110 HR 3996 EH: Temporary Tax Relief Act of
U.S. House of Representatives
0
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
(a)This Act may be cited
as the Temporary Tax Relief Act of
2007
.
(b)Except as otherwise expressly provided,
whenever in this Act 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.
(c)The table of contents for this Act is as follows:
Sec. 1. Short title, etc.
Title I—AMT Relief
Sec. 101. Extension of alternative minimum tax relief for
nonrefundable personal credits.
Sec. 102. Extension of increased alternative minimum tax
exemption amount.
Sec. 103. Increase of AMT refundable credit amount for
individuals with long-term unused credits for prior year minimum tax liability,
etc.
Title II—Additional Individual Tax Relief
Sec. 201. Refundable child credit.
Sec. 202. Additional standard deduction for real property taxes
for nonitemizers.
Title III—One-year extenders
Subtitle A—Extenders Primarily Affecting
Individuals
Sec. 301. Deduction for State and local sales
taxes.
Sec. 302. Deduction of qualified tuition and related
expenses.
Sec. 303. Treatment of certain dividends of regulated
investment companies.
Sec. 304. Parity in the application of certain limits to mental
health benefits.
Sec. 305. Qualified conservation contributions.
Sec. 306. Tax-free distributions from individual retirement
plans for charitable purposes.
Sec. 307. Deduction for certain expenses of elementary and
secondary school teachers.
Sec. 308. Election to include combat pay as earned income for
purposes of earned income tax credit.
Sec. 309. Modification of mortgage revenue bonds for
veterans.
Sec. 310. Distributions from retirement plans to individuals
called to active duty.
Sec. 311. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
Sec. 312. Qualified investment entities.
Sec. 313. State legislators’ travel expenses away from
home.
Subtitle B—Extenders Primarily Affecting
Businesses
Sec. 321. Research credit.
Sec. 322. Indian employment credit.
Sec. 323. New markets tax credit.
Sec. 324. Railroad track maintenance.
Sec. 325. Fifteen-year straight-line cost recovery for
qualified leasehold improvements and qualified restaurant property.
Sec. 326. Seven-year cost recovery period for motorsports
racing track facility.
Sec. 327. Accelerated depreciation for business property on
Indian reservation.
Sec. 328. Expensing of environmental remediation
costs.
Sec. 329. Deduction allowable with respect to income
attributable to domestic production activities in Puerto Rico.
Sec. 330. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 331. Extension and modification of credit to holders of
qualified zone academy bonds.
Sec. 332. Tax incentives for investment in the District of
Columbia.
Sec. 333. Extension of economic development credit for American
Samoa.
Sec. 334. Enhanced charitable deduction for contributions of
food inventory.
Sec. 335. Enhanced charitable deduction for contributions of
book inventory to public schools.
Sec. 336. Enhanced deduction for qualified computer
contributions.
Sec. 337. Basis adjustment to stock of S corporations making
charitable contributions of property.
Sec. 338. Extension of work opportunity tax credit for
Hurricane Katrina employees.
Subtitle C—Other Extenders
Sec. 341. Disclosure for combined employment tax
reporting.
Sec. 342. Disclosure of return information to apprise
appropriate officials of terrorist activities.
Sec. 343. Disclosure upon request of information relating to
terrorist activities.
Sec. 344. Disclosure of return information to carry out income
contingent repayment of student loans.
Sec. 345. Authority for undercover operations.
Sec. 346. Increase in limit on cover over of rum excise tax to
Puerto Rico and the Virgin Islands.
Sec. 347. Disclosure of return information for certain veterans
programs.
Title IV—Mortgage Forgiveness Debt Relief
Sec. 401. Discharges of indebtedness on principal residence
excluded from gross income.
Sec. 402. Long-term extension of deduction for mortgage
insurance premiums.
Sec. 403. Alternative tests for qualifying as cooperative
housing corporation.
Sec. 404. Gain from sale of principal residence allocated to
nonqualified use not excluded from income.
Title V—Administrative Provisions
Sec. 501. Repeal of authority to enter into private debt
collection contracts.
Sec. 502. Delay of application of withholding requirement on
certain governmental payments for goods and services.
Sec. 503. Clarification of entitlement of Virgin Islands
residents to protections of limitations on assessment and collection of
tax.
Sec. 504. Revision of tax rules on expatriation.
Sec. 505. Repeal of suspension of certain penalties and
interest.
Sec. 506. Unused merchandise drawback.
Title VI—Revenue Provisions
Subtitle A—Nonqualified deferred compensation from certain tax
indifferent parties
Sec. 601. Nonqualified deferred compensation from certain tax
indifferent parties.
Subtitle B—Provisions related to certain investment
partnerships
Sec. 611. Income of partners for performing investment
management services treated as ordinary income received for performance of
services.
Sec. 612. Indebtedness incurred by a partnership in acquiring
securities and commodities not treated as acquisition indebtedness for
organizations which are partners with limited liability.
Sec. 613. Application to partnership interests and tax sharing
agreements of rule treating certain gain on sales between related persons as
ordinary income.
Subtitle C—Other Provisions
Sec. 621. Delay in application of worldwide allocation of
interest.
Sec. 622. Broker reporting of customer’s basis in securities
transactions.
Sec. 623. Modification of penalty for failure to file
partnership returns.
Sec. 624. Penalty for failure to file S corporation
returns.
Sec. 625. Time for payment of corporate estimated
taxes.
<enum>I</enum><header>AMT
Relief</header>
<section id="H57DC299C7B1245FEBE481139B8F237A6"><enum>101.</enum><header>Extension of
alternative minimum tax relief for nonrefundable personal credits</header>
<subsection id="HEC363C8528CC4D64ADE77577C7B3F5B3"><enum>(a)</enum><header>In
general</header><text>Paragraph (2) of section 26(a) (relating to special rule
for taxable years 2000 through 2006) is amended—</text>
<paragraph id="HB37EAC7763544FEFBF8EBE5127100076"><enum>(1)</enum><text>by striking
<quote>or 2006</quote> and inserting <quote>2006, or 2007</quote>, and</text>
</paragraph><paragraph id="H0753F138348F4CDDA5C28B350027ECAD"><enum>(2)</enum><text>by striking
<quote><header-in-text level="paragraph" style="OLC">2006</header-in-text></quote> in the heading thereof and inserting
<quote><header-in-text level="paragraph" style="OLC">2007</header-in-text></quote>.</text>
</paragraph></subsection><subsection id="H6D371EEC1BE54139949E281F55C00D3"><enum>(b)</enum><header> Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section><section display-inline="no-display-inline" id="H31808C50F0D041CCACF2EA2731CBB8" section-type="subsequent-section"><enum>102.</enum><header>Extension of
increased alternative minimum tax exemption amount</header>
<subsection id="HF61F3B9876424A85B5D9ADE858368D6C"><enum>(a)</enum><header>In
general</header><text>Paragraph (1) of section 55(d) (relating to exemption
amount) is amended—</text>
<paragraph id="HAF91B01B4DE6433EBDDE6CD6E82FEBC7"><enum>(1)</enum><text>by striking
<quote>($62,550 in the case of taxable years beginning in 2006)</quote> in
subparagraph (A) and inserting <quote>($66,250 in the case of taxable years
beginning in 2007)</quote>, and</text>
</paragraph><paragraph id="H5C96436946D04E84B9A074D1784DCEC9"><enum>(2)</enum><text>by striking
<quote>($42,500 in the case of taxable years beginning in 2006)</quote> in
subparagraph (B) and inserting <quote>($44,350 in the case of taxable years
beginning in 2007)</quote>.</text>
</paragraph></subsection><subsection id="H0D21C9D2E96A4E2F00E7FD74BFEAD2F6"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2006.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H889FD4781B23413AAE6F00B7EF615661" section-type="subsequent-section"><enum>103.</enum><header>Increase of AMT
