II
Calendar No. 587
110th CONGRESS
2d Session
S. 12
IN THE SENATE OF THE UNITED STATES
February 29, 2008
Mr. McConnell (for himself, Mr. Alexander, Mr. Allard, Mr. Bond, Mr. Bunning, Mr. Cornyn, Mr. Craig, Mrs. Dole, Mr. Enzi, Mr. Grassley, Mr. Gregg, Mrs. Hutchison, Mr. Inhofe, Mr. Isakson, Mr. Roberts, and Mr. Hatch) introduced the following bill; which was read the first time
March 3, 2008
Read the second time and placed on the calendar
A BILL
To promote home ownership, manufacturing, and economic growth.
Short title; table of contents
Short title
This Act may be cited
as the Homeownership, Manufacturing,
and Economic Growth Act
or the HOME
Act
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—Keeping taxes low
Sec. 100. Amendment to 1986 Code.
Subtitle A—Extension of expiring provisions
Part I—Individual tax provisions
SUBPART A—Provisions expiring in 2007
Sec. 101. Nonbusiness energy property.
Sec. 102. Election to include combat pay as earned income for purposes of the earned income credit.
Sec. 103. Deduction for certain expenses of elementary and secondary school teachers.
Sec. 104. Distributions from retirement plans to individuals called to active duty.
Sec. 105. Modification of mortgage revenue bonds for veterans.
Sec. 106. Deduction for State and local sales taxes.
Sec. 107. Archer MSAs.
Sec. 108. Deduction of qualified tuition and related expenses.
Sec. 109. Tax-free distributions from individual retirement plans for charitable purposes.
Sec. 110. Stock in RIC for purposes of determining estates of nonresidents not citizens.
SUBPART B—Provisions expiring in 2008
Sec. 111. Residential energy efficient property.
Part II—Business tax provisions
SUBPART A—Provisions expiring in 2007
Sec. 121. Research activities.
Sec. 122. Indian employment credit.
Sec. 123. Railroad track maintenance.
Sec. 124. Production of fuel from a nonconventional source at certain facilities.
Sec. 125. Energy efficient appliances.
Sec. 126. 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements.
Sec. 127. Seven-year cost recovery period for motorsports racing track facility.
Sec. 128. Accelerated depreciation for business property on Indian reservation.
Sec. 129. Qualified conservation contributions.
Sec. 130. Enhanced charitable deduction for contributions of food inventory.
Sec. 131. Enhanced charitable deduction for contributions of book inventory.
Sec. 132. Enhanced charitable deduction for corporate contributions of computer equipment for educational purposes.
Sec. 133. Expensing of environmental remediation costs.
Sec. 134. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
Sec. 135. Special rule for sales or dispositions to implement FERC or State electric restructuring policy.
Sec. 136. Modification of tax treatment of certain payments to controlling exempt organizations.
Sec. 137. Suspension of taxable income limit with respect to marginal wells.
Sec. 138. Treatment of certain dividends of regulated investment companies.
Sec. 139. Basis adjustment to stock of S corporations making charitable contributions of property.
Sec. 140. Extension of qualified zone academy bonds.
Sec. 141. Tax incentives for investment in the District of Columbia.
Sec. 142. 0.2 percent FUTA surtax.
SUBPART B—Provisions expiring in 2008
Sec. 146. Biodiesel and renewable diesel used as fuel.
Sec. 147. Electricity produced from certain renewable resources; production of refined coal and Indian coal.
Sec. 148. New markets tax credit.
Sec. 149. Extension of new energy efficient home credit.
Sec. 150. Extension of mine rescue team training credit.
Sec. 151. Extension of energy credit.
Sec. 152. 5-year NOL carryback for certain electric utility companies.
Sec. 153. Extension of energy efficient commercial buildings deduction.
Sec. 154. Extension of election to expense advanced mine safety equipment.
Sec. 155. Extension and modification of expensing rules for qualified film and television productions.
Sec. 156. Subpart
F exception for active financing income.Sec. 157. Extension of look-thru rule for related controlled foreign corporations.
Part III—Excise tax provisions
SUBPART A—Provisions expiring in 2007
Sec. 161. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
Sec. 162. Parity in the application of certain limits to mental health benefits.
Sec. 163. Extension of economic development credit for American Samoa.
SUBPART B—Provisions expiring in 2008
Sec. 166. Special rule for qualified methanol or ethanol fuel from coal.
Sec. 167. Biodiesel mixture credit and credit for fuels used for nontaxable purposes.
Part IV—Tax administration provisions
SUBPART A—Provisions expiring in 2007
Sec. 171. Disclosures to facilitate combined employment tax reporting.
Sec. 172. Disclosure of return information to apprise appropriate officials of terrorist activities.
Sec. 173. Disclosure upon request of information relating to terrorist activities.
Sec. 174. Disclosure of return information to carry out income contingent repayment of student loans.
Sec. 175. Authority for undercover operations.
SUBPART B—Provisions expiring in 2008
Sec. 176. Extension of reporting of interest of exempt organizations in insurance contracts.
Sec. 177. Disclosures relating to certain programs administered by the Department of Veterans Affairs.
Subtitle B—Alternative minimum tax relief
Sec. 181. 2-year extension of increased alternative minimum tax exemption amount.
Sec. 182. Extension of alternative minimum tax relief for nonrefundable personal credits.
Subtitle C—Additional tax relief
Sec. 191. Permanent extension of 2001 and 2003 tax relief provisions.
Sec. 192. Maximum corporate income tax rate reduced to 25 percent.
Sec. 193. 3-year carryback of certain credits.
Sec. 194. Election to accelerate AMT and R and D credits in lieu of bonus depreciation.
Sec. 195. Indexing of certain assets for purposes of determining gain or loss.
Sec. 196. Deferral of gain on sale of certain principal residences.
Sec. 197. Amount excluded from sale of principal residence indexed for inflation.
Sec. 198. Repeal of phasein for domestic production activities deduction.
TITLE II—Keeping America competitive
Sec. 201. Sense of Congress regarding the legislative initiatives required to strengthen and protect the well being of our Nation's capital markets.
Sec. 202. Directing the Securities and Exchange Commission to convene a public hearing on the impact of excessive litigation.
Sec. 203. Directing the Commission to establish formal processes and procedures for cost-benefit analyses of proposed and existing rules and regulations.
Sec. 204. Directing the Commission to define
smaller public companyto provide certainty to issuers.
Sec. 205. Mutual recognition.
Sec. 206. Supporting the Securities and Exchange Commission reform efforts to speed the process of rulemaking for self regulatory organizations.
Sec. 207. Eliminate the exemption from State regulation for certain securities designated by national securities exchanges.
Sec. 208. Directing the Commission to accelerate full conversion of IFRS and United States GAAP.
Sec. 209. Promoting market access for financial services.
TITLE III—Protecting homeowners
Sec. 301. Subprime refinancing loans through use of qualified mortgage bonds.
Sec. 302. Expeditious distribution of funds already provided for mortgage foreclosure counseling.
Sec. 303. Credit for purchase of homes in or near foreclosure.
Sec. 304. Enhanced mortgage loan disclosures.
Sec. 305. Carryback of certain net operating losses allowed for 5 years; temporary suspension of 90 percent AMT limit.
TITLE IV—Reducing the litigation tax
Sec. 401 Limitation on punitive damages for small businesses.
Sec. 402. Reasonableness review of attorney’s fees.
Sec. 403. Partial award of attorney’s fees for unreasonable lawsuits.
Sec. 404. Mandatory sanctions for frivolous lawsuits.
Sec. 405. Bar on junk science in the courtroom.
Keeping taxes low
Amendment to 1986 Code
Except as otherwise expressly provided, whenever in this title 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.
Extension of expiring provisions
Individual tax provisions
Provisions expiring in 2007
Nonbusiness energy property
Extension of credit
Section 25C(g)
(relating to termination) is amended by striking December 31,
2007
and inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to property placed in service after December 31, 2007.
Election to include combat pay as earned income for purposes of the earned income credit
In general
Subclause (II) of section 32(c)(2)(B)(vi) (defining
earned income) is amended by striking January 1, 2008
and
inserting January 1, 2010
.
Conforming amendment
Paragraph (4) of section 6428, as amended by the Economic Stimulus Act of 2008, is amended to read as follows:
Earned income
The term earned income
has the meaning set
forth in section 32(c)(2) except that such term shall not include net earnings
from self-employment which are not taken into account in computing taxable
income.
.
Effective date
The amendments made by this section shall apply to taxable years ending after December 31, 2007.
Deduction for certain expenses of elementary and secondary school teachers
In general
Subparagraph (D) of
section 62(a)(2) (relating to certain expenses of elementary and secondary
school teachers) is amended by striking or 2007
and inserting
2007, 2008, or 2009
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Distributions from retirement plans to individuals called to active duty
In General
Clause (iv) of section 72(t)(2)(G) is amended by striking
December 31, 2007
and inserting January 1,
2010
.
Effective Date
The amendment made by this section shall apply to individuals ordered or called to active duty on or after December 31, 2007.
Modification of mortgage revenue bonds for veterans
Qualified Mortgage Bonds Used To Finance Residences for Veterans Without Regard to First-Time Homebuyer Requirement
Subparagraph (D) of section
143(d)(2) (relating to exceptions) is amended by inserting and after the
date of the enactment of the HOME Act and before January 1, 2010
after
January 1, 2008
.
Effective Date
The amendment made by this section shall apply to bonds issued after the date of the enactment of this Act.
Deduction for State and local sales taxes
In general
Subparagraph (I) of section 164(b)(5) is amended by
striking January 1, 2008
and inserting January 1,
2010
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Archer MSAs
In general
Subsection (i) of section 220 (relating to limitation on number of taxpayers having Archer MSAs) is amended—
by striking
2007
each place it appears in paragraphs (2) and (3)(B) and
inserting 2009
,
by striking
2007
in the heading of paragraph (3)(B)
and inserting 2009
.
Conforming amendments
Subsection (j) of section 220 is amended—
by striking
or 2006
each place it appears in paragraph (2) and inserting
2006, 2007, or 2008
,
by striking
or
2006
in the heading for paragraph (2) and inserting
2006, 2007, or
2008
, and
by striking
and 2006
in paragraph (4) and inserting 2006, 2007, and
2008
.
