Extends through 2007: (1) offsets against the alternative minimum tax for certain nonrefundable income tax credits; and (2) increased alternative minimum tax exemptions for individual taxpayers.

Extends through 2008 various expiring tax provisions primarily affecting individual taxpayers, including: (1) the tax deductions for state and local sales taxes, for qualified tuition and related expenses, for qualified conservation contributions, for certain expenses of elementary and secondary school teachers, and for the travel expenses of state legislators while away from home; (2) tax-free distributions from individual retirement accounts for charitable purposes; (3) the taxpayer election to include combat pay as earned income for purposes of the earned income tax credit; (4) special rules for qualified mortgage bonds to finance home purchases by veterans; and (5) tax-free distributions from retirement plans for individuals called to active military service.

Extends through 2008 various expiring tax provisions primarily affecting businesses, including: (1) the tax credits for increasing research expenses, for hiring workers on Indian reservations, for investment in new markets, for railroad track maintenance, and for hiring workers in areas affected by Hurricane Katrina; (2) accelerated depreciation for qualified leasehold and restaurant improvements, for motorsports entertainment complexes, and for business property on Indian reservations; (3) expensing allowances for environmental remediation costs; (4) tax deductions for contributions of food and book inventories and for computer equipment for educational purposes; and (5) tax incentives for investment in the District of Columbia and American Samoa.

Extends through 2008 authorities for: (1) issuing qualified zone academy bonds; (2) making disclosures of tax information to facilitate student loan repayments and for combating terrorist activities; and (3) Internal Revenue Service (IRS) undercover operations.

Allows an exclusion from gross income for up to $2 million of the income attributable to discharges of home mortgage indebtedness incurred after January 1, 2007.

Extends through 2014 the tax deduction for mortgage insurance premiums.

Sets forth alternative criteria for qualifying a corporation as a cooperative housing corporation for purposes of the tax deduction for payments to such corporations.

Limits the exclusion from gross income of gain from the sale of a principal residence by denying an exclusion of the gain that is allocable to a nonqualified use of such residence (i.e., use other than as a principal residence).

Repeals the authority of the IRS to enter into private debt collection contracts.

Delays until 2012 the requirement for federal, state, and local agencies to withhold 3% of payments for goods and services provided to such agencies.

Revises tax administration provisions and rules relating to: (1) tax returns of certain U.S. Virgin Island residents; and (2) the tax treatment of high-income individuals who relinquish U.S. citizenship or residency to avoid U.S. taxation (expatriates).

Repeals the 36-month suspension of interest and penalties on tax underpayments for taxpayers not notified of a tax deficiency by the IRS. Increases tax penalties for failure to file accurate tax information returns.

Amends the Tariff Act of 1930 to provide that wine of the same color shall be deemed to be commercially interchangeable for purposes of the duty drawback for unused merchandise.

Title I: AMT Relief - (Sec. 101) Extends through 2007 for individual taxpayers: (1) the offset of nonrefundable personal tax credits against regular and alternative minimum tax (AMT) liability; and (2) the increased AMT exemption amounts.

(Sec. 103) Increases the AMT refundable credit amount for individual taxpayers with long-term unused tax credits in prior taxable years. Abates any underpayment of tax and related interest and penalties attributable to the application of special AMT rules for the treatment of incentive stock options.

Title II: Additional Individual Tax Relief - (Sec. 201) Lowers in 2008 (from $10,000 to $8,500) the earned income threshold amount for determining the refundable portion of the child tax credit.

(Sec. 202) Allows individual taxpayers an additional standard tax deduction in 2008 for state and local real property taxes. Limits the amount of such deduction to $350 ($700 for married individuals filing a joint tax return).

Title III: One-Year Extenders - Subtitle A: Extenders Primarily Affecting Individuals - (Sec. 301) Extends through 2008: (1) the tax deduction for state and local sales taxes in lieu of state and local income taxes; (2) the tax deduction for qualified tuition and related expenses; (3) the exemption from withholding of tax of interest-related and short-term capital gain dividends received from a regulated investment company (RIC); (4) the tax penalty for noncompliance with mental health parity requirements; (5) the special rule for charitable contributions of capital gain real property for conservation purposes; (6) tax-free distributions from individual retirement plans for charitable purposes; (7) the tax deduction for certain expenses of elementary and secondary school teachers; (8) the taxpayer election to include combat zone compensation as earned income for purposes of the earned income tax credit; (9) mortgage revenue bond financing of residences for veterans without regard to first-time homebuyer requirements; (10) tax-free distributions from retirement plans for individuals called or ordered to active military duty; (11) the special rule for RIC stock held in the estate of a nonresident non-citizen; (12) the inclusion of an RIC within the definition of "qualified investment entity" for income tax purposes; and (13) the special rule for state legislators' travel expenses while away from home.

Subtitle B: Extenders Primarily Affecting Businesses - (Sec. 321) Extends through 2008: (1) the tax credit for increasing research activities; (2) the Indian employment tax credit; (3) the new markets tax credit; (4) the railroad track maintenance tax credit; (5) accelerated depreciation for qualified leasehold and restaurant property, for motorsports racing track facilities, and for business property on Indian reservations; (6) the taxpayer election to expense certain environmental remediation costs; (7) the tax deduction for income attributable to domestic production activities in Puerto Rico; (8) the special rule for the tax treatment of certain payments to tax-exempt organizations by a controlled subsidiary; (9) the authority for issuance of qualified zone academy bonds; (10) certain tax incentives for investment in the District of Columbia; (11) the American Samoa economic development credit; (12) the expanded tax deduction for contributions of food and book inventories by certain noncorporate taxpayers; (13) the tax deduction for charitable contributions of computer technology and equipment for educational purposes; (14) the special rule for reductions in the basis of S corporation stock for charitable contributions; and (15) the work opportunity tax credit for certain Hurricane Katrina employees (extended through August 28, 2008).

Subtitle C: Other Extenders - (Sec. 341) Extends through 2008 authorities for: (1) combined employment tax reporting; (2) Internal Revenue Service (IRS) disclosures to federal officials relating to terrorist activities; (3) IRS disclosures to the Department of Education for the income-contingent student loan repayment program; (4) IRS undercover operations; and (5) IRS disclosures to the Department of Veteran Affairs (VA) for certain veteran benefit programs.

(Sec. 346) Extends through 2008 the increased payment ($10.50 to $13.25 per proof gallon) of distilled spirits excise tax to the Treasuries of Puerto Rico and the Virgin Islands;

Title IV: Mortgage Forgiveness Debt Relief - (Sec. 401) Excludes from gross income amounts attributable to a discharge of indebtedness incurred to acquire a principal residence. Limits to $2 million the excludable amount of such indebtedness. Reduces the basis of a principal residence by the amount of discharged indebtedness excluded from gross income. Disallows an exclusion for a discharge of indebtedness on account of services performed for the lender or any other factor not directly related to a decline in the value of the residence or to the financial condition of the taxpayer. Sets forth rules for determining the allowable amount of the exclusion for taxpayers with nonqualifying indebtedness and who are insolvent.

(Sec. 402) Extends through 2014 the tax deduction for mortgage insurance premiums.

(Sec. 403) Sets forth alternative tests for qualifying as a cooperative housing corporation for purposes of the tax deduction for payments to such corporations. Qualifies a corporation if: (1) 80% or more of the total square footage of the corporation's property is used or available for use by its tenant-stockholders for residential purposes, or (2) 90% of the corporation's expenditures are for the acquisition, construction, management, maintenance, or care of its property for the benefit of the tenant-stockholders.

(Sec. 404) Limits the exclusion from gross income of gain from the sale of a principal residence by denying an exclusion of the gain that is allocable to a nonqualified use of such residence (i.e., use other than as a principal residence).

Title V: Administrative Provisions - (Sec. 501) Repeals the authority of the IRS to enter into private debt collection contracts. Exempts contracts entered into before July 18, 2007, if such contracts are not renewed or extended after such date. Nullifies any contract entered into, extended, or renewed on or after July 18, 2007.

(Sec. 502) Delays until 2012 the requirement for federal, state, and local agencies to withhold 3% of payments for goods and services provided to such agencies.

Requires the Secretary of the Treasury to report to the House Committee on Ways and Means and the Senate Committee on Finance on issues relating to the administration of the withholding requirement.

(Sec. 503) Treats income tax returns filed with the U.S. Virgin Islands by an individual claiming to be a bona fide resident of the Virgin Islands during the entire taxable year as filed with the United States for tax administration purposes.

(Sec. 504) Sets forth additional rules for the tax treatment of high-income individuals who relinquish U.S. citizenship or residency to avoid U.S. taxation (expatriates). Treats all property of expatriates as sold for its fair market value on the day before the expatriation date and includes gain (over $600,000) or loss from such sale in the gross income of such expatriates. Allows expatriates to elect to defer payment of any tax resulting from expatriation if adequate security for payment of such tax is given.

Requires 30% withholding of tax for certain items of deferred compensation payable to expatriates.

Imposes a separate tax on gifts and bequests from expatriates exceeding $10,000, payable by the recipient of such gift or bequest.

(Sec. 505) Repeals provisions providing for a 36-month suspension of interest and penalties on tax underpayments for taxpayers who had not been notified of a tax deficiency by the IRS.

(Sec. 506) Amends the Tariff Act of 1930 to provide that wine of the same color with a price variation not more than 50% between the imported and exported wine shall be deemed to be commercially interchangeable for purposes of the duty drawback for unused merchandise.

Title VI: Revenue Provisions - Subtitle A: Nonqualified Deferred Compensation from Certain Tax Indifferent Parties - (Sec. 601) Requires the inclusion in gross income for income tax purposes of employee compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity when there is no substantial risk of forfeiture of the rights to such compensation. Defines "nonqualified entity" as any foreign corporation unless substantially all of its income is: (1) effectively connected with a trade or business in the United States; or (2) subject to a comprehensive foreign income tax. Includes certain partnerships within such definition.

Subtitle B: Provisions Related to Certain Investment Partnerships - (Sec. 611) Allows the recharacterization of certain net income and loss from an investment services partnership interest for the performance of services as ordinary income or loss, unless such income relates to a partner's invested capital.

(Sec. 612) Exempts any tax-exempt organization that is a partner with limited liability in a partnership from the unrelated business income rules relating to indebtedness incurred for acquiring certain securities and commodities.

(Sec. 613) Revises the rule for treating gain from the sale or exchange of property between related persons as ordinary income to include depreciable property which is an interest in a partnership.

Subtitle C: Other Provisions - (Sec. 621) Delays until 2018 the application of special rules for the worldwide allocation of interest for purposes of computing the limitation on the foreign tax credit.

(Sec. 622) Requires brokers to include in their information returns for sales of any covered security: (1) the customer's adjusted basis in the security; and (2) whether any gain or loss with respect to the security is long-term or short-term. Extends until February 15 of each year the date by which broker statements must be sent to their customers. Imposes additional reporting requirements on transferors (to brokers) of covered securities and issuers of certain securities.

(Sec. 623) Increases the penalty for failure to file a partnership tax return.

(Sec. 624) Imposes an additional penalty on S corporations for failure to file required tax returns.

(Sec. 625) Amends the Tax Increase Prevention and Reconciliation Act of 2005 to increase the estimated tax payment due in the third quarter of 2012 for corporations with assets of at least $1 billion.

Tax Increase Prevention Act of 2007 - Amends the Internal Revenue Code to extend through 2007 for individual taxpayers: (1) the increased alternative minimum tax (AMT) exemption amounts; and (2) the offset of nonrefundable personal tax credits against regular and AMT liability.