refundable credit amount for individuals with long-term unused credits for
prior year minimum tax liability, etc</header>
<subsection commented="no" id="HC989D76FA9054A088B00AC4F4784854F"><enum>(a)</enum><header>In
general</header><text>Paragraph (2) of section 53(e) of the Internal Revenue
Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H13221CEEF5514754A8A8B75F67008951" style="OLC">
<paragraph commented="no" id="HB599D02DD8054F3BAD57B0CE46DBDE54"><enum>(2)</enum><header>AMT refundable
credit amount</header><text>For purposes of paragraph (1), the term <quote>AMT
refundable credit amount</quote> means, with respect to any taxable year, the
amount (not in excess of the long-term unused minimum tax credit for such
taxable year) equal to the greater of—</text>
<subparagraph commented="no" id="H8ECFB40F7B234A96B37EC1A452A158FA"><enum>(A)</enum><text>50 percent of the
long-term unused minimum tax credit for such taxable year, or</text>
</subparagraph><subparagraph commented="no" id="H6AC0DFF80C52410FB48799E6B5B984C1"><enum>(B)</enum><text display-inline="yes-display-inline">the amount (if any) of the AMT refundable
credit amount determined under this paragraph for the taxpayer’s preceding
taxable
year.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="HA212865326CD4B3881C9BD61CACD4826"><enum>(b)</enum><header>Treatment of
certain underpayments, interest, and penalties attributable to the treatment of
incentive stock options</header><text>Section 53 of such Code is amended by
adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H6E5D2BFD1AB2410F97516469D32169B" style="OLC">
<subsection commented="no" id="HE647EA1FEA7242E7B1FE8D458BFCD1B"><enum>(f)</enum><header>Treatment of
certain underpayments, interest, and penalties attributable to the treatment of
incentive stock options</header>
<paragraph commented="no" id="H66094AB325C0473BB3322C27A3DB006C"><enum>(1)</enum><header>Abatement</header><text>Any
underpayment of tax outstanding on the date of the enactment of this subsection
which is attributable to the application of section 56(b)(3) for any taxable
year ending before January 1, 2007 (and any interest or penalty with respect to
such underpayment which is outstanding on such date of enactment), is hereby
abated. No credit shall be allowed under this section with respect to any
amount abated under this paragraph.</text>
</paragraph><paragraph commented="no" id="HBA04668721634063A0EAF03DE7F65049"><enum>(2)</enum><header>Increase in
credit for certain interest and penalties already paid</header><text>Any
interest or penalty paid before the date of the enactment of this subsection
which would (but for such payment) have been abated under paragraph (1) shall
be treated for purposes of this section as an amount of adjusted net minimum
tax imposed for the taxable year of the underpayment to which such interest or
penalty
relates.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H4519BA7115C84B1D96AAAA4E009502B1"><enum>(c)</enum><header>Effective
date</header>
<paragraph commented="no" id="H36654257FAF34CAB924D482209553635"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendment made
by this section shall apply to taxable years beginning after December 31,
2006.</text>
</paragraph><paragraph commented="no" id="H14FE5162C5894AE197835F6E62833B6E"><enum>(2)</enum><header>Abatement</header><text>Section
53(f)(1) of the Internal Revenue Code of 1986, as added by subsection (b),
shall take effect on the date of the enactment of this Act.</text>
</paragraph></subsection></section><enum>II</enum><header>Additional
Individual Tax Relief</header>
<section id="H5DDB5BEA1B3A4F7686927E38CAF7F568"><enum>201.</enum><header>Refundable
child credit</header>
<subsection commented="no" id="HA9C45E8304A840A6B47308BCE2B1F06"><enum>(a)</enum><header>Modification of
threshold amount</header><text display-inline="yes-display-inline">Clause (i)
of section 24(d)(1)(B) is amended by inserting <quote>($8,500 in the case of
taxable years beginning in 2008)</quote> after <quote>$10,000</quote>.</text>
</subsection><subsection id="HE019C1902247483B96F00D97D506D29"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H6C1D539AF1E7427F8BC22208CEB664C" section-type="subsequent-section"><enum>202.</enum><header>Additional standard
deduction for real property taxes for nonitemizers</header>
<subsection id="H65F9CEDAB86040E296FEDB628D59725"><enum>(a)</enum><header>In
general</header><text>Section 63(c)(1) (defining standard deduction) is amended
by striking <quote>and</quote> at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting <quote>, and</quote>, and
by adding at the end the following new subparagraph:</text>
<quoted-block id="H1748A55C2338441B8660E3B28D14600">
<subparagraph id="H78A8B708983B42B1B7EBC2043EDB279"><enum>(C)</enum><text>in the case of any
taxable year beginning in 2008, the real property tax
deduction.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H4F417B48DF144285B285E4CB57924300"><enum>(b)</enum><header>Definition</header><text>Section
63(c) is amended by adding at the end the following new paragraph:</text>
<quoted-block id="H384A8EF551BD49CAAD7DB35774746BAD">
<paragraph id="H5FF6486E547149F3925B5099E58B3943"><enum>(8)</enum><header>Real property
tax deduction</header><text>For purposes of paragraph (1), the real property
tax deduction is so much of the amount of State and local real property taxes
(within the meaning of section 164) paid or accrued by the taxpayer during the
taxable year which do not exceed $350 ($700 in the case of a joint
return).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H41E1689F65824560BDAC5186087B3557"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><enum>III</enum><header>One-year
extenders</header>
<subtitle id="H46D2688AE29446BD8E1211745EDCCCA0"><enum>A</enum><header>Extenders
Primarily Affecting Individuals</header>
<section commented="no" display-inline="no-display-inline" id="H2ABE44B3159644F4B11EF7B0B1A604B5" section-type="subsequent-section"><enum>301.</enum><header>Deduction for State
and local sales taxes</header>
<subsection commented="no" id="HA0446BBB9FFD4726BE9D8C3BF516C42"><enum>(a)</enum><header>In
general</header><text>Subparagraph (I) of section 164(b)(5) is amended by
striking <quote>January 1, 2008</quote> and inserting <quote>January 1,
2009</quote>.</text>
</subsection><subsection commented="no" id="H556FF9C9C47542C588AC4BEFDD003147"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H1E4A944455BF4650AA1B559CC406ABAC" section-type="subsequent-section"><enum>302.</enum><header>Deduction of
qualified tuition and related expenses</header>
<subsection id="H2CDDD4CEC732493490AFFDF15E9EAB3C"><enum>(a)</enum><header>In
general</header><text>Subsection (e) of section 222 (relating to termination)
is amended by striking <quote>December 31, 2007</quote> and inserting
<quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HC2B8178212074BE2A74C5800F7CE9E23"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section id="H91CD83BF7F554E8D9E6166B12FC16FD2"><enum>303.</enum><header>Treatment of
certain dividends of regulated investment companies</header>
<subsection id="H9E4C70B5A7C349DDB20614D5FA41B2D6"><enum>(a)</enum><header>Interest-related
dividends</header><text>Subparagraph (C) of section 871(k)(1) (defining
interest-related dividend) is amended by striking <quote>December 31,
2007</quote> and inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection display-inline="no-display-inline" id="HB388A5DDC35E4696B88F4CF1AD26FFCE"><enum>(b)</enum><header>Short-term
capital gain dividends</header><text display-inline="yes-display-inline">Subparagraph (C) of section 871(k)(2)
(defining short-term capital gain dividend) is amended by striking
<quote>December 31, 2007</quote> and inserting <quote>December 31,
2008</quote>.</text>