Effective date
The amendments made by this section shall apply to calendar years beginning after December 31, 2007.
Deduction of qualified tuition and related expenses
In general
Subsection (e) of section 222 (relating to termination)
is amended by striking December 31, 2007
and inserting
December 31, 2009
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Tax-free distributions from individual retirement plans for charitable purposes
In general
Subparagraph (F) of section 408(d)(8) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to distributions made in taxable years beginning after December 31, 2007.
Stock in RIC for purposes of determining estates of nonresidents not citizens
In general
Paragraph (3) of
section 2105(d) (relating to stock in a RIC) is amended by striking
December 31, 2007
and inserting December 31,
2009
.
Effective date
The amendment made by this section shall apply to decedents dying after December 31, 2007.
Provisions expiring in 2008
Residential energy efficient property
Subsection (g) of section 25D (relating to
termination) is amended by striking December 31, 2008
and
inserting December 31, 2009
.
Business tax provisions
Provisions expiring in 2007
Research activities
In general
Section 41(h) (relating to termination) is amended by
striking December 31, 2007
and inserting December 31,
2009
in paragraph (1)(B).
Effective date
The amendment made by this section shall apply to amounts paid or incurred after December 31, 2007.
Indian employment credit
In general
Subsection (f) of section 45A (relating to termination)
is amended by striking December 31, 2007
and inserting
December 31, 2009
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Railroad track maintenance
In general
Subsection (f) of section 45G (relating to application of
section) is amended by striking January 1, 2008
and inserting
January 1, 2010
.
Effective date
The amendment made by this section shall apply to expenditures paid or incurred during taxable years beginning after December 31, 2007.
Production of fuel from a nonconventional source at certain facilities
In general
Subsection (f)(1)(B) of section 45K (relating to
extension for certain facilities) is amended by striking January 1,
2008
and inserting January 1, 2010
.
Effective date
The amendment made by this section shall apply to fuels produced and sold after December 31, 2007.
Energy efficient appliances
In general
Subsection (b) of section 45M (relating to applicable
amount) is amended by striking calendar year 2006 or 2007
each
place it appears in paragraphs (1)(A)(i), (1)(B)(i), (1)(C)(ii)(I), and
(1)(C)(iii)(I), and inserting calendar year 2006, 2007, 2008, or
2009
.
Restart of credit limitation
Paragraph (1) of section 45M(e) (relating to
aggregate credit amount allowed) is amended by inserting beginning after
December 31, 2007
after for all prior taxable
years
.
Effective date
The amendments made by this section shall apply to appliances produced after December 31, 2007.
15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements
In general
Clauses (iv) and (v) of section 168(e)(3)(E) (relating to
15-year property) are each amended by striking January 1, 2008
and inserting January 1, 2010
.
Effective date
The amendments made by this section shall apply to property placed in service after December 31, 2007.
Seven-year cost recovery period for motorsports racing track facility
In general
Subparagraph (D) of section 168(i)(15) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to property placed in service after December 31, 2007.
Accelerated depreciation for business property on Indian reservation
In general
Paragraph (8) of section 168(j) (relating to termination)
is amended by striking December 31, 2007
and inserting
December 31, 2009
.
Effective date
The amendment made by this section shall apply to property placed in service after December 31, 2007.
Qualified conservation contributions
In general
Clause (vi) of section 170(b)(1)(E) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Contributions by corporate farmers and ranchers
Clause (iii) of section
170(b)(2)(B) (relating to termination) is amended by striking December
31, 2007
and inserting December 31, 2009
.
Effective date
The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2007.
Enhanced charitable deduction for contributions of food inventory
In general
Clause (iv) of section 170(e)(3)(C) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to contributions made after December 31, 2007.
Enhanced charitable deduction for contributions of book inventory
In general
Clause (iv) of section 170(e)(3)(D) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Clerical amendment
Clause (iii) of section 170(e)(3)(D) (relating to
certification by donee) is amended by inserting of books
after
to any contribution
.
Effective date
The amendments made by this section shall apply to contributions made after December 31, 2007.
Enhanced charitable deduction for corporate contributions of computer equipment for educational purposes
In general
Subparagraph (G) of section 170(e)(6) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to contributions made after December 31, 2007.
Expensing of environmental remediation costs
In general
Subsection (h) of section 198 (relating to termination)
is amended by striking December 31, 2007
and inserting
December 31, 2009
.
Effective date
The amendment made by this section shall apply to expenditures paid or incurred after December 31, 2007.
Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico
In general
Subparagraph (C) of section 199(d)(8) (relating to termination) is amended—
by striking
first 2 taxable years
and inserting first 4 taxable
years
, and
by striking
January 1, 2008
and inserting January 1,
2010
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Special rule for sales or dispositions to implement FERC or State electric restructuring policy
In general
Paragraph (3) of section 451(i) (relating to qualifying
electric transmission transaction) is amended by striking January 1,
2008
and inserting January 1, 2010
.
Effective date
The amendment made by this section shall apply to transactions occurring after December 31, 2007.
Modification of tax treatment of certain payments to controlling exempt organizations
In general
Clause (iv) of section 512(b)(13)(E) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to payments received or accrued after December 31, 2007.
Suspension of taxable income limit with respect to marginal wells
In general
Subparagraph (H) of section 613A(c)(6) (relating to
temporary suspension of taxable income limit with respect to marginal
production) is amended by striking January 1, 2008
and inserting
January 1, 2010
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2007.
Treatment of certain dividends of regulated investment companies
Interest-related dividends
Subparagraph (C) of section 871(k)(1) (defining
interest-related dividend) is amended by striking December 31,
2007
and inserting December 31, 2009
.
Short-term capital gain dividends
Subparagraph (C) of section 871(k)(2)
(defining short-term capital gain dividend) is amended by striking
December 31, 2007
and inserting December 31,
2009
.
Disposition of investment in United States real property
Clause (ii) of section
897(h)(4)(A) (relating to termination) is amended by striking December
31, 2007
and inserting December 31, 2009
.
Effective date
The amendments made by this section shall apply to dividends with respect to taxable years of regulated investment companies beginning after December 31, 2007.
Basis adjustment to stock of S corporations making charitable contributions of property
In general
The last sentence of section 1367(a)(2) (relating to
decreases in basis) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to contributions made in taxable years beginning after December 31, 2007.
Extension of qualified zone academy bonds
In general
Paragraph (1) of section 1397E(e) is amended by striking
and 2007
and inserting 2007, 2008, and
2009
.
Effective date
The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.
Tax incentives for investment in the District of Columbia
Designation of DC enterprise zone
Subsection (f) of section 1400 (relating to
time for which designation applicable) is amended by striking December
31, 2007
each place it appears in paragraphs (1) and (2) and inserting
December 31, 2009
.
Tax-exempt DC empowerment zone bonds
Subsection (b) of section 1400A (relating
to period of applicability) is amended by inserting , and after the date
of the enactment of the HOME Act and before December 31, 2009
after
December 31, 2007
.
Acquisition date for eligibility for zero-percent capital gains rate for investment in DC
ubsection (b) of section 1400B (relating to DC zone asset) is
amended by striking January 1, 2008
each place it appears in
paragraphs (2)(A)(i), (3)(A), (4)(A)(i), and (4)(B)(i)(I) and inserting
January 1, 2010
.
Tax credit for first-time DC homebuyers
Subsection (i) of section 1400C
(relating to application of section) is amended by striking January 1,
2008
and inserting January 1, 2010
.
Effective date
The amendments made by this section shall apply to transactions after December 31, 2007.
0.2 percent FUTA surtax
In general
Section 3301 (relating to rate of tax) is amended—
by striking
through 2007
in paragraph (1) and inserting through
2009
, and
by striking
calendar year 2008
in paragraph (2) and inserting
calendar year 2010
.
Effective date
The amendments made by this section shall apply to wages paid after December 31, 2007.
Provisions expiring in 2008
Biodiesel and renewable diesel used as fuel
Subsection (g) of section 40A (relating to
termination) is amended by striking December 31, 2008
and
inserting December 31, 2009
.
Electricity produced from certain renewable resources; production of refined coal and Indian coal
Section 45(d)
(relating to qualified facilities) is amended by striking January 1,
2009
each place it appears in paragraphs (1), (2), (3), (4), (5), (6),
(7), (8), (9), and (10) and inserting January 1, 2010
.
New markets tax credit
Subparagraph (D) of
section 45D(f)(1) (relating to national limitation on amount of investments
designated) is amended by striking and 2008
and inserting
2008, and 2009
.
Extension of new energy efficient home credit
Subsection (g) of
section 45L (relating to termination) is amended by striking December
31, 2008
and inserting December 31, 2009
.
Extension of mine rescue team training credit
Section 45N(e) (relating to termination) is
amended by striking December 31, 2008
and inserting
December 31, 2009
.
Extension of energy credit
Solar energy property
Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a)
(relating to energy credit) are each amended by striking January 1,
2009
and inserting January 1, 2010
.
Fuel cell property
Subparagraph (E) of section 48(c)(1) (relating to
qualified fuel cell property) is amended by striking December 31,
2008
and inserting December 31, 2009
.
Microturbine property
Subparagraph (E) of section 48(c)(2) (relating to
qualified microturbine property) is amended by striking December 31,
2008
and inserting December 31, 2009
.
5-year NOL carryback for certain electric utility companies
Subparagraph (I)(i) of section 172(b)(1) (relating to transmission property and pollution control investment) is amended—
by striking January 1, 2009
and inserting January 1, 2010
, and
by striking
January 1, 2006
and inserting January 1,
2007
.
Extension of energy efficient commercial buildings deduction
Section 179D(h) (relating to termination) is
amended by striking December 31, 2008
and inserting
December 31, 2009
.
Extension of election to expense advanced mine safety equipment
Section
179E(g) (relating to termination) is amended by striking December 31,
2008
and inserting December 31, 2009
.
Extension and modification of expensing rules for qualified film and television productions
Section 181(f)
(relating to termination) is amended by striking December 31,
2008
and inserting December 31, 2009
.
