[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3648 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                     December 14, 2007.
    Resolved, That the bill from the House of Representatives (H.R. 
3648) entitled ``An Act to amend the Internal Revenue Code of 1986 to 
exclude discharges of indebtedness on principal residences from gross 
income, and for other purposes.'', do pass with the following

                               AMENDMENT:

            Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mortgage Forgiveness Debt Relief Act 
of 2007''.

SEC. 2. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL RESIDENCE EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Paragraph (1) of section 108(a) of the Internal 
Revenue Code of 1986 is amended by striking ``or'' at the end of 
subparagraph (C), by striking the period at the end of subparagraph (D) 
and inserting ``, or'', and by inserting after subparagraph (D) the 
following new subparagraph:
                    ``(E) the indebtedness discharged is qualified 
                principal residence indebtedness which is discharged 
                before January 1, 2010.''.
    (b) Special Rules Relating to Qualified Principal Residence 
Indebtedness.--Section 108 of such Code is amended by adding at the end 
the following new subsection:
    ``(h) Special Rules Relating to Qualified Principal Residence 
Indebtedness.--
            ``(1) Basis reduction.--The amount excluded from gross 
        income by reason of subsection (a)(1)(E) shall be applied to 
        reduce (but not below zero) the basis of the principal 
        residence of the taxpayer.
            ``(2) Qualified principal residence indebtedness.--For 
        purposes of this section, the term `qualified principal 
        residence indebtedness' means acquisition indebtedness (within 
        the meaning of section 163(h)(3)(B), applied by substituting 
        `$2,000,000 ($1,000,000' for `$1,000,000 ($500,000' in clause 
        (ii) thereof) with respect to the principal residence of the 
        taxpayer.
            ``(3) Exception for certain discharges not related to 
        taxpayer's financial condition.--Subsection (a)(1)(E) shall not 
        apply to the discharge of a loan if the discharge is 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.
            ``(4) Ordering rule.--If any loan is discharged, in whole 
        or in part, and only a portion of such loan is qualified 
        principal residence indebtedness, subsection (a)(1)(E) shall 
        apply only to so much of the amount discharged as exceeds the 
        amount of the loan (as determined immediately before such 
        discharge) which is not qualified principal residence 
        indebtedness.
            ``(5) Principal residence.--For purposes of this 
        subsection, the term `principal residence' has the same meaning 
        as when used in section 121.''.
    (c) Coordination.--
            (1) Subparagraph (A) of section 108(a)(2) of such Code is 
        amended by striking ``and (D)'' and inserting ``(D), and (E)''.
            (2) Paragraph (2) of section 108(a) of such Code is amended 
        by adding at the end the following new subparagraph:
                    ``(C) Principal residence exclusion takes 
                precedence over insolvency exclusion unless elected 
                otherwise.--Paragraph (1)(B) shall not apply to a 
                discharge to which paragraph (1)(E) applies unless the 
                taxpayer elects to apply paragraph (1)(B) in lieu of 
                paragraph (1)(E).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges of indebtedness on or after January 1, 2007.

SEC. 3. EXTENSION OF TREATMENT OF MORTGAGE INSURANCE PREMIUMS AS 
              INTEREST.

    (a) In General.--Subclause (I) of section 163(h)(3)(E)(iv) of the 
Internal Revenue Code of 1986 (relating to termination) is amended by 
striking ``December 31, 2007'' and inserting ``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or accrued after December 31, 2007.

SEC. 4. ALTERNATIVE TESTS FOR QUALIFYING AS COOPERATIVE HOUSING 
              CORPORATION.

    (a) In General.--Subparagraph (D) of section 216(b)(1) of the 
Internal Revenue Code of 1986 (defining cooperative housing 
corporation) is amended to read as follows:
                    ``(D) meeting 1 or more of the following 
                requirements for the taxable year in which the taxes 
                and interest described in subsection (a) are paid or 
                incurred:
                            ``(i) 80 percent or more of the 
                        corporation's gross income for such taxable 
                        year is derived from tenant-stockholders.
                            ``(ii) At all times during such taxable 
                        year, 80 percent or more of the total square 
                        footage of the corporation's property is used 
                        or available for use by the tenant-stockholders 
                        for residential purposes or purposes ancillary 
                        to such residential use.
                            ``(iii) 90 percent or more of the 
                        expenditures of the corporation paid or 
                        incurred during such taxable year are paid or 
                        incurred for the acquisition, construction, 
                        management, maintenance, or care of the 
                        corporation's property for the benefit of the 
                        tenant-stockholders.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

SEC. 5. EXCLUSION FROM INCOME FOR BENEFITS PROVIDED TO VOLUNTEER 
              FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by inserting after section 139A the 
following new section:

``SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND EMERGENCY 
              MEDICAL RESPONDERS.

    ``(a) In General.--In the case of any member of a qualified 
volunteer emergency response organization, gross income shall not 
include--
            ``(1) any qualified State and local tax benefit, and
            ``(2) any qualified payment.
    ``(b) Denial of Double Benefits.--In the case of any member of a 
qualified volunteer emergency response organization--
            ``(1) the deduction under 164 shall be determined with 
        regard to any qualified State and local tax benefit, and
            ``(2) expenses paid or incurred by the taxpayer in 
        connection with the performance of services as such a member 
        shall be taken into account under section 170 only to the 
        extent such expenses exceed the amount of any qualified payment 
        excluded from gross income under subsection (a).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified state and local tax benefit.--The term 
        `qualified state and local tax benefit' means any reduction or 
        rebate of a tax described in paragraph (1), (2), or (3) of 
        section 164(a) provided by a State or political division 
        thereof on account of services performed as a member of a 
        qualified volunteer emergency response organization.
            ``(2) Qualified payment.--
                    ``(A) In general.--The term `qualified payment' 
                means any payment (whether reimbursement or otherwise) 
                provided by a State or political division thereof on 
                account of the performance of services as a member of a 
                qualified volunteer emergency response organization.
                    ``(B) Applicable dollar limitation.--The amount 
                determined under subparagraph (A) for any taxable year 
                shall not exceed $30 multiplied by the number of months 
                during such year that the taxpayer performs such 
                services.
            ``(3) Qualified volunteer emergency response 
        organization.--The term `qualified volunteer emergency response 
        organization' means any volunteer organization--
                    ``(A) which is organized and operated to provide 
                firefighting or emergency medical services for persons 
                in the State or political subdivision, as the case may 
                be, and
                    ``(B) which is required (by written agreement) by 
                the State or political subdivision to furnish 
                firefighting or emergency medical services in such 
                State or political subdivision.
    ``(d) Termination.--This section shall not apply with respect to 
taxable years beginning after December 31, 2010.''.
    (b) Clerical Amendment.--The table of sections for such part is 
amended by inserting after the item relating to section 139A the 
following new item:

``Sec. 139B. Benefits provided to volunteer firefighters and emergency 
                            medical responders.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 6. CLARIFICATION OF STUDENT HOUSING ELIGIBLE FOR LOW-INCOME 
              HOUSING CREDIT.

    (a) In General.--Subclause (I) of section 42(i)(3)(D)(ii) of the 
Internal Revenue Code of 1986 (relating to certain students not to 
disqualify unit) is amended to read as follows:
                                    ``(I) single parents and their 
                                children and such parents are not 
                                dependents (as defined in section 152, 
                                determined without regard to 
                                subsections (b)(1), (b)(2), and 
                                (d)(1)(B) thereof) of another 
                                individual and such children are not 
                                dependents (as so defined) of another 
                                individual other than a parent of such 
                                children, or.''
    (b) Effective Date.--The amendment made by this section shall apply 
to--
            (1) housing credit amounts allocated before, on, or after 
        the date of the enactment of this Act, and
            (2) buildings placed in service before, on, or after such 
        date to the extent paragraph (1) of section 42(h) of the 
        Internal Revenue Code of 1986 does not apply to any building by 
        reason of paragraph (4) thereof.

SEC. 7. APPLICATION OF JOINT RETURN LIMITATION FOR CAPITAL GAINS 
              EXCLUSION TO CERTAIN POST-MARRIAGE SALES OF PRINCIPAL 
              RESIDENCES BY SURVIVING SPOUSES.

    (a) Sale Within 2 Years of Spouse's Death.--Section 121(b) of the 
Internal Revenue Code of 1986 (relating to limitations) is amended by 
adding at the end the following new paragraph:
            ``(4) Special rule for certain sales by surviving 
        spouses.--In the case of a sale or exchange of property by an 
        unmarried individual whose spouse is deceased on the date of 
        such sale, paragraph (1) shall be applied by substituting 
        `$500,000' for `$250,000' if such sale occurs not later than 2 
        years after the date of death of such spouse and the 
        requirements of paragraph (2)(A) were met immediately before 
        such date of death.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to sales or exchanges after December 31, 2007.

SEC. 8. MODIFICATION OF PENALTY FOR FAILURE TO FILE PARTNERSHIP 
              RETURNS; LIMITATION ON DISCLOSURE.

    (a) Extension of Time Limitation.--Section 6698(a) of the Internal 
Revenue Code of 1986 (relating to failure to file partnership returns) 
is amended by striking ``5 months'' and inserting ``12 months''.
    (b) Increase in Penalty Amount.--Paragraph (1) of section 6698(b) 
of such Code is amended by striking ``$50'' and inserting ``$85''.
    (c) Limitation on Disclosure of Taxpayer Returns to Partners, S 
Corporation Shareholders, Trust Beneficiaries, and Estate 
Beneficiaries.--
            (1) In general.--Section 6103(e) of such Code (relating to 
        disclosure to persons having material interest) is amended by 
        adding at the end the following new paragraph:
            ``(10) Limitation on certain disclosures under this 
        subsection.--In the case of an inspection or disclosure under 
        this subsection relating to the return of a partnership, S 
        corporation, trust, or an estate, the information inspected or 
        disclosed shall not include any supporting schedule, 
        attachment, or list which includes the taxpayer identity 
        information of a person other than the entity making the return 
        or the person conducting the inspection or to whom the 
        disclosure is made.''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply to returns required to be filed after the date of the 
enactment of this Act.

SEC. 9. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

    (a) In General.--Part I of subchapter B of chapter 68 of the 
Internal Revenue Code of 1986 (relating to assessable penalties) is 
amended by adding at the end the following new section:

``SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.

    ``(a) General Rule.--In addition to the penalty imposed by section 
7203 (relating to willful failure to file return, supply information, 
or pay tax), if any S corporation required to file a return under 
section 6037 for any taxable year--
            ``(1) fails to file such return at the time prescribed 
        therefor (determined with regard to any extension of time for 
        filing), or
            ``(2) files a return which fails to show the information 
        required under section 6037,
such S corporation shall be liable for a penalty determined under 
subsection (b) for each month (or fraction thereof) during which such 
failure continues (but not to exceed 12 months), unless it is shown 
that such failure is due to reasonable cause.
    ``(b) Amount Per Month.--For purposes of subsection (a), the amount 
determined under this subsection for any month is the product of--
            ``(1) $85, multiplied by
            ``(2) the number of persons who were shareholders in the S 
        corporation during any part of the taxable year.
    ``(c) Assessment of Penalty.--The penalty imposed by subsection (a) 
shall be assessed against the S corporation.
    ``(d) Deficiency Procedures Not To Apply.--Subchapter B of chapter 
63 (relating to deficiency procedures for income, estate, gift, and 
certain excise taxes) shall not apply in respect of the assessment or 
collection of any penalty imposed by subsection (a).''.
    (b) Clerical Amendment.--The table of sections for part I of 
subchapter B of chapter 68 of such Code is amended by adding at the end 
the following new item:

``Sec. 6699. Failure to file S corporation return.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns required to be filed after the date of the enactment 
of this Act.

SEC. 10. MODIFICATION OF REQUIRED INSTALLMENT OF CORPORATE ESTIMATED 
              TAXES WITH RESPECT TO CERTAIN DATES.

    The percentage under subparagraph (B) of section 401(1) of the Tax 
Increase Prevention and Reconciliation Act of 2005 in effect on the 
date of the enactment of this Act is increased by 1.50 percentage 
points.

            Attest:

                                                             Secretary.
110th CONGRESS

  1st Session

                               H. R. 3648

_______________________________________________________________________

                               AMENDMENT