</subsection><subsection id="H2CE63AFFD5F24E8DBFCEEEF892FD272"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to dividends
with respect to taxable years of regulated investment companies beginning after
December 31, 2007.</text>
</subsection></section><section id="H0B94F471AECD4256BD868E7C25EF1DF0"><enum>304.</enum><header>Parity in the
application of certain limits to mental health benefits</header>
<subsection id="H930D9E4969DD4961B77425ECF58400B6"><enum>(a)</enum><header>In
general</header><text>Paragraph (3) of section 9812(f) (relating to application
of section) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H48338ECDDC814FDE97C135072E41CB41"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to benefits
for services furnished after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H02E70A71639E40FC81FF22048B3911A4" section-type="subsequent-section"><enum>305.</enum><header>Qualified
conservation contributions</header>
<subsection id="HA49942FFEA4844C3A7481116E6F79891"><enum>(a)</enum><header>In
general</header><text>Clause (vi) of section 170(b)(1)(E) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H8776A4B6090D472884B0264D454CF94E"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
contributions made in taxable years beginning after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H1902274BE00D40D68BEFF5EDCEEDD8F6" section-type="subsequent-section"><enum>306.</enum><header>Tax-free
distributions from individual retirement plans for charitable purposes</header>
<subsection id="H67B65CAB4E6C47468D8CB5201E556606"><enum>(a)</enum><header>In
general</header><text>Subparagraph (F) of section 408(d)(8) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HAF2E65DB4CDD4553BAA873D8704493D7"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
distributions made in taxable years beginning after December 31, 2007.</text>
</subsection></section><section id="H064C9C06488945D98690B4FC8193005B"><enum>307.</enum><header>Deduction for
certain expenses of elementary and secondary school teachers</header>
<subsection id="H4C9356AC35D74813B28274C39846BCB1"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subparagraph (D) of
section 62(a)(2) (relating to certain expenses of elementary and secondary
school teachers) is amended by striking <quote>or 2007</quote> and inserting
<quote>2007, or 2008</quote>.</text>
</subsection><subsection id="HEB1AF3B8EFAC4B91A872FBFAFE47ECBB"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H599B8870F9994250820000CA23E7651B" section-type="subsequent-section"><enum>308.</enum><header>Election to include
combat pay as earned income for purposes of earned income tax credit</header>
<subsection id="HC29658B643FF4C6797F260B101F840F7"><enum>(a)</enum><header>In
general</header><text>Subclause (II) of section 32(c)(2)(B)(vi) (defining
earned income) is amended by striking <quote>January 1, 2008</quote> and
inserting <quote>January 1, 2009</quote>.</text>
</subsection><subsection id="H35F8D74190D947989EBD4244A199A57B"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years ending after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="HB55DFA17CA11429BA6BDFB39E8F758F3" section-type="subsequent-section"><enum>309.</enum><header>Modification of
mortgage revenue bonds for veterans</header>
<subsection id="H8D7050ABE2364FB7B8055E2E6C62A558"><enum>(a)</enum><header>Qualified
mortgage bonds used To finance residences for veterans without regard to
first-time homebuyer requirement</header><text>Subparagraph (D) of section
143(d)(2) (relating to exceptions) is amended by striking <quote>January 1,
2008</quote> and inserting <quote>January 1, 2009</quote>.</text>
</subsection><subsection id="HFEBEEC101A034C249FFE9BEB28C596E5"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to bonds
issued after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="HC9F1F10FC716499C91EF3F2B12766435" section-type="subsequent-section"><enum>310.</enum><header>Distributions from
retirement plans to individuals called to active duty</header>
<subsection id="H08D1B914C12543E89ECC69828F1B081E"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 72(t)(2)(G) is amended by striking
<quote>December 31, 2007</quote> and inserting <quote>January 1,
2009</quote>.</text>
</subsection><subsection id="HA05D754EB4A743DB97FAAAA8CE93D4C5"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
individuals ordered or called to active duty on or after December 31,
2007.</text>
</subsection></section><section id="HADABEC8848D349278C3D28D033F746A8"><enum>311.</enum><header>Stock in RIC
for purposes of determining estates of nonresidents not citizens</header>
<subsection id="HE6432F8E4DE8437B9BF0C9B2FF0872D8"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (3) of
section 2105(d) (relating to stock in a RIC) is amended by striking
<quote>December 31, 2007</quote> and inserting <quote>December 31,
2008</quote>.</text>
</subsection><subsection id="HFBFD0F78199244B700442D1B00DF7E12"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to decedents
dying after December 31, 2007.</text>
</subsection></section><section id="HB7D3977149384FD4BFAB52D0066400F7"><enum>312.</enum><header>Qualified
investment entities</header>
<subsection id="H9B21D24C97FE42F9A18379C23BD13371"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Clause (ii) of
section 897(h)(4)(A) (relating to termination) is amended by striking
<quote>December 31, 2007</quote> and inserting <quote>December 31,
2008</quote>.</text>
</subsection><subsection id="HB01B6A06203A443AB08EA2D1D2119764"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall take effect on
January 1, 2008.</text>
</subsection></section><section id="H5F9110C83EF44EE8BFC1922612F99EEA"><enum>313.</enum><header>State
legislators’ travel expenses away from home</header>
<subsection id="H9BF17D01FFF845ECB97C4F77E77C0091"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (2) of
section 162(h) (relating to legislative days) is amended by adding at the end
the following flush sentence: <quote>In the case of taxable years beginning in
2008, a legislature shall be treated for purposes of this paragraph as in
session on any day in which it is formally called into session without regard
to whether legislation was considered on such day.</quote>.</text>
</subsection><subsection id="H0CFA5B97DFB64323981B971E63860011"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section></subtitle><subtitle id="H716A17C13C5F461AB754F4000059324E"><enum>B</enum><header>Extenders
Primarily Affecting Businesses</header>
<section id="HC4F81CD463094D2A8BB1372F2FBE5D81"><enum>321.</enum><header>Research
credit</header>
<subsection id="H331F31CB8321401A8DBA4B4D38AF3800"><enum>(a)</enum><header>In
general</header><text>Subparagraph (B) of section 41(h)(1) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HB690BF8B92E34888AC6FF57CF8166E48"><enum>(b)</enum><header>Conforming
amendment</header><text>Subparagraph (D) of section 45C(b)(1) (relating to
qualified clinical testing expenses) is amended by striking <quote>December 31,
2007</quote> and inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HC3130E30E3504FD5AFE5DE029171426C"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to amounts
paid or incurred after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H246FD9434E17419FB46DAB0908E092EF" section-type="subsequent-section"><enum>322.</enum><header>Indian employment
credit</header>
<subsection id="HC44936627B6B4F86B3E94800BC165339"><enum>(a)</enum><header>In
general</header><text>Subsection (f) of section 45A (relating to termination)
is amended by striking <quote>December 31, 2007</quote> and inserting
<quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HE564F911FF8F4EF1B7F269AB8088E7ED"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section id="H434E17AE088C4C27BDC818F6D38B74AA"><enum>323.</enum><header>New markets tax
credit</header><text display-inline="no-display-inline">Subparagraph (D) of
section 45D(f)(1) (relating to national limitation on amount of investments
