragraph (2) or (3) may be considered as not constituting gross income solely for purposes of this part.
.
Revisions to REIT asset tests
Clarification of valuation test
The first sentence in the matter following section 856(c)(4)(B)(iii)(III) is amended by inserting (including a discrepancy caused solely by the change in the foreign currency exchange rate used to value a foreign asset)
after such requirements
.
Clarification of permissible asset category
Section 856(c)(5), as amended by section 201(d), is amended by adding at the end the following new subparagraph:
Cash
The term cash includes foreign currency if the real estate investment trust or its qualified business unit (as defined in section 989) uses such foreign currency as its functional currency (as defined in section 985(b)).
.
Conforming foreign currency revisions
Net income from foreclosure property
Clause (i) of section 857(b)(4)(B) is amended to read as follows:
gain (including any foreign currency gain, as defined in section 988(b)(1)) from the sale or other disposition of foreclosure property described in section 1221(a)(1) and the gross income for the taxable year derived from foreclosure property (as defined in section 856(e)), but only to the extent such gross income is not described in (or, in the case of foreign currency gain, not attributable to gross income described in) section 856(c)(3) other than subparagraph (F) thereof, over
.
Net income from prohibited transactions
Clause (i) of section 857(b)(6)(B) is amended to read as follows:
the term net income derived from prohibited transactions means the excess of the gain (including any foreign currency gain, as defined in section 988(b)(1)) from prohibited transactions over the deductions (including any foreign currency loss, as defined in section 988(b)(2)) allowed by this chapter which are directly connected with prohibited transactions;
.
Taxable REIT subsidiaries
Conforming taxable REIT subsidiary asset test
Section 856(c)(4)(B)(ii) is amended by striking 20 percent
and inserting 25 percent
.
Dealer sales
Holding period under safe harbor
Section 857(b)(6) (relating to income from prohibited transactions) is amended—
by striking 4 years
in subparagraphs (C)(i), (C)(iv), and (D)(i) and inserting 2 years
,
by striking 4-year period
in subparagraphs (C)(ii), (D)(ii), and (D)(iii) and inserting 2-year period
, and
by striking real estate asset
and all that follows through if
in the matter preceding clause (i) of subparagraphs (C) and (D), respectively, and inserting real estate asset (as defined in section 856(c)(5)(B)) and which is described in section 1221(a)(1) if
.
Determining value of sales under safe harbor
Section 857(b)(6) is amended—
by striking the semicolon at the end of subparagraph (C)(iii) and inserting , or (III) the fair market value of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the taxable year does not exceed 10 percent of the fair market value of all of the assets of the trust as of the beginning of the taxable year;
, and
by adding or
at the end of subclause (II) of subparagraph (D)(iv) and by adding at the end of such subparagraph the following new subclause:
the fair market value of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the taxable year does not exceed 10 percent of the fair market value of all of the assets of the trust as of the beginning of the taxable year,
.
Health care REITs
Conformity for health care facilities
Related party rentals
Subparagraph (B) of section 856(d)(8) (relating to special rule for taxable REIT subsidiaries) is amended to read as follows:
Exception for certain lodging facilities and health care property
The requirements of this subparagraph are met with respect to an interest in real property which is a qualified lodging facility or a qualified health care property (as defined in subsection (e)(6)(D)(i)) leased by the trust to a taxable REIT subsidiary of the trust if the property is operated on behalf of such subsidiary by a person who is an eligible independent contractor. For purposes of this section, a taxable REIT subsidiary is not considered to be operating or managing a qualified health care property or qualified lodging facility solely because it directly or indirectly possesses a license, permit or similar instrument enabling it to do so.
.
Eligible independent contractor
Subparagraphs (A) and (B) of section 856(d)(9) (relating to eligible independent contractor) are amended to read as follows:
In general
The term eligible independent contractor means, with respect to any qualified lodging facility or qualified health care property (as defined in subsection (e)(6)(D)(i)), any independent contractor if, at the time such contractor enters into a management agreement or other similar service contract with the taxable REIT subsidiary to operate such qualified lodging facility or qualified health care property, such contractor (or any related person) is actively engaged in the trade or business of operating qualified lodging facilities or qualified health care properties, respectively, for any person who is not a related person with respect to the real estate investment trust or the taxable REIT subsidiary.
Special rules
Solely for purposes of this paragraph and paragraph (8)(B), a person shall not fail to be treated as an independent contractor with respect to any qualified lodging facility or qualified health care property (as so defined) by reason of the following:
The taxable REIT subsidiary bears the expenses for the operation of such qualified lodging facility or qualified health care property pursuant to the management agreement or other similar service contract.