Subpart F exception for active financing income
Exempt insurance income
Paragraph (10) of section 953(e) (relating to application) is amended—
by striking
January 1, 2009
and inserting January 1, 2010
,
and
by striking
December 31, 2008
and inserting December 31,
2009
.
Exception to treatment as foreign personal holding company income
Paragraph
(9) of section 954(h) (relating to application) is amended by striking
January 1, 2009
and inserting January 1,
2010
.
Extension of look-thru rule for related controlled foreign corporations
Subparagraph (B) of section 954(c)(6)
(relating to application) is amended by striking January 1, 2009
and inserting January 1, 2010
.
Excise tax provisions
Provisions expiring in 2007
Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands
In general
Paragraph (1) of section 7652(f) is amended by inserting
, and after the date of the enactment of the HOME Act and before January
1, 2010
after January 1, 2008
.
Effective date
The amendment made by this section shall apply to distilled spirits brought into the United States after the date of the enactment of this Act.
Parity in the application of certain limits to mental health benefits
In general
Subsection (f) of section 9812 (relating to application of section) is amended—
by striking
and
at the end of paragraph (2),
by striking the
period at the end of paragraph (3) and inserting , and before the date
of the enactment of the HOME Act
, and
by adding at the end the following new paragraph:
after December 31, 2009.
.
Amendment to the Employee Retirement Income Security Act of 1974
Section
712(f) of the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1185a(f)) is amended by inserting , and before the date of the enactment
of the HOME Act, and after December 31, 2009
after December 31,
2007
.
Amendment to the Public Health Service Act
Section 2705(f) of the Public
Health Service Act (42 U.S.C. 300gg-5(f)) is amended by inserting , and
before the date of the enactment of the HOME Act, and after December 31,
2009
after December 31, 2006
.
Effective date
The amendments made by this section shall apply to benefits for services furnished on or after the date of the enactment of this Act.
Extension of economic development credit for American Samoa
In general
Subsection (d) of section 119 of division A of the Tax Relief and Health Care Act of 2006 is amended—
by
striking first two taxable years
and inserting first 4
taxable years
, and
by striking
January 1, 2008
and inserting January 1,
2010
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Provisions expiring in 2008
Special rule for qualified methanol or ethanol fuel from coal
Subparagraph (D) of section 4041(b)(2)
(relating to termination) is amended by striking January 1, 2009
and inserting January 1, 2010
.
Biodiesel mixture credit and credit for fuels used for nontaxable purposes
Biodiesel mixtures
Paragraph (6) of
section 6426(c) (relating to termination) is amended by striking
December 31, 2008
and inserting December 31,
2009
.
Biodiesel used for nontaxable purposes
Paragraph (5)(B) of section 6427(e)
(relating to termination) is amended by striking December 31,
2008
and inserting December 31, 2009
.
Tax administration provisions
Provisions expiring in 2007
Disclosures to facilitate combined employment tax reporting
In general
Subparagraph (B) of section 6103(d)(5) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendments made by this subsection shall apply to disclosures after the date of the enactment of this Act.
Disclosure of return information to apprise appropriate officials of terrorist activities
In general
Clause (iv) of section 6103(i)(3)(C) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to disclosures after the date of the enactment of this Act.
Disclosure upon request of information relating to terrorist activities
In general
Subparagraph (E) of section 6103(i)(7) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to disclosures after the date of the enactment of this Act.
Disclosure of return information to carry out income contingent repayment of student loans
In general
Subparagraph (D) of section 6103(l)(13) (relating to
termination) is amended by striking December 31, 2007
and
inserting December 31, 2009
.
Effective date
The amendment made by this section shall apply to disclosures after the date of the enactment of this Act.
Authority for undercover operations
In general
Paragraph (6) of
section 7608(c) (relating to application of section) is amended by striking
January 1, 2008
each place it appears and inserting
January 1, 2010
.
Effective date
The amendments made by this section shall apply to operations conducted after the date of the enactment of this Act.
Provisions expiring in 2008
Extension of reporting of interest of exempt organizations in insurance contracts
Section 6050V(e)
(relating to termination) is amended by striking the date which is 2
years after the date of the enactment of this section
and inserting
December 31, 2009
.
Disclosures relating to certain programs administered by the Department of Veterans Affairs
In general
Section 6103(l)(7)(D) (relating to programs to which rule
applies) is amended by striking September 30, 2008
and inserting
December 31, 2009
.
Technical amendment
Section 6103(l)(7)(D)(viii)(III) is amended by striking
sections 1710(a)(1)(I), 1710(a)(2), 1710(b), and 1712(a)(2)(B)
and inserting sections 1710(a)(2)(G), 1710(a)(3), and
1710(b)
.
Alternative minimum tax relief
2-year extension of increased alternative minimum tax exemption amount
In general
Section 55(d)(1) is amended—
by striking
$66,250
and all that follows through 2007
in
subparagraph (A) and inserting the joint return amount in the case of
taxable years beginning in 2008 and 2009
, and
by striking
$44,350
and all that follows through 2007
in
subparagraph (B) and inserting the unmarried individual return amount in
the case of taxable years beginning in 2008 and 2009
.
Joint return amount; unmarried individual return amount
Section 55(d) is amended by adding at the end the following new paragraph:
Joint return amount; unmarried individual return amount
Joint return amount
For purposes of paragraph (1)(A), the joint return amount shall be—
$69,950 for taxable years beginning in 2008, and
$73,250 for taxable year beginning in 2009.
Unmarried individual return amount
For purposes of paragraph (1)(B), the unmarried individual return amount shall be—
$46,200 for taxable years beginning in 2008, and
$47,850 for taxable year beginning in 2009.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Extension of alternative minimum tax relief for nonrefundable personal credits
In general
Paragraph (2) of section 26(a) is amended—
by striking
or 2007
and inserting 2007, 2008, or 2009
,
and
by striking
2007
in the heading thereof and inserting
2009
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Additional tax relief
Permanent extension of 2001 and 2003 tax relief provisions
Economic Growth and Tax Relief Reconciliation Act of 2001
Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to compliance with Congressional Budget Act) is repealed.
Jobs and Growth Tax Relief Reconciliation Act of 2003
Title III of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking section 303.
Maximum corporate income tax rate reduced to 25 percent
In general
Paragraph (1) of section 11(b) (relating to amount of tax on corporations) is amended to read as follows:
In general
The amount of the tax imposed by subsection (a) shall be the sum of—
15 percent of so much of the taxable income as does not exceed $50,000, and
25 percent of so much of the taxable income as exceeds $50,000.
.
Personal service corporations
Paragraph (2) of section 11(b) is amended by
striking 35 percent
and inserting 25
percent
.
Conforming amendments
Paragraphs (1) and
(2) of section 1445(e) are each amended by striking 35 percent
and inserting 25 percent
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2008, except that the amendments made by subsection (c) shall take effect on January 1, 2009.
3-year carryback of certain credits
General Business Credit
Subsection (a) of section 39 is amended by adding at the end the following new paragraph:
Special rule for 2007, 2008, and 2009
In the case of an excess described in paragraph (1) arising in a taxable year beginning in 2007, 2008, or 2009—
paragraph (1)(A)
shall be applied by substituting each of the 3 taxable years
for
`the taxable year
,
paragraphs (2)(A)
and (3)(C)(i) shall each be applied by substituting 23 taxable
years
for 21 taxable years
, and
paragraphs (2)(B)
and (3)(C)(ii) shall be applied by substituting 23 taxable years
for 20 taxable
years
.
.
Foreign Tax Credit
In general
Section 904(c) is amended by adding at the end thereof
the following: In the case of taxable years beginning in 2007, 2008, or
2009, the first sentence of this subsection shall, at the election of the
taxpayer, be applied by substituting
.in the third preceding taxable
year, the second preceding taxable year, the first preceding taxable
year
for the first preceding taxable
year
.
Application of special refund rules
Section 6411 (relating to tentative carryback and refund adjustments) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection:
Application to foreign tax credit carryback
Under rules prescribed by the Secretary, in the case of taxable years beginning in 2007, 2008, and 2009, this section shall apply with respect to a foreign tax credit carryback provided in section 904(c) in the same manner as this section applies with respect to net operating loss carrybacks provided in section 172(b), business credit carrybacks provided in section 39, and capital loss carrybacks provided in subsection (a)(1) or (c) of section 1212.
.
Effective date
The amendments made by this section shall apply to general business credits and foreign tax credits arising in taxable years beginning after December 31, 2006.
Election to accelerate AMT and R and D credits in lieu of bonus depreciation
In general
Section 168(k) is amended by adding at the end the following new paragraph:
Election to accelerate AMT and R and D credits in lieu of bonus depreciation
In general
If a corporation elects to have this paragraph apply —
no additional depreciation shall be allowed under paragraph (1) for any property placed in service during the taxable year, and
the limitations described in subparagraph (B) for such taxable year shall be increased by an aggregate amount not in excess of the bonus depreciation amount for such taxable year.
Limitations to be increased
The limitations described in this subparagraph are—
the limitation under section 38(c), and
the limitation under section 53(c).
Bonus depreciation amount
For purposes of this paragraph—
In general
The bonus depreciation amount for any taxable year is an amount equal to the product of the applicable percentage and the excess (if any) of—
the aggregate amount of depreciation which would be determined under this section for property placed in service during the taxable year if no election under this paragraph were made, over
the aggregate amount of depreciation allowable under this section for property placed in service during the taxable year.
Applicable percentage
For purposes of clause (i), the applicable percentage shall be—
30 percent in the case of the limitation under section 38(c), and
20 percent in the case of the limitation under section 53(c).
Allocation of bonus depreciation amounts
In general
Subject to clauses (ii) and (iii), the taxpayer shall, at such time and in such manner as the Secretary may prescribe, specify the portion (if any) of the bonus depreciation amount which is to be allocated to each of the limitations described in subparagraph (B).
Business credit limitation
The portion of the bonus depreciation amount allocated to the limitation described in subparagraph (B)(i) shall not exceed an amount equal to the portion of the credit allowable under section 38 for the taxable year which is allocable to business credit carryforwards to such taxable year which are—
from taxable years beginning before January 1, 2006, and
properly allocable (determined under the rules of section 38(d)) to the research credit determined under section 41(a).
Alternative minimum tax credit limitation
The portion of the bonus depreciation amount allocated to the limitation described in subparagraph (B)(ii) shall not exceed an amount equal to the portion of the minimum tax credit allowable under section 53 for the taxable year which is allocable to the adjusted minimum tax imposed for taxable years beginning before January 1, 2006.
Credit refundable
Any aggregate increases in the credits allowed under section 38 or 53 by reason of this paragraph shall, for purposes of this title, be treated as a credit allowed to the taxpayer under subpart C of part IV of subchapter A.
Other rules
Election
Any election under this paragraph (including any allocation under subparagraph (D)) may be revoked only with the consent of the Secretary.
Deduction allowed in computing minimum tax
Notwithstanding this paragraph, paragraph (2)(G) shall apply with respect to the deduction computed under this section (after application of this paragraph) with respect to property placed in service during any applicable taxable year.
.
Effective date
The amendments made by this section shall apply to property placed in service after December 31, 2007, in taxable years ending after such date.
Indexing of certain assets for purposes of determining gain or loss
In General
Part II of subchapter O of chapter 1 (relating to basis rules of general application) is amended by redesignating section 1023 as section 1024 and by inserting after section 1022 the following new section:
Indexing of certain assets for purposes of determining gain or loss
General rule
Indexed basis substituted for adjusted basis
Solely for purposes of determining gain or loss on the sale or other disposition by a taxpayer (other than a corporation) of an indexed asset which has been held for more than 3 years, the indexed basis of the asset shall be substituted for its adjusted basis.
Exception for depreciation, etc
The deductions for depreciation, depletion, and amortization shall be determined without regard to the application of paragraph (1) to the taxpayer or any other person.
Written documentation requirement
Paragraph (1) shall apply only with respect to indexed assets for which the taxpayer has written documentation of the original purchase price paid or incurred by the taxpayer to acquire such asset.
Indexed asset
In general
For purposes of this section, the term indexed asset means—
common stock in a C corporation (other than a foreign corporation), or
tangible property,
Stock in certain foreign corporations included
For purposes of this section—
In general
The term indexed asset includes common stock in a foreign corporation which is regularly traded on an established securities market.
Exception
Subparagraph (A) shall not apply to—
stock in a passive foreign investment company (as defined in section 1296), and
stock in a foreign corporation held by a United States person who meets the requirements of section 1248(a)(2).
Treatment of American depository receipts
An American depository receipt for common stock in a foreign corporation shall be treated as common stock in such corporation.
Indexed basis
For purposes of this section—
General rule
The indexed basis for any asset is—
the adjusted basis of the asset, increased by
the applicable inflation adjustment.
Applicable inflation adjustment
The applicable inflation adjustment for any asset is an amount equal to—
the adjusted basis of the asset, multiplied by
the percentage (if any) by which—
the gross domestic product deflator for the last calendar quarter ending before the asset is disposed of, exceeds
the gross domestic product deflator for the last calendar quarter ending before the asset was acquired by the taxpayer.
Gross domestic product deflator
The gross domestic product deflator for any calendar quarter is the implicit price deflator for the gross domestic product for such quarter (as shown in the last revision thereof released by the Secretary of Commerce before the close of the following calendar quarter).
Suspension of holding period where diminished risk of loss; treatment of short sales
In general
If the taxpayer (or a related person) enters into any transaction which substantially reduces the risk of loss from holding any asset, such asset shall not be treated as an indexed asset for the period of such reduced risk.
Short sales
In general
In the case of a short sale of an indexed asset with a short sale period in excess of 3 years, for purposes of this title, the amount realized shall be an amount equal to the amount realized (determined without regard to this paragraph) increased by the applicable inflation adjustment. In applying subsection (c)(2) for purposes of the preceding sentence, the date on which the property is sold short shall be treated as the date of acquisition and the closing date for the sale shall be treated as the date of disposition.
Short sale period
For purposes of subparagraph (A), the short sale period begins on the day that the property is sold and ends on the closing date for the sale.
Treatment of regulated investment companies and real estate investment trusts
Adjustments at entity level
In general
Except as otherwise provided in this paragraph, the adjustment under subsection (a) shall be allowed to any qualified investment entity (including for purposes of determining the earnings and profits of such entity).
Exception for corporate shareholders
Under regulations—
in the case of a distribution by a qualified investment entity (directly or indirectly) to a corporation—
the determination of whether such distribution is a dividend shall be made without regard to this section, and
the amount treated as gain by reason of the receipt of any capital gain dividend shall be increased by the percentage by which the entity’s net capital gain for the taxable year (determined without regard to this section) exceeds the entity’s net capital gain for such year determined with regard to this section, and
there shall be other appropriate adjustments (including deemed distributions) so as to ensure that the benefits of this section are not allowed (directly or indirectly) to corporate shareholders of qualified investment entities.
Exception for qualification purposes
This section shall not apply for purposes of sections 851(b) and 856(c).
Exception for certain taxes imposed at entity level
Tax on failure to distribute entire gain
If any amount is subject to tax under section 852(b)(3)(A) for any taxable year, the amount on which tax is imposed under such section shall be increased by the percentage determined under subparagraph (B)(i)(II). A similar rule shall apply in the case of any amount subject to tax under paragraph (2) or (3) of section 857(b) to the extent attributable to the excess of the net capital gain over the deduction for dividends paid determined with reference to capital gain dividends only. The first sentence of this clause shall not apply to so much of the amount subject to tax under section 852(b)(3)(A) as is designated by the company under section 852(b)(3)(D).
Other taxes
This section shall not apply for purposes of determining the amount of any tax imposed by paragraph (4), (5), or (6) of section 857(b).
Adjustments to interests held in entity
Regulated investment companies
Stock in a regulated investment company (within the meaning of section 851) shall be an indexed asset for any calendar quarter in the same ratio as—
the average of the fair market values of the indexed assets held by such company at the close of each month during such quarter, bears to
the average of the fair market values of all assets held by such company at the close of each such month.
Real estate investment trusts
Stock in a real estate investment trust (within the meaning of section 856) shall be an indexed asset for any calendar quarter in the same ratio as—
the fair market value of the indexed assets held by such trust at the close of such quarter, bears to
the fair market value of all assets held by such trust at the close of such quarter.
Ratio of 80 percent or more
If the ratio for any calendar quarter determined under subparagraph (A) or (B) would (but for this subparagraph) be 80 percent or more, such ratio for such quarter shall be 100 percent.
Ratio of 20 percent or less
If the ratio for any calendar quarter determined under subparagraph (A) or (B) would (but for this subparagraph) be 20 percent or less, such ratio for such quarter shall be zero.
Look-thru of partnerships
For purposes of this paragraph, a qualified investment entity which holds a partnership interest shall be treated (in lieu of holding a partnership interest) as holding its proportionate share of the assets held by the partnership.
Treatment of return of capital distributions
Except as otherwise provided by the Secretary, a distribution with respect to stock in a qualified investment entity which is not a dividend and which results in a reduction in the adjusted basis of such stock shall be treated as allocable to stock acquired by the taxpayer in the order in which such stock was acquired.
Qualified investment entity
For purposes of this subsection, the term qualified investment entity means—
a regulated investment company (within the meaning of section 851), and
a real estate investment trust (within the meaning of section 856).
Other pass-thru entities
Partnerships
In general
In the case of a partnership, the adjustment made under subsection (a) at the partnership level shall be passed through to the partners.
Special rule in the case of section 754 elections
In the case of a transfer of an interest in a partnership with respect to which the election provided in section 754 is in effect—
the adjustment under section 743(b)(1) shall, with respect to the transferor partner, be treated as a sale of the partnership assets for purposes of applying this section, and
with respect to the transferee partner, the partnership’s holding period for purposes of this section in such assets shall be treated as beginning on the date of such adjustment.
S corporations
In the case of an S corporation, the adjustment made under subsection (a) at the corporate level shall be passed through to the shareholders. This section shall not apply for purposes of determining the amount of any tax imposed by section 1374 or 1375.
Common trust funds
In the case of a common trust fund, the adjustment made under subsection (a) at the trust level shall be passed through to the participants.
Indexing adjustment disregarded in determining loss on sale of interest in entity
Notwithstanding the preceding provisions of this subsection, for purposes of determining the amount of any loss on a sale or exchange of an interest in a partnership, S corporation, or common trust fund, the adjustment made under subsection (a) shall not be taken into account in determining the adjusted basis of such interest.
Dispositions between related persons
In general
This section shall not apply to any sale or other disposition of property between related persons except to the extent that the basis of such property in the hands of the transferee is a substituted basis.
Related persons defined
For purposes of this section, the term related persons means—
persons bearing a relationship set forth in section 267(b), and
persons treated as single employer under subsection (b) or (c) of section 414.
Transfers To increase indexing adjustment
If any person transfers cash, debt, or any other property to another person and the principal purpose of such transfer is to secure or increase an adjustment under subsection (a), the Secretary may disallow part or all of such adjustment or increase.
Special rules
For purposes of this section—
Treatment of improvements, etc
If there is an addition to the adjusted basis of any tangible property or of any stock in a corporation during the taxable year by reason of an improvement to such property or a contribution to capital of such corporation—
such addition shall never be taken into account under subsection (c)(1)(A) if the aggregate amount thereof during the taxable year with respect to such property or stock is less than $1,000, and
such addition shall be treated as a separate asset acquired at the close of such taxable year if the aggregate amount thereof during the taxable year with respect to such property or stock is $1,000 or more.
Assets which are not indexed assets throughout holding period
The applicable inflation adjustment shall be appropriately reduced for periods during which the asset was not an indexed asset.
Treatment of certain distributions
A distribution with respect to stock in a corporation which is not a dividend shall be treated as a disposition.
Section cannot increase ordinary loss
To the extent that (but for this paragraph) this section would create or increase a net ordinary loss to which section 1231(a)(2) applies or an ordinary loss to which any other provision of this title applies, such provision shall not apply. The taxpayer shall be treated as having a long-term capital loss in an amount equal to the amount of the ordinary loss to which the preceding sentence applies.