designated) is amended by striking <quote>and 2008</quote> and inserting
<quote>2008, and 2009</quote>.</text>
</section><section id="H0EAD8DDDF94B4A0C93AB44CEF1813F1B"><enum>324.</enum><header>Railroad track
maintenance</header>
<subsection id="H77FCED51F5294310BB40B2FED4555093"><enum>(a)</enum><header>In
general</header><text>Subsection (f) of section 45G (relating to application of
section) is amended by striking <quote>January 1, 2008</quote> and inserting
<quote>January 1, 2009</quote>.</text>
</subsection><subsection id="H430E991ACC4C44D38325CE41F2B2C4EF"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
expenditures paid or incurred during taxable years beginning after December 31,
2007.</text>
</subsection></section><section id="H989E9198CBCC4B37B4742EA996A6169F"><enum>325.</enum><header>Fifteen-year
straight-line cost recovery for qualified leasehold improvements and qualified
restaurant property</header>
<subsection id="HA4E05AD138684BDF8FB4FC38EB863C26"><enum>(a)</enum><header>In
general</header><text>Clauses (iv) and (v) of section 168(e)(3)(E) (relating to
15-year property) are each amended by striking <quote>January 1, 2008</quote>
and inserting <quote>January 1, 2009</quote>.</text>
</subsection><subsection id="H7D65A9298E6C4E7C9F00006F056D1E6F"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to property
placed in service after December 31, 2007.</text>
</subsection></section><section id="H1ED66D98AE9142B08B3468DEF1C5B85F"><enum>326.</enum><header>Seven-year cost
recovery period for motorsports racing track facility</header>
<subsection id="H9AFABD1322A24F0795363EB4D3B7813"><enum>(a)</enum><header>In
general</header><text>Subparagraph (D) of section 168(i)(15) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H392E4E4C217642D0A5E6C19FCEE420B7"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to property
placed in service after December 31, 2007.</text>
</subsection></section><section id="HF8577D30F6134D1985723D6E44F679E7"><enum>327.</enum><header>Accelerated
depreciation for business property on Indian reservation</header>
<subsection id="H2FEF6BE415DB4827AF72D1E96EE2AB46"><enum>(a)</enum><header>In
general</header><text>Paragraph (8) of section 168(j) (relating to termination)
is amended by striking <quote>December 31, 2007</quote> and inserting
<quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HB85A5B72E3E34D11BB0095B4B1BA4DE0"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to property
placed in service after December 31, 2007.</text>
</subsection></section><section id="HF6E66D5B1D18464381EC0018F27CC899"><enum>328.</enum><header>Expensing of
environmental remediation costs</header>
<subsection id="H2675932852E441AF9B2C2BC995DC20EE"><enum>(a)</enum><header>In
general</header><text>Subsection (h) of section 198 (relating to termination)
is amended by striking <quote>December 31, 2007</quote> and inserting
<quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H6ECD5110A0884402B226002CEDBC8200"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
expenditures paid or incurred after December 31, 2007.</text>
</subsection></section><section id="H85133D5A7CED4B7BB5BE745E720014AA"><enum>329.</enum><header>Deduction
allowable with respect to income attributable to domestic production activities
in Puerto Rico</header>
<subsection id="H6373283515184DFEA4D0EAD026BB1349"><enum>(a)</enum><header>In
general</header><text>Subparagraph (C) of section 199(d)(8) (relating to
termination) is amended—</text>
<paragraph id="H1563FF76B93444B790E30750059D095C"><enum>(1)</enum><text>by striking
<quote>first 2 taxable years</quote> and inserting <quote>first 3 taxable
years</quote>, and</text>
</paragraph><paragraph id="H8BFAF86FCB714DB8BCC435AF574B3216"><enum>(2)</enum><text>by striking
<quote>January 1, 2008</quote> and inserting <quote>January 1,
2009</quote>.</text>
</paragraph></subsection><subsection id="HD08FC669ADD04B2E889FF57E9BAB1621"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section id="H373DD320DA4C4A098939C7F73DB4FEEB"><enum>330.</enum><header>Modification of
tax treatment of certain payments to controlling exempt organizations</header>
<subsection id="H3E7AB47990AF4628841418E6E06CAAFB"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 512(b)(13)(E) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H165E8CEE7CE840EE82A34456D6EA7D4D"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to payments
received or accrued after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H798B7619821449CFB14723A5A3EBDC10" section-type="subsequent-section"><enum>331.</enum><header>Extension and
modification of credit to holders of qualified zone academy bonds</header>
<subsection commented="no" id="HD71B2C21BC4247B39C5D3E634E030000"><enum>(a)</enum><header>In
general</header><text>Subsection (e) of section 1397E (relating to limitation
on amount of bonds designated) is amended by striking <quote>1998, 1999, 2000,
2001, 2002, 2003, 2004, 2005, 2006, and 2007</quote> and inserting <quote>each
of calendar years 1998 through 2008</quote>.</text>
</subsection><subsection id="HA343689DF12C406782BE971E7324DCB6"><enum>(b)</enum><header>Modification of
arbitrage rules</header>
<paragraph id="H5499E75E1D2741DA83E9CAF97F29119E"><enum>(1)</enum><header>In
general</header><text>Subsection (g) of section 1397E (relating to special
rules relating to arbitrage) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H641249C49EC44B5AB57FBD1EEDBC17EB" style="OLC">
<subsection id="H01EB74AB680946C8981486BA9C21E7F4"><enum>(g)</enum><header>Special rules
relating to arbitrage</header>
<paragraph id="H70FC4DBD1FDF4E0AA0D0843402E74546"><enum>(1)</enum><header>In
general</header><text>An issue shall be treated as meeting the requirements of
this subsection if the issuer satisfies the requirements of section 148 with
respect to the proceeds of the issue.</text>
</paragraph><paragraph id="H501D655BF5DF4D8C8CBFCAB32FB3CF0"><enum>(2)</enum><header>Special rule for
investments during expenditure period</header><text>An issue shall not be
treated as failing to meet the requirements of paragraph (1) by reason of any
investment of available project proceeds during the 5-year period described in
subsection (f)(1)(A) (including any extension of such period under subsection
(f)(2)).</text>
</paragraph><paragraph id="H6C2234F5DFAD432B838205AC9643BE5C"><enum>(3)</enum><header>Special rule for
reserve funds</header><text>An issue shall not be treated as failing to meet
the requirements of paragraph (1) by reason of any fund which is expected to be
used to repay such issue if—</text>
<subparagraph id="H2360F0B0393743A1A7D148F620234FB6"><enum>(A)</enum><text>such fund is
funded at a rate not more rapid than equal annual installments,</text>
</subparagraph><subparagraph id="HB8D9CDE2FEBC4B1F922C6DF9A7E60062"><enum>(B)</enum><text>such fund is
funded in a manner that such fund will not exceed the amount necessary to repay
the issue if invested at the maximum rate permitted under subparagraph (C),
and</text>
</subparagraph><subparagraph id="H1815EFAE665F4AF6BBBEBA7924752D77"><enum>(C)</enum><text>the yield on such
fund is not greater than the discount rate determined under subsection (d)(3)
with respect to the
issue.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H6EC96915E00545D18018337914634090"><enum>(2)</enum><header>Application of
available project proceeds to other requirements</header><text>Subsections
(d)(1)(A), (d)(2)(A), (f)(1)(A), (f)(1)(B), (f)(1)(C), and (f)(3) of section
1397E are each amended by striking <quote>proceeds</quote> and inserting
<quote>available project proceeds</quote>.</text>
</paragraph><paragraph id="HA5489935400948E89143102180F8A712"><enum>(3)</enum><header>Available
project proceeds defined</header><text>Subsection (i) of section 1397E
(relating to definitions) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H925A6CA1878942D4B7AC4D1BA3D7271" style="OLC">
<paragraph id="H584134F94EB1456DB9DBC2150899B4BA"><enum>(4)</enum><header>Available
