[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3648 Referred in Senate (RFS)]
1st Session
H. R. 3648
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 4, 2007
Received; read twice and referred to the Committee on Finance
_______________________________________________________________________
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.''.
(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. LONG-TERM EXTENSION OF DEDUCTION FOR MORTGAGE INSURANCE
PREMIUMS.
(a) In General.--Subparagraph (E) of section 163(h)(3) of the
Internal Revenue Code of 1986 (relating to mortgage insurance premiums
treated as interest) is amended by striking clauses (iii) and (iv) and
inserting the following new clause:
``(iii) Application.--Clause (i) shall not
apply with respect to any mortgage insurance
contract issued before January 1, 2007, or
after December 31, 2014.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to contracts issued after December 31, 2006.
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. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO NONQUALIFIED
USE NOT EXCLUDED FROM INCOME.
(a) In General.--Subsection (b) of section 121 of the Internal
Revenue Code of 1986 (relating to limitations) is amended by adding at
the end the following new paragraph:
``(4) Exclusion of gain allocated to nonqualified use.--
``(A) In general.--Subsection (a) shall not apply
to so much of the gain from the sale or exchange of
property as is allocated to periods of nonqualified
use.
``(B) Gain allocated to periods of nonqualified
use.--For purposes of subparagraph (A), gain shall be
allocated to periods of nonqualified use based on the
ratio which--
``(i) the aggregate periods of nonqualified
use during the period such property was owned
by the taxpayer, bears to
``(ii) the period such property was owned
by the taxpayer.
``(C) Period of nonqualified use.--For purposes of
this paragraph--
``(i) In general.--The term `period of
nonqualified use' means any period (other than
the portion of any period preceding January 1,
2008) during which the property is not used as
the principal residence of the taxpayer or the
taxpayer's spouse or former spouse.
``(ii) Exceptions.--The term `period of
nonqualified use' does not include--
``(I) any portion of the 5-year
period described in subsection (a)
which is after the last date that such
property is used as the principal
residence of the taxpayer or the
taxpayer's spouse,
``(II) any period (not to exceed an
aggregate period of 10 years) during
which the taxpayer or the taxpayer's
spouse is serving on qualified official
extended duty (as defined in subsection
(d)(9)(C)) described in clause (i),
(ii), or (iii) of subsection (d)(9)(A),
and
``(III) any other period of
temporary absence (not to exceed an
aggregate period of 2 years) due to
change of employment, health
conditions, or such other unforeseen
circumstances as may be specified by
the Secretary.
``(D) Coordination with recognition of gain
attributable to depreciation.--For purposes of this
paragraph--
``(i) subparagraph (A) shall be applied
after the application of subsection (d)(6), and
``(ii) subparagraph (B) shall be applied
without regard to any gain to which subsection
(d)(6) applies.''.
(b) Effective Date.--The amendment made by this section shall apply
to sales and exchanges after December 31, 2007.
SEC. 6. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
Subparagraph (B) of section 401(1) of the Tax Increase Prevention
and Reconciliation Act of 2005 is amended by striking the percentage
contained therein and inserting ``116.75 percent''.
Passed the House of Representatives October 4, 2007.
Attest:
LORRAINE C. MILLER,
Clerk.