The taxable REIT subsidiary receives the revenues from the operation of such qualified lodging facility or qualified health care property, net of expenses for such operation and fees payable to the operator pursuant to such agreement or contract.
The real estate investment trust receives income from such person with respect to another property that is attributable to a lease of such other property to such person that was in effect as of the later of—
January 1, 1999, or
the earliest date that any taxable REIT subsidiary of such trust entered into a management agreement or other similar service contract with such person with respect to such qualified lodging facility or qualified health care property.
.
Taxable reit subsidiaries
The last sentence of section 856(l)(3) is amended—
by inserting or a health care facility
after a lodging facility
, and
by inserting or health care facility
after such lodging facility
.
Effective dates
Effective dates
In general
Except as otherwise provided in this section, the amendments made by this title shall apply to taxable years beginning after the date of the enactment of this Act.
REIT income tests
The amendment made by section 201(a) and (b) shall apply to gains and items of income recognized after the date of the enactment of this Act.
The amendment made by section 201(c) shall apply to transactions entered into after the date of the enactment of this Act.
The amendment made by section 201(d) shall apply after the date of the enactment of this Act.
Conforming foreign currency revisions
The amendment made by section 203(a) shall apply to gains recognized after the date of the enactment of this Act.
The amendment made by section 203(b) shall apply to gains and deductions recognized after the date of the enactment of this Act.
Dealer sales
The amendments made by subtitle C shall apply to sales made after the date of the enactment of this Act.
Revenue provisions
Broker reporting of customer’s basis in securities transactions
In general
Broker reporting for securities transactions
Section 6045 (relating to returns of brokers) is amended by adding at the end the following new subsection:
Additional information required in the case of securities transactions, etc
In general
If a broker is otherwise required to make a return under subsection (a) with respect to the gross proceeds of the sale of a covered security, the broker shall include in such return the information described in paragraph (2).
Additional information required
In general
The information required under paragraph (1) to be shown on a return with respect to a covered security of a customer shall include the customer’s adjusted basis in such security and whether any gain or loss with respect to such security is long-term or short-term (within the meaning of section 1222).
Determination of adjusted basis
For purposes of subparagraph (A)—
In general
The customer’s adjusted basis shall be determined—
in the case of any security (other than any stock for which an average basis method is permissible under section 1012), in accordance with the first-in first-out method unless the customer notifies the broker by means of making an adequate identification of the stock sold or transferred, and
in the case of any stock for which an average basis method is permissible under section 1012, in accordance with the broker’s default method unless the customer notifies the broker that he elects another acceptable method under section 1012 with respect to the account in which such stock is held.
Exception for wash sales
Except as otherwise provided by the Secretary, the customer’s adjusted basis shall be determined without regard to section 1091 (relating to loss from wash sales of stock or securities) unless the transactions occur in the same account with respect to identical securities.
Covered security
For purposes of this subsection—
In general
The term covered security means any specified security acquired on or after the applicable date if such security—
was acquired through a transaction in the account in which such security is held, or
was transferred to such account from an account in which such security was a covered security, but only if the broker received a statement under section 6045A with respect to the transfer.
Specified security
The term specified security means—
any share of stock in a corporation,
any note, bond, debenture, or other evidence of indebtedness,
any commodity, or contract or derivative with respect to such commodity, if the Secretary determines that adjusted basis reporting is appropriate for purposes of this subsection, and
any other financial instrument with respect to which the Secretary determines that adjusted basis reporting is appropriate for purposes of this subsection.
Applicable date
The term applicable date means—
January 1, 2010, in the case of any specified security which is stock in a corporation (other than any stock described in clause (ii)),
January 1, 2011, in the case of any stock for which an average basis method is permissible under section 1012, and
January 1, 2012, or such later date determined by the Secretary in the case of any other specified security.
Treatment of S corporations
In the case of the sale of a covered security acquired by an S corporation (other than a financial institution) after December 31, 2011, such S corporation shall be treated in the same manner as a partnership for purposes of this section.
Special rules for short sales
In the case of a short sale, reporting under this section shall be made for the year in which such sale is closed.
.
Broker information required with respect to options
Section 6045, as amended by subsection (a), is amended by adding at the end the following new subsection:
Application to options on securities
Exercise of option
For purposes of this section, if a covered security is acquired or disposed of pursuant to the exercise of an option that was granted or acquired in the same account as the covered security, the amount received with respect to the grant or paid with respect to the acquisition of such option shall be treated as an adjustment to gross proceeds or as an adjustment to basis, as the case may be.