project proceeds</header><text>The term <term>available project proceeds</term>
means—</text>
<subparagraph id="H064FD383A402434EB0C4D45804C8D366"><enum>(A)</enum><text display-inline="yes-display-inline">the excess of—</text>
<clause id="H9CB39F2E0C0046EC934E098E4B9F4705"><enum>(i)</enum><text>the proceeds from
the sale of an issue, over</text>
</clause><clause id="HF0C463A364AA487100D686B702EF4DF9"><enum>(ii)</enum><text>the issuance
costs financed by the issue (to the extent that such costs do not exceed 2
percent of such proceeds), and</text>
</clause></subparagraph><subparagraph id="H8599C440457A4C36B2147C075D2CC769"><enum>(B)</enum><text>the proceeds from
any investment of the excess described in subparagraph
(A).</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="H275A555D7425464A90C8B27D8DFEB00"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="H277AC6F87F3146ECAED5C3A73237008E"><enum>(1)</enum><header>Extension</header><text>The
amendment made by subsection (a) shall apply to obligations issued after
December 31, 2007.</text>
</paragraph><paragraph id="H749A721D20354F68A889D4D5A1E3D21"><enum>(2)</enum><header>Modification of
arbitrage rules</header><text>The amendments made by subsection (b) shall apply
to obligations issued after the date of the enactment of this Act.</text>
</paragraph></subsection></section><section id="HE77B1C63F9364A17A75076267C562D5C"><enum>332.</enum><header>Tax incentives
for investment in the District of Columbia</header>
<subsection id="H6E319F80D5BE4BE8A200B9F22840CEBC"><enum>(a)</enum><header>Designation of
Zone</header>
<paragraph id="H92517136139F4757AD901E7EEA7D3CFE"><enum>(1)</enum><header>In
general</header><text>Subsection (f) of section 1400 is amended by striking
<quote>2007</quote> both places it appears and inserting
<quote>2008</quote>.</text>
</paragraph><paragraph id="HD6B148539E4F4BE6A87C4FDAC557ABDE"><enum>(2)</enum><header>Effective
date</header><text>The amendments made by this subsection shall apply to
periods beginning after December 31, 2007.</text>
</paragraph></subsection><subsection id="H317D26D28A244829951013270052302C"><enum>(b)</enum><header>Tax-Exempt
Economic Development Bonds</header>
<paragraph id="H1B7A4D1568C64799B8381048F4E9CFA2"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 1400A is amended by striking
<quote>2007</quote> and inserting <quote>2008</quote>.</text>
</paragraph><paragraph id="H7CEF9492361546710021B3BD5274EC99"><enum>(2)</enum><header>Effective
date</header><text>The amendment made by this subsection shall apply to bonds
issued after December 31, 2007.</text>
</paragraph></subsection><subsection id="H13A2175EE7B94C3C89FEC381BBD1BCB6"><enum>(c)</enum><header>Zero Percent
Capital Gains Rate</header>
<paragraph id="HF7BD235609C4435392DDE78247A5002E"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 1400B is amended by striking
<quote>2008</quote> each place it appears and inserting
<quote>2009</quote>.</text>
</paragraph><paragraph id="H17FC9EDD38FC4062B485DB36F1686000"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph commented="no" id="H62C6AAC028954D28B4EA141E208E0588"><enum>(A)</enum><text>Section
1400B(e)(2) is amended—</text>
<clause commented="no" id="H526798ACCBFC42C5A89CF26EA1A620A3"><enum>(i)</enum><text>by striking
<quote>2012</quote> and inserting <quote>2013</quote>, and</text>
</clause><clause commented="no" id="H36A7C1FC81534922A3B0028B155B26C0"><enum>(ii)</enum><text>by striking
<quote><header-in-text level="paragraph" style="OLC">2012</header-in-text></quote> in the heading thereof and inserting
<quote><header-in-text level="paragraph" style="OLC">2013</header-in-text></quote>.</text>
</clause></subparagraph><subparagraph commented="no" id="HA715AC52F90541E69BAEA9E299ADBD5F"><enum>(B)</enum><text>Section
1400B(g)(2) is amended by striking <quote>2012</quote> and inserting
<quote>2013</quote>.</text>
</subparagraph><subparagraph commented="no" id="HFA760236C526445B97B69D9C4EF91017"><enum>(C)</enum><text>Section 1400F(d)
is amended by striking <quote>2012</quote> and inserting
<quote>2013</quote>.</text>
</subparagraph></paragraph><paragraph id="HBE1F12EFBCBF40DFB9810422DD48ECDF"><enum>(3)</enum><header>Effective
dates</header>
<subparagraph id="HF24B76C6636D4A3EAAA123802148DB72"><enum>(A)</enum><header>Extension</header><text>The
amendments made by paragraph (1) shall apply to acquisitions after December 31,
2007.</text>
</subparagraph><subparagraph id="HF26FF9836AB54DCFBAECF1F05841218F"><enum>(B)</enum><header>Conforming
amendments</header><text>The amendments made by paragraph (2) shall take effect
on the date of the enactment of this Act.</text>
</subparagraph></paragraph></subsection><subsection id="H4653FFB57A224E1A8104DEE8E0AEE53C"><enum>(d)</enum><header>First-Time
Homebuyer Credit</header>
<paragraph id="H2128A1B4320F46B88DC9CA922CE466A3"><enum>(1)</enum><header>In
general</header><text>Subsection (i) of section 1400C is amended by striking
<quote>2008</quote> and inserting <quote>2009</quote>.</text>
</paragraph><paragraph id="HA38B5B0C2D364E6EB535BEC64DC314FC"><enum>(2)</enum><header>Effective
date</header><text>The amendment made by this subsection shall apply to
property purchased after December 31, 2007.</text>
</paragraph></subsection></section><section id="H940C7C502A48435C8E56AF10B953706"><enum>333.</enum><header>Extension of
economic development credit for American Samoa</header>
<subsection id="HDC17141C60C542C8956BE2FBAB33CA55"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (d) of
section 119 of division A of the Tax Relief and Health Care Act of 2006 is
amended—</text>
<paragraph id="HBD0A5455DCA949B9AEE23B372DF21D85"><enum>(1)</enum><text>by striking
<quote>first two taxable years</quote> and inserting <quote>first 3 taxable
years</quote>, and</text>
</paragraph><paragraph id="H6047B7116319446AA5741F51BBDA7733"><enum>(2)</enum><text>by striking
<quote>January 1, 2008</quote> and inserting <quote>January 1,
2009</quote>.</text>
</paragraph></subsection><subsection id="H97D94B2544EA433393526473A68594A2"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section id="H914C3B4A5ECE483D96C8207217388B12"><enum>334.</enum><header>Enhanced
charitable deduction for contributions of food inventory</header>
<subsection id="HA0ECB15AFC2A458BBAC77FAC7CF57EE3"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 170(e)(3)(C) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HBADCD666DA844F138CD932A073008706"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
contributions made after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="HD76CCAF21969400BB1B033D3BCA4FD1D" section-type="subsequent-section"><enum>335.</enum><header>Enhanced charitable
deduction for contributions of book inventory to public schools</header>
<subsection id="HACB8E00858774B4C86BC0055363794F3"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 170(e)(3)(D) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H076AA5AA2F964BA2A6266412509C2102"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
contributions made after December 31, 2007.</text>
</subsection></section><section id="H6450BFE6D62F4C44AAFBE85982D91B09"><enum>336.</enum><header>Enhanced
deduction for qualified computer contributions</header>
<subsection id="H595E6B33CB684B4DBF00F36FEC2F9660"><enum>(a)</enum><header>In
general</header><text>Subparagraph (G) of section 170(e)(6) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HD5F4FAB820034B5EABD57C2CB20033BF"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
contributions made during taxable years beginning after December 31,
2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H01057D69A9DD4F1181824436F000BC8C" section-type="subsequent-section"><enum>337.</enum><header>Basis adjustment to
stock of S corporations making charitable contributions of property</header>
<subsection id="HC5B0B580E9FD4212B524444FEE5EA020"><enum>(a)</enum><header>In