Acquisition date where there has been prior application of subsection (a)(1) with respect to the taxpayer
If there has been a prior application of subsection (a)(1) to an asset while such asset was held by the taxpayer, the date of acquisition of such asset by the taxpayer shall be treated as not earlier than the date of the most recent such prior application.
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
.
Clerical amendment
The table of sections for part II of subchapter O of chapter 1 is amended by striking the item relating to section 1023 and by inserting after the item relating to section 1022 the following new item:
Sec. 1023. Indexing of certain assets for purposes of determining gain or loss.
Sec. 1024. Cross references.
.
Effective date
The amendments made by this section shall apply to sales and other dispositions of indexed assets after the date of the enactment of this Act, in taxable years ending after such date.
Deferral of gain on sale of certain principal residences
In general
Part III of subchapter O of chapter 1 of subtitle A (relating to common nontaxable exchanges) is amended by inserting after section 1033 the following new section:
Deferral of gain on sale of certain principal residences
Deferral of gain
In general
In the case of a sale of a principal residence by a taxpayer, the taxpayer's gain (if any) from such sale shall be recognized only to the extent that the taxpayer's adjusted sales price exceeds the taxpayer's cost of purchasing a qualified residence.
Reduction of basis in qualified residence
In the case of a nonrecognition of gain on the sale of a principal residence due to the purchase of a qualified residence under paragraph (1), the taxpayer's basis in the qualified residence shall be reduced by the amount of such gain.
Definitions
Adjusted sales price
In general
For purposes of this section, the term adjusted sales price means the amount realized, reduced by the aggregate of the expenses for work performed on a principal residence in order to assist in its sale.
Limitation
The reduction provided in subparagraph (A) applies only to expenses—
for work performed during the 90-day period ending on the day on which the contract to sell the principal residence is entered into,
which are paid on or before the 30th day after the date of the sale of the principal residence, and
which are—
not allowable as deductions in computing taxable income under section 63, and
not taken into account in computing the amount realized from the sale of the principal residence.
Qualified residence
For purposes of this section, the term qualified residence means property that is—
purchased by the taxpayer for use as a principal residence, and
purchased during the period beginning 2 years before the date of the sale of the taxpayer's previous principal residence and ending 2 years after the date of such sale.
Application of section
For purposes of this section:
Exchange of residence for property
An exchange by the taxpayer of a principal residence for other property shall be treated as a sale of such residence, and the acquisition of a qualified residence on the exchange of property shall be treated as a purchase of such residence.
Construction of residence
A qualified residence any part of which was constructed or reconstructed by the taxpayer shall be treated as purchased by the taxpayer. In determining the taxpayer's cost of purchasing a qualified residence, there shall be included only so much of such cost as is attributable to the acquisition, construction, reconstruction, and improvements made which are properly chargeable to capital account, during the period specified in subsection (b)(2)(B).
Sale of new residence prior to sale of principal residence
If a residence is purchased by the taxpayer before the date of the sale of the taxpayer's principal residence, such purchased residence shall not be a qualified residence under this section if such residence is sold or otherwise disposed of by the taxpayer before the date of the sale of the taxpayer's principal residence.
Multiple principal residences
If the taxpayer, during the period described in subsection (b)(2)(B), purchases more than 1 residence which is used as the taxpayer's principal residence at some time during the 2 years after the date of the sale of a principal residence for which gain is deferred under this section, only the last of such residences so used by the taxpayer within such 2 years shall be a qualified residence under this section. If a qualified residence is sold in a sale to which subsection (d)(2) applies within 2 years after the sale of the taxpayer's previous principal residence, for purposes of applying the preceding sentence with respect to such principal residence, the qualified residence sold shall be treated as the last residence used during such 2-year period.
Limitation
In general
Subsection (a) shall not apply with respect to the sale of the taxpayer's principal residence if within 2 years before the date of such sale the taxpayer sold at a gain other property used by him as his principal residence, and any part of such gain was deferred by reason of subsection (a).
Subsequent sale connected with new principal place of work
Paragraph (1) shall not apply with respect to the sale of the taxpayer's principal residence if—
such sale was in connection with the commencement of work by the taxpayer (or the taxpayer's spouse, if such spouse has the same principal residence as the taxpayer) as an employee or as a self-employed individual at a new principal place of work, and
the taxpayer would satisfy the conditions of section 217(c) if the principal residence so sold were treated as the former residence for purposes of section 217.
Tenant-stockholder in a cooperative housing corporation
For purposes of this section, references to property used by the taxpayer as a principal residence shall include stock held by a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) if—
in the case of stock sold, the house or apartment which the taxpayer was entitled to occupy as such stockholder was used by the taxpayer as a principal residence, and
in the case of stock purchased, the taxpayer used as a principal residence the house or apartment which the taxpayer was entitled to occupy as such stockholder.
Joint ownership
In the case of a residence jointly owned and used as a principal residence by 1 or more taxpayers, or by a married couple filing separately, the gain (if any) from the sale of such principal residence which may be deferred under subsection (a) shall be allocated among such taxpayers according to regulations which shall be prescribed by the Secretary.
Members of the Armed Forces
In general
The running of any period of time specified in subsection (b)(2)(B) or (c) (other than the 2 years referred to in subsection (c)(4)) shall be suspended during any time that the taxpayer (or the taxpayer's spouse, if such spouse has the same principal residence as the taxpayer) serves on extended active duty with the Armed Forces of the United States after the date of the sale of the principal residence for which gain is deferred under this section, except that any period of time so suspended shall not extend beyond the date that is 4 years after the date of sale of such principal residence.
Members stationed outside the United States or required to reside in Government quarters
In the case of a taxpayer (or the taxpayer's spouse, if such spouse has the same principal residence as the taxpayer) who, during any period of time the running of which is suspended under paragraph (1)—
is stationed outside the United States, or
after returning from a tour of duty outside of the United States and pursuant to a determination by the Secretary of Defense that adequate off-base housing is not available at a remote base site, is required to reside in on-base Government quarters,
Individual whose tax home is outside the United States
The running of any period of time specified in subsection (b)(2)(B) or (c) (other than the 2 years referred to in subsection (c)(4)) shall be suspended during any time that the taxpayer (or the taxpayer's spouse, if such spouse has the same principal residence as the taxpayer) has a tax home (as defined in section 911(d)(3)) outside the United States after the date of the sale of the principal residence for which gain is deferred under this section, except that any period of time so suspended shall not extend beyond the date that is 4 years after the date of sale of such principal residence.
Special rule for condemnation
In the case of the seizure, requisition, or condemnation of a principal residence, or the sale or exchange of a principal residence under threat or imminence thereof, the taxpayer may elect to have this section apply in lieu of section 1033. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the principal residence. Such election shall be made at such time and in such manner as the Secretary shall prescribe.
Statute of limitations
In the case of any sale of a principal residence that results in gain—
the statutory period for the assessment of any deficiency attributable to any part of such gain 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 shall prescribe) of—
the taxpayer's cost of purchasing any qualified residence which results in nonrecognition of such gain,
the taxpayer's intention not to purchase such a qualified residence during the period specified in subsection (b)(2)(B), or
a failure to make such a purchase within such period, 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.
Application of exclusion on the sale of a principal residence
In the case of a sale of a principal residence by a taxpayer to which section 121 applies, the amount of the gain on such sale that may be deferred under subsection (a) of this section shall be reduced by the amount of gain on such sale that is excluded from gross income under section 121(a).
.
Conforming amendments
Coordination with section 121
Section 121 (relating to exclusion of gain from sale of principal residence) is amended by adding at the end the following new subsection:
Coordination with section 1034 deferral
For deferral of gain from the sale of a principal residence in the case of a purchase of another qualified residence, see section 1034.
.
Subsection (g) of
section 121 (relating to residences acquired in rollovers under section 1034)
is amended by striking (as in effect on the day before the date of the
enactment of this section)
.
Extension of period of limitation
Section 6503 (relating to suspension of running of period of limitation) is amended—
by redesignating subsection (k) as subsection (l), and
by inserting after subsection (j) the following new subsection:
Extension of time for assessment of tax liability on gain from the sale of certain principal residences
The running of any period of limitations for collection of any amount of tax liability on gain from the sale of a principal residence that is deferred under section 1034 shall be suspended for the period of any extension of time specified under section 1034(j).
.
Reduction in basis
Subsection (a) of section 1016 (relating to general rule) is amended—
by striking
and
at the end of paragraph (36),
by striking the
period at the end of paragraph (37) and inserting , and
,
and
by adding at the end the following new paragraph:
to the extent provided in section 1034(a)(2).
.
Clerical amendment
The table of sections for part III of subchapter O of chapter 1 of subtitle A (relating to common nontaxable exchanges) is amended by inserting after the item relating to section 1033 the following new item:
Sec. 1034. Deferral of gain on sale of certain principal residences.
.
Effective date
The amendments made by this section shall apply to sales in taxable years beginning after the date of the enactment of this Act.
Amount excluded from sale of principal residence indexed for inflation
In general
Section 121 is amended by adding at the end the following new subsection:
Inflation adjustment
In general
In the case of any taxable year beginning after 2008, the $250,000 amount under subsection (b)(1) 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 the calendar
year in which the taxable year begins, determined by substituting
calendar year 2007
for calendar year 1992
in
subparagraph (B) thereof.
Rounding
If any amount as adjusted under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.
.
Conforming amendments
Subparagraph (A) of section 121(b)(2) is amended—
by striking
Paragraph (1) shall be applied by substituting
and inserting $500,000
for $250,000
The dollar amount
under paragraph (1) shall be twice the dollar amount otherwise in effect under
such paragraph
, and
by striking
$500,000
in the heading and inserting Increased
.
Section 121(b)(4)
is amended by striking paragraph (1) shall be applied by substituting
and inserting
$500,000
for $250,000
the dollar amount under paragraph (1) shall be twice the dollar amount
otherwise in effect under such paragraph
.
Effective date
The amendments made by this section shall apply to sales occurring after December 31, 2008.
Repeal of phasein for domestic production activities deduction
In general
Subsection (a) of section 199 (relating to income attributable to domestic production activities) is amended to read as follows:
Allowance of deduction
There shall be allowed as a deduction an amount equal to 9 percent of the lesser of—
the qualified production activities income of the taxpayer for the taxable year, or
taxable income (determined without regard to this section) for the taxable year.
.
Conforming amendments
Section 199 is amended by striking subsection
(a)(1)(B)
each place it appears and inserting subsection
(a)(2)
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Keeping America competitive
Sense of Congress regarding the legislative initiatives required to strengthen and protect the well being of our Nation's capital markets
Findings
Congress finds the following:
America's capital markets are a foundation of our Nation's economic well being and security.
Healthy capital markets foster investment in the United States economy, helping to sustain and create jobs.
The American economy is fundamentally strong, but a correction in the residential housing market, credit turmoil, and high oil prices are hampering economic growth.
American businesses and investors face ever increasing competition from international competitors and markets.
Economic policies that maintain low tax rates on capital gains and dividends have historically fostered sustained growth in the American economy.
Sense of Congress
It is the sense of the Congress that—
Congress should not pass legislation that would create new or greater uncertainty in the financial markets;
Congress should not pass legislation that would serve to further constrict liquidity in the marketplace;
Congress should not pass legislation that would make credit more expensive and less accessible in the United States than in other world markets;
Congress should not pass legislation that would inhibit or impair capital formation and long-term investments;
Congress should maintain existing tax policy regarding capital formation and long-term investment, except in the case of illegitimate tax shelter activity;
Congress should pass legislation to extend permanently the 2001 and 2003 tax rate cuts, including the 15 percent capital gains and dividend rates, and to simplify and lower corporate tax rates; and
Congress should promote the entrepreneurship and economic development fostered by long-term, private investment.
Directing the Securities and Exchange Commission to convene a public hearing on the impact of excessive litigation
Findings
Congress finds that—
companies listed on United States securities exchanges face the potential of extraordinary litigation costs that companies listed abroad do not;
securities class action settlements in the United States for 2006 totaled $10,600,000,000 (not counting the Enron-related settlements of approximately $7,100,000,000), reflecting an increase of—
255 percent from 2004;
more than 500 percent from 2000 (not including the $3,100,000,000 Cendant settlement); and
an astonishing 7,000 percent from 1995;
while many such claims are legitimate, the sheer number of cases and the staggering settlement amounts illustrate the growing impact of the tort system on the United States economy; and
by contrast, such private shareholder class action suits do not exist in the United Kingdom and other European Union countries.
Public hearing
Not later than 60
days after the date of enactment of this Act, the Chairman of the Securities
and Exchange Commission (in this section referred to as the
Commission
) shall convene a public hearing on the impact of
excessive litigation on the competitiveness of companies listed on United
States securities exchanges.
Directing the Commission to establish formal processes and procedures for cost-benefit analyses of proposed and existing rules and regulations
Study
Not later than 180 days after the date of enactment of this Act, the Commission shall submit to Congress a study of its existing processes and procedures for conducting cost-benefit analyses of proposed and existing rules and regulations, and shall report to Congress on ways in which the Commission could perform more rigorous and informed cost-benefit analyses of such rules and regulations.
Proposed rule
In general
Not later than 180 days after the date of submission to Congress of the report under subsection (a), the Commission shall issue a final rule to establish formal processes and procedures for conducting cost-benefit analyses of proposed and existing rules and regulations.
Certain content required
At a minimum, processes and procedures proposed by the Commission under this subsection shall include provisions directing the Commission—
to assess all costs and benefits of available regulatory alternatives, including both quantifiable measures (to the extent that such measures can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider;
to design its rules and regulations in the most cost-effective manner to achieve the regulatory objective, considering incentives for innovation, consistency, predictability, the costs of enforcement and compliance, and flexibility;
to assess both the costs and the benefits of the intended rule or regulation and propose or adopt a rule or regulation only upon a reasoned determination that the benefits of the intended rule or regulation justify its costs;
to base its decisions on the best reasonably obtainable economic and other information concerning the need for, and consequences of, the intended rule or regulation;
to tailor its rules and regulations to impose the least possible burden on individuals, businesses of differing sizes, and other entities, consistent with obtaining the regulatory objectives, taking into account, among other things, and to the extent practicable, the cumulative costs; and
to establish a process for reexamining existing rules and regulations, or, at a minimum, those rules and regulations that the Commission, industry participants, or others identify as imposing unjustifiable costs or competitive burdens, that shall be designed to determine whether the rules and regulations are working as intended, whether there are satisfactory alternatives of a less burdensome nature, and whether changes should be made.
Periodic review
Each rule and regulation of the Commission that is subject to review pursuant to paragraph (2)(F) shall be reviewed not less frequently than 2 years after the date of its issuance in final form, and once every 10 years thereafter.
Directing the
Commission to define smaller public company
to provide certainty
to issuers
Rule revision required
Not later than 90 days after the date of enactment of
this Act, the Commission, pursuant to its authority to amend rules of the
Public Company Accounting Oversight Board under section 107 of the
Sarbanes-Oxley Act of 2002, shall revise Auditing Standard No. 5 of the
Oversight Board, as in effect on the date of enactment of this Act, to include
a definition of the term smaller public company
.
Definition of smaller public company
For purposes of the rule revision required
under subsection (a), the term smaller public company
shall mean
an issuer for which an annual report is required by section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)) that—
has a total market capitalization at the beginning of the relevant reporting period of less than $700,000,000; and
has total revenues for that reporting period of less than $250,000,000.
Mutual recognition
Findings
Congress finds that—
there is an ongoing and pressing need to update the United States financial regulatory structure to address the increasingly global nature of the financial marketplace;
existing regulations on cross-border activities are outdated, and predate the revolution in communications technology and the accompanying transformations in global markets;
existing regulations on cross-border activities are complex, inefficient, not flexible enough to meet modern market needs, and have the effect of chilling innovation and imposing significant and unnecessary burdens on United States investors;
the Commission has delayed the timetable for Commission action on key elements of reexamining and developing new approaches to cross-border regulation, including much needed reform to Commission rule 240.15a–6 of title 17, Code of Federal Regulations, as in effect on the date of enactment of this Act, and potential recognition of foreign regulatory regimes; and
such delay postpones the regulatory changes needed to eliminate unnecessary inefficiencies from international financial transactions, and poses an increasingly significant risk to the effective modernization and competitiveness of United States capital markets.
Modernization of cross-border rules applicable to brokers and dealers
In general
The Commission shall, by rule, exempt any foreign broker or dealer from the registration requirements of the Securities Exchange Act of 1934, and any other regulation applicable to registered or unregistered brokers or dealers, to the extent that the foreign broker or dealer effects transactions in securities with or for, or induces or attempts to induce the purchase or sale of any security by—
a qualified investor, as defined in section 3(a)(54) of the Securities Exchange Act of 1934;
an investor that is a resident outside of the United States; and
any person described in Commission rule 240.15a–6(a)(4) of title 17, Code of Federal Regulations, as in effect on the date of enactment of this Act.
Definition of foreign broker or dealer
As
used in this section, the term Foreign broker or dealer
has the
same meaning as in section 240.15a–6(b)(3) of title 17, Code of Federal
Regulations, as in effect on the date of enactment of this Act.
Regulatory authority
The Commission may, upon a finding that such action is necessary to protect United States investors and consistent with this section, require a foreign broker or dealer and its associated persons—
to file documentation to establish that the foreign broker or dealer and its associated persons are not subject to statutory disqualification;
to consent to service of process for any civil action brought by or proceeding before the Commission or a self-regulatory organization; and
to agree to provide any information or documents that the Commission reasonably requests, relating to effecting transactions in securities with or for, or inducing or attempting to induce the purchase or sale of any security by persons described in subparagraphs (A) through (C) of paragraph (1), subject to limitations recognizing potential conflicts with applicable foreign laws or regulations.
Limitation on State action
No State or political subdivision thereof, or any self-regulatory organization, may impose any registration, licensing, qualification, or other legal requirement applicable to a foreign broker or dealer or associated person thereof that is exempt from Commission registration and regulation pursuant to this subsection, except that the State or political subdivision thereof, or such self-regulatory organization, may require the foreign broker or dealer to provide copies of any documents filed with the Commission, as described in this subsection.
Timing of regulations
Final regulations to carry out this subsection shall be issued by the Commission, and such regulations shall become effective, not later than 180 days after the date of enactment of this Act.
Mutual recognition rules
In general
The Commission shall issue regulations designed to provide for a framework for mutual recognition of foreign regulatory regimes, so that foreign brokers, dealers, and exchanges shall be regulated based on regulation in their home country, and shall not be subject to duplicative regulatory requirements, except to the extent that the Commission finds necessary to protect United States investors.
Implementation
The Commission shall adopt regulations that provide an expeditious and transparent implementation mechanism for this section, based on objective qualification criteria and fixed timelines, that is designed to enable foreign brokers, dealers, and exchanges to operate in the United States and abroad based on regulation in their home country.
Limitation
The regulations required by this subsection—
shall not require individualized review and approval process for foreign brokers, dealers, and exchanges to be eligible to rely on regulation in their home country, but shall permit such brokers, dealers, and exchanges to make a supplemental showing, on an individual exemptive basis, to demonstrate their qualifications to do business with relevant classes of investors; and
may not create regulatory distinctions that limit trading of portfolios containing both United States and non-United States securities or impose other requirements that are inconsistent with the business objectives of investors.
Timing
The Commission shall issue proposed regulations to carry out this subsection not later than 90 days after the date of enactment of this Act, and shall make such regulations effective reasonably promptly thereafter.
Exemption authority
The Commission may, by rule, provide for such exemptions to the provisions of this subsection as the Commission determines appropriate.
Supporting the Securities and Exchange Commission reform efforts to speed the process of rulemaking for self regulatory organizations
Findings
Congress finds that—
United States capital markets are evolving quickly, and United States equity exchanges face increasing competition, both domestically and internationally;
the Commission has recognized this transformation in the competitive landscape and announced a project to redesign the rule approval process for exchanges to make it more efficient;
rather than approving rule filings by self regulatory organizations within the 35-day period prescribed under the Securities Exchange Act of 1934, the Commission has routinely requested that exchanges agree to extend deadlines while rules are weighed and considered within the agency, potentially resulting in years before exchange rule filings are finally approved;
this antiquated and overly rigid regulatory model does not recognize the new realities of international competition among exchanges or new competition from innovative products that compete with traditional asset classes; and
competitors to United States equity exchanges operate under different regulatory regimes, which can allow such competitors to adapt to rapidly changing business environments while United States exchanges are frozen in rule approval process review by the Commission for months or years.
Rulemaking
The Commission shall promulgate rules under section 19 of the Securities Exchange Act of 1934, to speed the process of rulemaking to enable self-regulatory organizations to respond to competitive inequities and better meet customer needs. Such rules and other actions should be completed not later than 180 days after the date of enactment of this Act, and should predate or be coterminous with any foreign exchange mutual recognition regime established under this Act.
Eliminate the exemption from State regulation for certain securities designated by national securities exchanges
Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. 77r(b)(1)) is amended—
in subparagraph (A)—
by striking
or the American Stock Exchange, or listed, or authorized for listing, on
the National Market System of the Nasdaq Stock Market (or any successor to such
entities)
and inserting , the American Stock Exchange, or the
Nasdaq Stock Market (or any successor to such entities)
; and
by inserting
before the semicolon at the end the following: , except that a security
listed, or authorized for listing, on the New York Stock Exchange, the American
Stock Exchange, or the Nasdaq Stock Market (or any successor to any such
entity) shall not be a covered security if the exchange adopts listing
standards pursuant to section 19(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78s(b)) that designates a tier or segment of such securities as
securities that are not covered securities for purposes of this section and
such security is listed, or authorized for listing, on such tier or
segment
; and
in subparagraph
(B), by inserting covered
after applicable
to
.
Directing the Commission to accelerate full conversion of IFRS and United States GAAP
Findings
Congress finds that—
the accounting framework applied in more
than 100 countries around the world is the International Financial Reporting
Standard (in this section referred to as IFRS
);
a number of additional important United States trading partners, including Canada, Brazil, Chile, India, and South Korea, have announced dates to shift to IFRS; and
the difficulty and expense of reconciling
IFRS with generally accepted accounting principles employed in the United
States (in this section referred to as GAAP
), the accounting
framework within which companies whose shares are listed on United States
exchanges must report their financial information, is among the highest hurdles
for foreign companies considering a United States listing, and one of the most
compelling incentives for foreign-based businesses to list their shares on
exchanges based somewhere other than the United States.
Acceleration of effort
The Commission shall—
accelerate efforts to offer to both United States- and foreign-based companies the option of reporting financial information using either IFRS or GAAP; and
accelerate efforts with the Commission’s foreign counterparts to achieve full conversion of IFRS and GAAP.
Promoting market access for financial services
Findings
Congress finds that—
there is a need to consistently monitor and increase Government advocacy for United States financial services firms’ attempts to gain overseas financial market access;
the presence of foreign financial services firms in the United States and their activities should be documented to find which countries’ firms enjoy full market access in the United States, while their home governments deny national treatment to American financial services firms; and
an analysis of
the results achieved from the U.S.-China Strategic Economic Dialogue (referred
to as SED
) and how such results specifically apply to United
States financial services firms, including benchmarks and timeframes for future
improvements, should be compiled to assess the efficacy of the
negotiations.
Amendments to Financial Reports Act
The Financial Reports Act of 1988 (22 U.S.C. 5351 et seq.) is amended—
in section 3602—
in the section
heading, by striking quadrennial
and inserting
annual
;
by striking
Not less frequently than every 4 years, beginning December 1,
1990
and inserting Beginning July 1, 2008, and annually
thereafter,
; and
by striking
to the Congress
and inserting to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives
; and
in section 3603—
by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively; and
by inserting after subsection (a) the following:
Report on SED
In general
The Secretary shall include in the initial report
required under section 3602, a summary of the results of the most recent United
States-China Strategic Economic Dialogue (in this subsection referred to as
SED
) and the results of the SED as it relates to promoting
market access for financial institutions.
Progress report
The reports required under section 3602 shall include a progress report on the implementation of any agreements resulting from the SED, a description of the remaining challenges, if any, in improving market access for financial institutions, and a plan, including benchmarks and time frames, for dealing with the remaining challenges.
Specific content
Each report described in this subsection shall specifically address issues regarding—
foreign investment rules;
the problems of a dual-share stock market;
the openness of the derivatives market;
restrictions on foreign bank branching;
the ability to offer insurance (including innovative products); and
regulatory and procedural transparency.
.
Protecting homeowners
Subprime refinancing loans through use of qualified mortgage bonds
Use of qualified mortgage bonds proceeds for subprime refinancing loans
Section 143(k) of the Internal Revenue Code of 1986 (relating to other definitions and special rules) is amended by adding at the end the following:
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 this paragraph to any case in which the proceeds of a qualified mortgage issue are used for any refinancing described in subparagraph (A)—
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 originated 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.
.
Increased volume cap for certain bonds
In general
Subsection (d) of section 146 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
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 (as reported in the most recent decennial census), and
the denominator of which is the total population of all States (as reported in the most recent decennial census).
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 purposes.
Qualified purpose
For purposes of this paragraph, the term qualified purpose means—
the issuance of exempt facility bonds used solely to provide 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 of such Code is amended by adding at the end the following:
Special rules for increased volume cap under subsection (d)(5)
In general
No amount which is attributable to the increase under subsection (d)(5) may be used—
for a carryforward purpose other than a qualified purpose (as defined in subsection (d)(5)), and
to issue any bond after calendar year 2010.
Ordering rules
For purposes of subparagraph (A), any carryforward of an issuing authority's volume cap for calendar year 2008 shall be treated as attributable to such increase to the extent of such increase.
.
Alternative minimum tax
In general
Clause (ii) of section 57(a)(5)(C) of the Internal
Revenue Code of 1986 is amended by striking shall not include
and all that follows and inserting “shall not include—
any qualified 501(c)(3) bond (as defined in section 145), or
any qualified mortgage bond (as defined in section 143(a)) or qualified veteran's mortgage bond (as defined in section 143(b)) issued after the date of the enactment of this subclause and before January 1, 2011.
.
Conforming amendment
The heading for section 57(a)(5)(C)(ii) of the Internal
Revenue Code of 1986 is amended by striking qualified 501(c)(3) bonds
and inserting certain
bond
.
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Expeditious distribution of funds already provided for mortgage foreclosure counseling
Upon certification
by the Neighborhood Reinvestment Corporation under paragraph (4) under the
heading Neighborhood Reinvestment Corporation—Payment to the
Neighborhood Reinvestment Corporation
of Public Law 110-161 that
Housing and Urban Development or Neighborhood Reinvestment Corporation-approved
counseling intermediaries and State Housing Finance Agencies have the need for
additional portions of the $180,000,000 provided therein for mortgage
foreclosure mitigation activities in States and areas with high rates of
mortgage foreclosures, defaults, or related activities beyond the initial
awards, and the expertise to use such funds effectively, the Neighborhood
Reinvestment Corporation shall expeditiously continue to award such funds as
need and expertise is shown.
Credit for purchase of homes in or near foreclosure
Allowance of credit
Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 25D the following new section:
Credit for purchase of homes in or near foreclosure
Allowance of credit
In general
In the case of an individual who is a purchaser of a qualified principal residence during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to so much of the purchase price of the residence as does not exceed $15,000.
Allocation of credit amount
The amount of the credit allowed under paragraph (1) shall be equally divided among the 3 taxable years beginning with the taxable year in which the purchase of the qualified principal residence is made.
Limitations
Date of purchase
The credit allowed under subsection (a) shall be allowed only with respect to purchases made—
after February 29, 2008, and
before March 1, 2009.
Limitation based on amount of tax
In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
the sum of the credits allowable under this subpart (other than this section) for the taxable year.
One-time only
In general
If a credit is allowed under this section in the case of any individual (and such individual's spouse, if married) with respect to the purchase of any qualified principal residence, no credit shall be allowed under this section in any taxable year with respect to the purchase of any other qualified principal residence by such individual or a spouse of such individual.
Joint purchase
In the case of a purchase of a qualified principal residence by 2 or more unmarried individuals or by 2 married individuals filing separately, no credit shall be allowed under this section if a credit under this section has been allowed to any of such individuals in any taxable year with respect to the purchase of any other qualified principal residence.
Qualified principal residence
In general
For purposes of this section, the term qualified principal residence means an eligible single-family residence that is purchased to be the principal residence of the purchaser.
Eligible single-family residence
In general
For purposes of this subsection, the term eligible single-family residence means a single-family structure that is—
a new previously unoccupied residence for which a building permit is issued and construction begins on or before September 1, 2007, but only if such residence is purchased by the taxpayer directly from the person to whom such building permit was issued,
an owner-occupied residence with respect to which the owner's acquisition indebtedness (as defined in section 163(h)(3)(B), determined without regard to clause (ii) thereof) is in default on or before March 1, 2008, or
a residence with respect to which a foreclosure event has taken place and which is owned by the mortgagor or the mortgagor's agent, but only if such residence was occupied as a principal residence by the mortgagee for at least 1 year prior to the foreclosure event.
Certification
In the case of an eligible single-family residence described in subparagraph (A)(i), no credit shall be allowed under this section unless the purchaser submits a certification by the seller of such residence that such residence meets the requirements of such subparagraph.
Denial of double benefit
No credit shall be allowed under this section for any purchase for which a credit is allowed under section 1400C.
Recapture in the case of certain dispositions
In the event that a taxpayer—
disposes of the qualified principal residence with respect to which a credit is allowed under subsection (a), or
fails to occupy such residence as the taxpayer's principal residence,
Special rules
Joint purchase
Married individuals filing separately
In the case of 2 married
individuals filing separately, subsection (a) shall be applied to each such
individual by substituting $7,500
for $15,000
in
subsection (a)(1).
Unmarried individuals
If 2 or more individuals who are not married purchase a qualified 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 $15,000.
Purchase
In defining the purchase of a qualified principal residence, rules similar to the rules of paragraphs (2) and (3) of section 1400C(e) (as in effect on the date of the enactment of this section) shall apply.
Reporting requirement
Rules similar to the rules of section 1400C(f) (as so in effect) shall apply.
Basis adjustment
For purposes of this subtitle, if a credit is allowed under this section with respect to the purchase of any residence, the basis of such residence shall be reduced by the amount of the credit so allowed.