Lapse or closing transaction
In the case of the lapse (or closing transaction (as defined in section 1234(b)(2)(A))) of an option on a specified security or the exercise of a cash-settled option on a specified security, reporting under subsections (a) and (g) with respect to such option shall be made for the calendar year which includes the date of such lapse, closing transaction, or exercise.
Prospective application
Paragraphs (1) and (2) shall not apply to any option which is granted or acquired before January 1, 2012.
Definitions
For purposes of this subsection, the terms covered security and specified security shall have the meanings given such terms in subsection (g)(3).
.
Extension of period for statements sent to customers
In general
Subsection (b) of section 6045 is amended by striking January 31
and inserting February 15
.
Statements related to substitute payments
Subsection (d) of section 6045 is amended—
by striking at such time and
, and
by inserting after other item.
the following new sentence: The written statement required under the preceding sentence shall be furnished on or before February 15 of the year following the calendar year in which the payment was made.
.
Other statements
Subsection (b) of section 6045 is amended by adding at the end the following: In the case of a consolidated reporting statement (as defined in regulations) with respect to any account, any statement which would otherwise be required to be furnished on or before January 31 of a calendar year with respect to any item reportable to the taxpayer shall instead be required to be furnished on or before February 15 of such calendar year if furnished with such consolidated reporting statement.
.
Determination of basis of certain securities on account by account or average basis method
Section 1012 (relating to basis of property–cost) is amended—
by striking The basis of property
and inserting the following:
In general
The basis of property
,
by striking The cost of real property
and inserting the following:
Special rule for apportioned real estate taxes
The cost of real property
, and
by adding at the end the following new subsections:
Determinations by account
In general
In the case of the sale, exchange, or other disposition of a specified security on or after the applicable date, the conventions prescribed by regulations under this section shall be applied on an account by account basis.
Application to open-end funds
In general
Except as provided in subparagraph (B), any stock in an open-end fund acquired before January 1, 2011, shall be treated as a separate account from any such stock acquired on or after such date.
Election by open-end fund for treatment as single account
If an open-end fund elects to have this subparagraph apply with respect to one or more of its stockholders—
subparagraph (A) shall not apply with respect to any stock in such fund held by such stockholders, and
all stock in such fund which is held by such stockholders shall be treated as covered securities described in section 6045(g)(3) without regard to the date of the acquisition of such stock.
Definitions
For purposes of this section—
Open-end fund
The term open-end fund means a regulated investment company (as defined in section 851) which is offering for sale or has outstanding any redeemable security of which it is the issuer. Any stock which is traded on an established securities exchange shall not be treated as stock in an open-end fund.
Specified security; applicable date
The terms specified security and applicable date shall have the meaning given such terms in section 6045(g).
Average basis for stock acquired pursuant to a dividend reinvestment plan
In general
In the case of any stock acquired after December 31, 2010, in connection with a dividend reinvestment plan, the basis of such stock while held as part of such plan shall be determined using one of the methods which may be used for determining the basis of stock in an open-end fund.
Treatment after transfer
In the case of the transfer to another account of stock to which paragraph (1) applies, such stock shall have a cost basis in such other account equal to its basis in the dividend reinvestment plan immediately before such transfer (properly adjusted for any fees or other charges taken into account in connection with such transfer).
Separate accounts; election for treatment as single account
Rules similar to the rules of subsection (c)(2) shall apply for purposes of this subsection.
Dividend reinvestment plan
For purposes of this subsection—
In general
The term dividend reinvestment plan means any arrangement under which dividends on any stock are reinvested in stock identical to the stock with respect to which the dividends are paid.
Initial stock acquisition treated as acquired in connection with plan
Stock shall be treated as acquired in connection with a dividend reinvestment plan if such stock is acquired pursuant to such plan or if the dividends paid on such stock are subject to such plan.
.
Information by transferors To aid brokers
In general
Subpart B of part III of subchapter A of chapter 61 is amended by inserting after section 6045 the following new section:
Information required in connection with transfers of covered securities to brokers
Furnishing of information
Every applicable person which transfers to a broker (as defined in section 6045(c)(1)) a security which is a covered security (as defined in section 6045(g)(3)) in the hands of such applicable person shall furnish to such broker a written statement in such manner and setting forth such information as the Secretary may by regulations prescribe for purposes of enabling such broker to meet the requirements of section 6045(g).