general</header><text>The last sentence of section 1367(a)(2) (relating to
decreases in basis) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection display-inline="no-display-inline" id="H1262FC6D39F046A583C67EF32EEC618"><enum>(b)</enum><header>Technical
amendment related to section 1203 of the Pension Protection Act of
2006</header><text>Subsection (d) of section 1366 is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H87ABF8E411FC48C6B12EFD9678AE61B3" style="OLC">
<paragraph commented="no" id="H04BC97320FB145569F613CE6CEBDF4A6"><enum>(4)</enum><header>Application of
limitation on charitable contributions</header><text>In the case of any
charitable contribution of property to which the second sentence of section
1367(a)(2) applies, paragraph (1) shall not apply to the extent of the excess
(if any) of—</text>
<subparagraph commented="no" id="H19DCE0BF49854DCEB356872C73C89358"><enum>(A)</enum><text>the shareholder’s
pro rata share of such contribution, over</text>
</subparagraph><subparagraph commented="no" id="H3F33D1C4BB3C492FB1B44E5F94492B21"><enum>(B)</enum><text>the shareholder’s
pro rata share of the adjusted basis of such
property.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H7F5FAD4E31E240AD9325A690620A65F"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="HD6D4453E48524AFABEC549AE411C883F"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to contributions made in taxable years beginning
after December 31, 2007.</text>
</paragraph><paragraph id="HF808F27B9B034E0AB6BD202F1EBE3C09"><enum>(2)</enum><header>Technical
amendment</header><text>The amendment made by subsection (b) shall take effect
as if included in the provision of the Pension Protection Act of 2006 to which
it relates.</text>
</paragraph></subsection></section><section id="H5396173E31EC490BB1215B6096547B98" section-type="subsequent-section"><enum>338.</enum><header>Extension of work
opportunity tax credit for Hurricane Katrina employees</header>
<subsection id="H0E38404C73BF4802BDE5A2C700086511"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 201(b) of the Katrina Emergency Tax Relief Act of 2005 is amended by
striking <quote>2-year</quote> and inserting <quote>3-year</quote>.</text>
</subsection><subsection id="H7357A9D0A4D641A3A2902E00BAA3A6D7"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
subsection (a) shall apply to individuals hired after August 27, 2007.</text>
</subsection></section></subtitle><subtitle id="H2A1DC27B19C6466A95005D8D628D746C"><enum>C</enum><header>Other
Extenders</header>
<section id="HA751EDACC679429BA608159043BEE030"><enum>341.</enum><header>Disclosure for
combined employment tax reporting</header>
<subsection id="HD635EFD91C1642EA8CCFAFCC4D651BCC"><enum>(a)</enum><header>In
general</header><text>Subparagraph (B) of section 6103(d)(5) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H1A7DFAE085AB4AD6AB15DF2E8D7616CF"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
disclosures after December 31, 2007.</text>
</subsection></section><section id="H8CDD22988F44462192F3146CD63E5D6E"><enum>342.</enum><header>Disclosure of
return information to apprise appropriate officials of terrorist
activities</header>
<subsection id="H9CEA1FC874884169819C80185C00594F"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 6103(i)(3)(C) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H108452B4A6F347E7A5B74BEAD7CBFAF8"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
disclosures after December 31, 2007.</text>
</subsection></section><section id="HA3180EB975124A679DC43CA6005E0075"><enum>343.</enum><header>Disclosure upon
request of information relating to terrorist activities</header>
<subsection id="H5BA1769B8EE24D18BBADF5517956B357"><enum>(a)</enum><header>In
general</header><text>Subparagraph (E) of section 6103(i)(7) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H147A9F100628492A909989FDF7AC4183"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
disclosures after December 31, 2007.</text>
</subsection></section><section id="H6153F5CDD38A4E3C8C259F14331E73BC"><enum>344.</enum><header>Disclosure of
return information to carry out income contingent repayment of student
loans</header>
<subsection id="H572682E5982B4A8EBE5900C3231F8FE3"><enum>(a)</enum><header>In
general</header><text>Subparagraph (D) of section 6103(l)(13) (relating to
termination) is amended by striking <quote>December 31, 2007</quote> and
inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="H005795CEDDC94B66915435AE8778E179"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to requests
made after December 31, 2007.</text>
</subsection></section><section id="H6EAF523EF0CD42C4A18D915B6B10FEDD"><enum>345.</enum><header>Authority for
undercover operations</header>
<subsection id="H4E622930A6BE4B40985E0007ACD723CB"><enum>(a)</enum><header>In
general</header><text>Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking <quote>January 1, 2008</quote> each place it
appears and inserting <quote>January 1, 2009</quote>.</text>
</subsection><subsection id="HEF8EF4E1782B40ECB875C14C997016D7"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall take effect on
January 1, 2008.</text>
</subsection></section><section id="HE6D2850E43AE4DE8009139C109388AC"><enum>346.</enum><header>Increase in
limit on cover over of rum excise tax to Puerto Rico and the Virgin
Islands</header>
<subsection id="H453B74364AC84B4ABA26BD98FEFAB0E9"><enum>(a)</enum><header>In
general</header><text>Paragraph (1) of section 7652(f) is amended by striking
<quote>January 1, 2008</quote> and inserting <quote>January 1,
2009</quote>.</text>
</subsection><subsection id="HAF878B75F76A4D9CB425CECBEDF0192"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to distilled
spirits brought into the United States after December 31, 2007.</text>
</subsection></section><section id="H32931492835744F9958617239CCDA3DA"><enum>347.</enum><header>Disclosure of
return information for certain veterans programs</header>
<subsection id="H1FA5CA23F7FB4A91A010D6C942B5430"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The last sentence of
paragraph (7) of section 6103(l) is amended by striking <quote>September 30,
2008</quote> and inserting <quote>December 31, 2008</quote>.</text>
</subsection><subsection id="HBE5F58FD96A44166B35B34CCC2003C57"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to requests
made after September 30, 2008.</text>
</subsection></section></subtitle><enum>IV</enum><header>Mortgage
Forgiveness Debt Relief</header>
<section display-inline="no-display-inline" id="H3C9DAD9C247B40D39998CA9F3B4C8D4B"><enum>401.</enum><header>Discharges of
indebtedness on principal residence excluded from gross income</header>
<subsection id="H7A5F5057F45C4D48BCD6BF839EC896D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 108(a) is amended by striking <quote>or</quote> at the end of
subparagraph (C), by striking the period at the end of subparagraph (D) and
inserting <quote>, or</quote>, and by inserting after subparagraph (D) the
following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HFA52C74C68B24C5098AC9A776B4C878" style="OLC">
<subparagraph id="H827F6E90F76647E2AC2916F62F570293"><enum>(E)</enum><text>the indebtedness
discharged is qualified principal residence
indebtedness.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HBFD1F7C511DA4F27A6C98596B2A5BD19"><enum>(b)</enum><header>Special rules
relating to qualified principal residence indebtedness</header><text>Section
108 is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HFE509206932D4B8291438B1EF2670045" style="OLC">
<subsection id="HE66B103AA602497F82625FDCC4D2F361"><enum>(h)</enum><header>Special rules
relating to qualified principal residence indebtedness</header>
<paragraph id="HF006DEED97D54624A6D092A3800BF93"><enum>(1)</enum><header>Basis
reduction</header><text display-inline="yes-display-inline">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.</text>
</paragraph><paragraph id="HE32F94DED8004C2F8C7BE0FDE915E03E"><enum>(2)</enum><header>Qualified
principal residence indebtedness</header><text display-inline="yes-display-inline">For purposes of this section, the term
<term>qualified principal residence indebtedness</term> means acquisition
indebtedness (within the meaning of section 163(h)(3)(B), applied by
substituting <quote>$2,000,000 ($1,000,000</quote> for <quote>$1,000,000
($500,000</quote> in clause (ii) thereof) with respect to the principal
residence of the taxpayer.</text>
</paragraph><paragraph display-inline="no-display-inline" id="HA2A5AC10D60D488C9C12E2C8D6DD85F1"><enum>(3)</enum><header>Exception for
certain discharges not related to taxpayer’s financial condition</header><text display-inline="yes-display-inline">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.</text>
</paragraph><paragraph id="H29258A22CAE948989C822E7B68A5885B"><enum>(4)</enum><header>Ordering
rule</header><text display-inline="yes-display-inline">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.</text>
</paragraph><paragraph id="H28BD78C2992E459D97FB02D2AE9DF233"><enum>(5)</enum><header>Principal
residence</header><text>For purposes of this subsection, the term
<term>principal residence</term> has the same meaning as when used in section
121.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H38CFE96D062E4454A9F7AAB5A5567DBB"><enum>(c)</enum><header>Coordination</header>
<paragraph id="HDCDBF2D369634287999535E3FB5CDA"><enum>(1)</enum><text>Subparagraph (A) of
section 108(a)(2) is amended by striking <quote>and (D)</quote> and inserting
<quote>(D), and (E)</quote>.</text>
</paragraph><paragraph id="HBB88383AA3E0419E84B1C781CDD9EBA1"><enum>(2)</enum><text>Paragraph (2) of
section 108(a) is amended by adding at the end the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HF2B38BE6A38040FCA5EEB6E99635C496" style="OLC">
<subparagraph id="H77E4FF4DF94149A7907C4E498CA824E5"><enum>(C)</enum><header>Principal
residence exclusion takes precedence over insolvency exclusion unless elected
otherwise</header><text display-inline="yes-display-inline">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).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HB838C268CC69431BA9A8DF7F1B61A9B7"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
discharges of indebtedness on or after January 1, 2007.</text>
</subsection></section><section id="HAFE3DF2299F84076BC6FE1D6C8C40650"><enum>402.</enum><header>Long-term
extension of deduction for mortgage insurance premiums</header>
<subsection id="H375295CAF1984555802300955EE2C519"><enum>(a)</enum><header>In
general</header><text>Subparagraph (E) of section 163(h)(3) (relating to
mortgage insurance premiums treated as interest) is amended by striking clauses
(iii) and (iv) and inserting the following new clause:</text>
<quoted-block display-inline="no-display-inline" id="H12C1BF922094422A83C9E6E2EEB39651" style="OLC">
<clause id="H0CEF9D7686E144D5BD5C8EF9126101BA"><enum>(iii)</enum><header>Application</header><text>Clause
(i) shall not apply with respect to any mortgage insurance contract issued
before January 1, 2007, or after December 31,
2014.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HED7AA887E46544B8A3A0DE335600CE3D"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to
contracts issued after December 31, 2006.</text>
</subsection></section><section id="HD93BB40957224159ADF6D4B449EDB83"><enum>403.</enum><header>Alternative
tests for qualifying as cooperative housing corporation</header>
<subsection id="H437B4F732FBF4A099849F94D5F9919BC"><enum>(a)</enum><header>In
general</header><text>Subparagraph (D) of section 216(b)(1) (defining
cooperative housing corporation) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HFC221C8141EF4B0999A04F391E68D0DE" style="OLC">
<subparagraph id="H7293C67816714047A1502FD6F32B54BF"><enum>(D)</enum><text>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:</text>
<clause id="H01EC9DD523BD42E991FEA4B2595A4B5"><enum>(i)</enum><text display-inline="yes-display-inline">80 percent or more of the corporation’s
gross income for such taxable year is derived from tenant-stockholders.</text>
</clause><clause id="H2739B2C52827472CBF2EBA33AC4CFDC2"><enum>(ii)</enum><text>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.</text>
</clause><clause id="HD0A518E24EE2475EBDDCA45355A95997"><enum>(iii)</enum><text>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.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H0008E1E2D28947F9888D3BAC3B7462A7"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years ending after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HB944E8C6D740484B9DF722114EAE4462" section-type="subsequent-section"><enum>404.</enum><header>Gain from sale of
principal residence allocated to nonqualified use not excluded from
income</header>
<subsection id="H8E6EA55FF6364BB3AFA6006B5295DC00"><enum>(a)</enum><header>In
general</header><text>Subsection (b) of section 121 (relating to limitations)
is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H78894054A7174D4596BBE66B57E84330" style="OLC">
<paragraph id="H11367BD575504BEDB1BD2CA2A4B644A1"><enum>(4)</enum><header>Exclusion of
gain allocated to nonqualified use</header>
<subparagraph id="H3E06CAD414BD4D558C87D134D6FCC7B"><enum>(A)</enum><header>In
general</header><text>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.</text>
</subparagraph><subparagraph id="H9E2145EA7E9A4787A0C65B33DAB420F4"><enum>(B)</enum><header>Gain allocated
to periods of nonqualified use</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), gain
shall be allocated to periods of nonqualified use based on the ratio
which—</text>
<clause id="H639EBD211708454E86BCD3D277DBE1C3"><enum>(i)</enum><text display-inline="yes-display-inline">the aggregate periods of nonqualified use
during the period such property was owned by the taxpayer, bears to</text>
</clause><clause id="H5156170E4D384936BEB59F1F28B7BF00"><enum>(ii)</enum><text>the period such
property was owned by the taxpayer.</text>
</clause></subparagraph><subparagraph id="HE141E3E3A5B04A0F8F2628052B4EAFC1"><enum>(C)</enum><header>Period of
nonqualified use</header><text>For purposes of this paragraph—</text>
<clause display-inline="no-display-inline" id="HECDCD285E0FF4EEEA6AE1FD5DF205579"><enum>(i)</enum><header>In
general</header><text>The term <term>period of nonqualified use</term> 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.</text>
</clause><clause id="H5DC5B842CB5C44CDB6BB977F97EF00C2"><enum>(ii)</enum><header>Exceptions</header><text>The
term <term>period of nonqualified use</term> does not include—</text>
<subclause id="H22346DF7477F41A2BFF8CDC61DCE4E1C"><enum>(I)</enum><text>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,</text>
</subclause><subclause id="H3665E75A99A84BE09000135900BFF052"><enum>(II)</enum><text>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</text>
</subclause><subclause id="H856E8E7A6529436B81B6D6EF9DA009C"><enum>(III)</enum><text>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.</text>
</subclause></clause></subparagraph><subparagraph id="H17A0F3CDFFD947A39025ACABCFC6AAF7"><enum>(D)</enum><header>Coordination
with recognition of gain attributable to depreciation</header><text>For
purposes of this paragraph—</text>
<clause id="H04FBFEB7E2D040AA005DDD74A4E47B65"><enum>(i)</enum><text>subparagraph (A)
shall be applied after the application of subsection (d)(6), and</text>
</clause><clause id="HE58DD6E2DFD843A5A7597D81A79F3245"><enum>(ii)</enum><text>subparagraph (B)
shall be applied without regard to any gain to which subsection (d)(6)
applies.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1B9C946FA0F94A0900991D29BFE32F45"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to sales and
exchanges after December 31, 2007.</text>
</subsection></section><enum>V</enum><header>Administrative
Provisions</header>
<section id="HD809444AAB6B4B2B8F842CF277D1E78"><enum>501.</enum><header>Repeal of
authority to enter into private debt collection contracts</header>