.
Clerical amendment
The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:
Sec. 25E. Credit for certain home purchases.
.
Enhanced mortgage loan disclosures
Truth in lending Act disclosures
Section 128(b)(2) of the Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended—
by inserting
(A)
before In the
;
by striking
a residential mortgage transaction, as defined in section 103(w)
and inserting any extension of credit that is secured by the dwelling of
a consumer
;
by striking
shall be made in accordance
and all that follows through
extended, or
; and
by striking
If the
and all that follows through the end of the paragraph and
inserting the following:
In the case of an extension of credit that is secured by the dwelling of a consumer, in addition to the other disclosures required by subsection (a), the disclosures provided under this paragraph shall—
state in
conspicuous type size and format, the following: You are not required to
complete this agreement merely because you have received these disclosures or
signed a loan application.
; and
be furnished to the borrower not later than 7 business days before the date of consummation of the transaction, and at the time of consummation of the transaction, subject to subparagraph (D).
In the case of an extension of credit that is secured by the dwelling of a consumer, under which the annual rate of interest is variable, or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection (a), the disclosures provided under this paragraph shall—
label the payment
schedule as follows: Payment Schedule: Payments Will Vary Based on
Interest Rate Changes
;
state the
maximum amount of the regular required payments on the loan, based on the
maximum interest rate allowed, introduced with the following language in
conspicuous type size and format: Your payment can go as high as
$_______
, the blank to be filled in with the maximum possible payment
amount;
if the loan is an adjustable rate mortgage that includes an initial fixed interest rate—
state in
conspicuous type size and format the following phrase: This loan is an
adjustable rate mortgage with an initial fixed interest rate. Your initial
fixed interest rate is AAA with a monthly payment of BBB until CCC. After that
date, the interest rate on your loan will reset
to an adjustable
rate and both your interest rate and payment could go higher on that date and
in the future. For example, if your initial fixed rate ended today, your new
adjustable interest rate would be DDD and your new payment EEE. If interest
rates are one percent higher than they are today or at some point in the
future, your new payment would be FFF. There is no guarantee you will be able
to refinance your loan to a lower interest rate and payment before your initial
fixed interest rate ends.;
the blank AAA in subparagraph (I) to be filled in with the initial fixed interest rate;
the blank BBB in subparagraph (I) to be filled in with the payment amount under the initial fixed interest rate;
the blank CCC in subparagraph (I) to be filled in with the loan reset date;
the blank DDD in subparagraph (I) to be filled in with the adjustable rate as if the initial rate expired on the date of disclosure under subparagraph (B);
the blank EEE in subparagraph (I) to be filled in with the payment under the adjustable rate as if the initial rate expired on the date of disclosure under subparagraph (B); and
the blank FFF in subparagraph (I) to be filled in with the payment under the adjustable rate as if index rate on which the adjustable rate was one percent higher than of the date of disclosure under subparagraph (B); and
if the loan contains a prepayment penalty—
state in conspicuous type and format the following phrase: This loan contains a prepayment penalty. If you desire to pay off this loan before GGG, you will pay a penalty of HHH.;
the blank GGG in subparagraph (I) to be filled in with the date the prepayment penalty expires; and
the blank HHH in subparagraph (I) to be filled in with the prepayment penalty amount.
In any case in which the disclosure statement provided 7 business days before the date of consummation of the transaction contains an annual percentage rate of interest that is no longer accurate, as determined under section 107(c), the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the date of consummation of the transaction.
.
Civil liability
Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended—
in paragraph
(2)(A)(iii), by striking not less than $200 or greater than
$2,000
and inserting $5,000, such amount to be adjusted annually
based on the consumer price index, to maintain current value
;
and
in the penultimate sentence of the undesignated matter following paragraph (4)—
by striking
only for
and inserting for
;
by striking
section 125 or
and inserting section 122, section
125,
;
by inserting
or section 128(b),
after 128(a),
; and
by inserting
or section 128(b)
before the period.
Carryback of certain net operating losses allowed for 5 years; temporary suspension of 90 percent AMT limit
In general
Subparagraph (H) of section 172(b)(1) of the Internal Revenue Code of 1986 is amended to read as follows:
5-year carryback of certain losses
Taxable years ending during 2001 and 2002
In the case of a net operating loss
for any taxable year ending during 2001 or 2002, subparagraph (A)(i) shall be
applied by substituting 5
for 2
and subparagraph
(F) shall not apply.
Taxable years ending during 2006, 2007, 2008, and 2009
In the case of a net operating loss for any taxable year ending during 2006, 2007, 2008, or 2009—
subparagraph
(A)(i) shall be applied by substituting 5
for
2
,
subparagraph
(E)(ii) shall be applied by substituting 4
for 2
,
and
subparagraph (F) shall not apply.
.
Temporary suspension of 90 percent limit on certain NOL carrybacks and carryovers
In general
Section 56(d) of the of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Additional adjustments
For purposes of paragraph (1)(A), the amount described in clause (I) of paragraph (1)(A)(ii) shall be increased by the amount of the net operating loss deduction allowable for the taxable year under section 172 attributable to the sum of—
carrybacks of net operating losses from taxable years ending during 2006, 2007, 2008, and 2009, and
carryovers of net operating losses to taxable years ending during 2006, 2007, 2008, or 2009.
.
Conforming amendment
Subclause (I) of section 56(d)(1)(A)(i) of such Code is
amended by inserting amount of such
before deduction
described in clause (ii)(I)
.
Anti-abuse rules
The Secretary of Treasury or the Secretary's designee shall prescribes such rules as are necessary to prevent the abuse of the purposes of the amendments made by this section, including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales.
Effective dates
Subsection (a)
In general
Except as provided in subparagraph (B), the amendments made by subsection (a) shall apply to net operating losses arising in taxable years ending in 2006, 2007, 2008, or 2009.
Election
In the case of a net operating loss for a taxable year ending during 2006 or 2007—
any election made under section 172(b)(3) of the Internal Revenue Code of 1986 may (notwithstanding such section) be revoked before November 1, 2008, and
any election made under section 172(j) of such Code shall (notwithstanding such section) be treated as timely made if made before November 1, 2008.
Subsection (b)
The amendments made by subsection (b) shall apply to taxable years ending after December 31, 1995.
Reducing the litigation tax
Limitation on punitive damages for small businesses
Definition of covered small business
In this section, the term covered small business means any unincorporated business, or any partnership, corporation, association, unit of local government, or organization—
that has fewer than 25 full-time employees as of the date that the relevant civil action is filed; and
the principal place of business of which is in a State other than the State where the relevant civil action is filed.
General rule
Except as provided in subsection (c), in any civil action filed in a Federal or State court against a covered small business, punitive damages—
may be awarded against that covered small business only if the court finds by clear and convincing evidence that conduct of that covered small business was—
carried out with a conscious, flagrant indifference to the rights or safety of others; and
the proximate cause of the harm that is the subject of the civil action; and
shall not be awarded against that covered small business in an amount greater than $250,000.
Exceptions
This section shall not apply to a civil action if the court finds by clear and convincing evidence that—
the covered small business acted with specific intent to cause the type of harm that is the subject of the civil action;
the conduct of the covered small business constitute a criminal offense; or
the conduct of the covered small business resulted in serious environmental degradation.
Application by the court
The limitation on punitive damages under this section shall be carried out by the court and shall not be disclosed to the jury, if any.
Reasonableness review of attorney’s fees
In general
In any civil action in a Federal or State court in which the damages awarded to a party exceed $5,000,000, the court shall review the fees paid to any attorney for the prevailing party and ensure that those fees are reasonable in light of the hours of work actually performed by that attorney and the risk of nonpayment of fees assumed by that attorney when that attorney agreed to represent the party.
Unreasonable fees
If a Federal or State court determines under subsection (a) that the fees paid to an attorney for a prevailing party are not reasonable, the court shall reduce the amount of that attorney's fees.
Assistance
A Federal or State court may, as appropriate, retain the services of an independent accounting firm to assist the court in conducting a review under this section.
Partial award of attorney’s fees for unreasonable lawsuits
In general
In any civil action described in subsection (b), a court shall award to a prevailing party 30 percent of the reasonable attorney’s fees that were incurred by that prevailing party in connection with a claim described in subsection (b)(2) after the date on which the party asserting that claim knew or should have known of the facts that would require that claim to be dismissed because there was no genuine issue of material fact.
Civil actions
A civil action described in this subsection is a civil action—
filed in a Federal court or against a party whose principal residence or place of business is in a State other than the State where the civil action is filed; and
in which the court finds that no genuine issue of material fact exists with regard to a claim that would allow a reasonable juror to find in favor of the party presenting that claim.
Mandatory sanctions for frivolous lawsuits
In general
If a court of the United States (as that term is defined in section 451 of title 28, United States Code) determines, whether on a motion of a party or on its own motion, that there has been a violation of rule 11 of the Federal Rules of Civil Procedure in any civil action, the court shall impose upon the attorney, law firm, or pro se litigant that violated rule 11, or is responsible for such violation, an appropriate sanction.
Sanctions
A sanction imposed under this section—
shall include an order to pay any other party to the relevant civil action the reasonable expenses incurred by that party as a direct result of the filing of the pleading, motion, or other paper that is the subject of the violation of rule 11 of the Federal Rules of Civil Procedure, including reasonable attorney’s fees; and
shall be sufficient to—
deter the repetition of such conduct or comparable conduct by other similarly situated persons; and
compensate any party injured by such conduct.
Bar on junk science in the courtroom
In general
In any civil action filed in a Federal court or against a party whose principal residence or place of business is in a State other than the State where the civil action is filed, if scientific, technical, or other specialized knowledge will assist the fact finder to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may give testimony relating to that evidence or fact, in the form of an opinion or otherwise, if—
the witness has disclosed, upon the request of the opposing party, those facts or data upon which the testimony of the witness is based or that are material to the testimony of the witness;
the testimony is based upon sufficient facts or data;
the testimony is the product of reliable principles and methods; and
the witness has applied the principles and methods reliably to the facts.
Review
A trial court’s application of subsection (a) shall be subject to de novo review.
March 3, 2008
Read the second time and placed on the calendar