Applicable person
For purposes of subsection (a), the term applicable person means—
any broker (as defined in section 6045(c)(1)), and
any other person as provided by the Secretary in regulations.
Time for furnishing statement
Except as otherwise provided by the Secretary, any statement required by subsection (a) shall be furnished not later than 15 days after the date of the transfer described in such subsection.
.
Assessable penalties
Paragraph (2) of section 6724(d) (defining payee statement) is amended by redesignating subparagraphs (I) through (CC) as subparagraphs (J) through (DD), respectively, and by inserting after subparagraph (H) the following new subparagraph:
section 6045A (relating to information required in connection with transfers of covered securities to brokers),
.
Clerical amendment
The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by inserting after the item relating to section 6045 the following new item:
Sec. 6045A. Information required in connection with transfers of covered securities to brokers.
.
Additional issuer information To aid brokers
In general
Subpart B of part III of subchapter A of chapter 61, as amended by subsection (b), is amended by inserting after section 6045A the following new section:
Returns relating to actions affecting basis of specified securities
In general
According to the forms or regulations prescribed by the Secretary, any issuer of a specified security shall make a return setting forth—
a description of any organizational action which affects the basis of such specified security of such issuer,
the quantitative effect on the basis of such specified security resulting from such action, and
such other information as the Secretary may prescribe.
Time for filing return
Any return required by subsection (a) shall be filed not later than the earlier of—
45 days after the date of the action described in subsection (a), or
January 15 of the year following the calendar year during which such action occurred.
Statements To be furnished to holders of specified securities or their nominees
According to the forms or regulations prescribed by the Secretary, every person required to make a return under subsection (a) with respect to a specified security shall furnish to the nominee with respect to the specified security (or certificate holder if there is no nominee) a written statement showing—
the name, address, and phone number of the information contact of the person required to make such return,
the information required to be shown on such return with respect to such security, and
such other information as the Secretary may prescribe.
Specified security
For purposes of this section, the term specified security has the meaning given such term by section 6045(g)(3)(B). No return shall be required under this section with respect to actions described in subsection (a) with respect to a specified security which occur before the applicable date (as defined in section 6045(g)(3)(C)) with respect to such security.
Public reporting in lieu of return
The Secretary may waive the requirements under subsections (a) and (c) with respect to a specified security, if the person required to make the return under subsection (a) makes publicly available, in such form and manner as the Secretary determines necessary to carry out the purposes of this section—
the name, address, phone number, and email address of the information contact of such person, and
the information described in paragraphs (1), (2), and (3) of subsection (a).
.
Assessable penalties
Subparagraph (B) of section 6724(d)(1) of such Code (defining information return) is amended by redesignating clause (iv) and each of the clauses which follow as clauses (v) through (xxii), respectively, and by inserting after clause (iii) the following new clause:
section 6045B(a) (relating to returns relating to actions affecting basis of specified securities),
.
Paragraph (2) of section 6724(d) of such Code (defining payee statement), as amended by subsection (c)(2), is amended by redesignating subparagraphs (J) through (DD) as subparagraphs (K) through (EE), respectively, and by inserting after subparagraph (I) the following new subparagraph:
subsections (c) and (e) of section 6045B (relating to returns relating to actions affecting basis of specified securities),
.
Clerical amendment
The table of sections for subpart B of part III of subchapter A of chapter 61 of such Code, as amended by subsection (b)(3), is amended by inserting after the item relating to section 6045A the following new item:
Sec. 6045B. Returns relating to actions affecting basis of specified securities.
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Effective date
In general
Except as otherwise provided in this subsection, the amendments made by this section shall take effect on January 1, 2010.
Extension of period for statements sent to customers
The amendments made by subsection (a)(3) shall apply to statements required to be furnished after December 31, 2008.
Delay in application of worldwide allocation of interest
In general
Paragraphs (5)(D) and (6) of section 864(f) are each amended by striking December 31, 2008
and inserting December 31, 2009
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Transitional rule
Subsection (f) of section 864 is amended by adding at the end the following new paragraph:
Transition
In the case of the first taxable year to which this subsection applies, the increase (if any) in the amount of the interest expense allocable to sources within the United States by reason of the application of this subsection shall be 78 percent of the amount of such increase determined without regard to this paragraph.
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Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2008.
Time for payment of corporate estimated taxes
Repeal of adjustment for 2012
Subparagraph (B) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 is amended by striking the percentage contained therein and inserting 100 percent
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Modification of adjustment for 2013
The percentage under subparagraph (C) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 in effect on the date of the enactment of this Act is increased by 13 percentage points.
April 24, 2008
Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed