[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3648 Enrolled Bill (ENR)]
H.R.3648
One Hundred Tenth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Thursday,
the fourth day of January, two thousand and seven
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.