<subsection id="H16FEFE3195524629961559B49E5070DF"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subchapter A of
chapter 64 is amended by striking section 6306.</text>
</subsection><subsection id="HA9EEA7709D6E4D039FB12B736842A98C"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph id="H6E8A37F413794BF093A3013E81C05721"><enum>(1)</enum><text>Subchapter B of
chapter 76 is amended by striking section 7433A.</text>
</paragraph><paragraph id="H506AA516D7CF45679298A6C0D4BA4291"><enum>(2)</enum><text>Section 7811 is
amended by striking subsection (g).</text>
</paragraph><paragraph id="H0007BCFE710A48C591EA13ED36A5613E"><enum>(3)</enum><text>Section 1203 of
the Internal Revenue Service Restructuring Act of 1998 is amended by striking
subsection (e).</text>
</paragraph><paragraph id="HDF43131ED0104870BD35E63B682F5280"><enum>(4)</enum><text>The table of
sections for subchapter A of chapter 64 is amended by striking the item
relating to section 6306.</text>
</paragraph><paragraph id="H7CF4B32B30D2478B9119E9A475426B00"><enum>(5)</enum><text display-inline="yes-display-inline">The table of sections for subchapter B of
chapter 76 is amended by striking the item relating to section 7433A.</text>
</paragraph></subsection><subsection id="H89EC77822FB34D5ABBA96C27A6B08BA"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="H67846B77C0CF4AEABB6BD8D6C090468"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the
amendments made by this section shall take effect on the date of the enactment
of this Act.</text>
</paragraph><paragraph id="HF4E4C2009821437CAF5C7079E490FCCB"><enum>(2)</enum><header>Exception for
existing contracts, etc</header><text>The amendments made by this section shall
not apply to any contract which was entered into before July 18, 2007, and is
not renewed or extended on or after such date.</text>
</paragraph><paragraph id="H7833B9F2BF754DDF8F3BDB000F142C8"><enum>(3)</enum><header>Unauthorized
contracts and extensions treated as void</header><text>Any qualified tax
collection contract (as defined in section 6306 of the Internal Revenue Code of
1986, as in effect before its repeal) which is entered into on or after July
18, 2007, and any extension or renewal on or after such date of any qualified
tax collection contract (as so defined) shall be void.</text>
</paragraph></subsection></section><section id="H735DF0D705A7483A9C40CDC17E98297B"><enum>502.</enum><header>Delay of
application of withholding requirement on certain governmental payments for
goods and services</header>
<subsection id="H09D5AB612B6A471EA20000390072DCFA"><enum>(a)</enum><header>In
general</header><text>Subsection (b) of section 511 of the Tax Increase
Prevention and Reconciliation Act of 2005 is amended by striking
<quote>December 31, 2010</quote> and inserting <quote>December 31,
2011</quote>.</text>
</subsection><subsection id="H130C356F82C34563AF13F2A6114C1397"><enum>(b)</enum><header>Report to
Congress</header><text>Not later than 6 months after the date of the enactment
of this Act, the Secretary of the Treasury shall submit to the Committee on
Ways and Means of the House of Representatives and the Committee on Finance of
the Senate a report with respect to the withholding requirements of section
3402(t) of the Internal Revenue Code of 1986, including a detailed analysis
of—</text>
<paragraph id="HB7482E374D18425696553E007896F9E"><enum>(1)</enum><text display-inline="yes-display-inline">the problems, if any, which are anticipated
in administering and complying with such requirements,</text>
</paragraph><paragraph id="H6121879527A54ACEB8D2F89C571FB0AD"><enum>(2)</enum><text>the burdens, if
any, that such requirements will place on governments and businesses (taking
into account such mechanisms as may be necessary to administer such
requirements), and</text>
</paragraph><paragraph id="HC5F68271043C4071BC65826F4D7B8B98"><enum>(3)</enum><text>the application of
such requirements to small expenditures for services and goods by
governments.</text>
</paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="H938CC480945C413B9F007404F5282C81" section-type="subsequent-section"><enum>503.</enum><header>Clarification of
entitlement of Virgin Islands residents to protections of limitations on
assessment and collection of tax</header>
<subsection commented="no" id="H252CD6BD7113430EB13226F6E7F7147B"><enum>(a)</enum><header>In
general</header><text>Subsection (c) of section 932 (relating to treatment of
Virgin Islands residents) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HF6950FAB864B489F82188790318E1F32" style="OLC">
<paragraph commented="no" id="HA31B70FDA52F49D6B2587416A6147F3B"><enum>(5)</enum><header>Treatment of
income tax return filed with Virgin Islands</header><text display-inline="yes-display-inline">An income tax return filed with the Virgin
Islands by an individual claiming to be described in paragraph (1) for the
taxable year shall be treated for purposes of subtitle F in the same manner as
if such return were an income tax return filed with the United States for such
taxable year. The preceding sentence shall not apply where such return is false
or fraudulent with the intent to evade tax or otherwise is a willful attempt in
any manner to defeat or evade
tax.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H4C033EF6B2BE4B56ADF8C87450AEAFBB"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after 1986.</text>
</subsection></section><section display-inline="no-display-inline" id="H7F7B35B375614D3B838B1FD2E8D75833" section-type="subsequent-section"><enum>504.</enum><header>Revision of tax
rules on expatriation</header>
<subsection id="H897495E755CF43029BC36CF900BE5C3E"><enum>(a)</enum><header>In
general</header><text>Subpart A of part II of subchapter N of chapter 1 is
amended by inserting after section 877 the following new section:</text>
<quoted-block id="HAFD25589697F4A21A2C1D85E7F08B97" style="OLC">
<section id="H7705BEC1CAE14B298C6E57D69C895306"><enum>877A.</enum><header>Tax
responsibilities of expatriation</header>
<subsection id="H4F859F937F4D4470AFF43FE9EC3444B"><enum>(a)</enum><header>General
rules</header><text>For purposes of this subtitle—</text>
<paragraph id="H24950B26C3E64135ACF62E6ED9DB60DD"><enum>(1)</enum><header>Mark to
market</header><text>All property of a covered expatriate shall be treated as
sold on the day before the expatriation date for its fair market value.</text>
</paragraph><paragraph id="HE7A3B752FA9E45428802A5D9E3CFA993"><enum>(2)</enum><header>Recognition of
gain or loss</header><text>In the case of any sale under paragraph (1)—</text>
<subparagraph id="HCF0F8CB094C547E6A7D1E30000C136F0"><enum>(A)</enum><text>notwithstanding
any other provision of this title, any gain arising from such sale shall be
taken into account for the taxable year of the sale, and</text>
</subparagraph><subparagraph id="HCEDCA0E9A4AA46F7BE05D4BAA489E1C8"><enum>(B)</enum><text>any loss arising
from such sale shall be taken into account for the taxable year of the sale to
the extent otherwise provided by this title, except that section 1091 shall not
apply to any such loss.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Proper
adjustment shall be made in the amount of any gain or loss subsequently
realized for gain or loss taken into account under the preceding sentence,
determined without regard to paragraph (3).</continuation-text></paragraph><paragraph id="H98ECE066C8B54873BC55790053AB5581"><enum>(3)</enum><header>Exclusion for
certain gain</header>
<subparagraph id="H70F33FFEAA4D4BA1B539C5329CB11EFA"><enum>(A)</enum><header>In
general</header><text>The amount which would (but for this paragraph) be
includible in the gross income of any individual by reason of paragraph (1)
shall be reduced (but not below zero) by $600,000.</text>
</subparagraph><subparagraph id="HB3E7E4B38C034E5DA4334B44468F2F97"><enum>(B)</enum><header>Adjustment for
inflation</header>
<clause id="HADD543AFED794B0584E659477743E220"><enum>(i)</enum><header>In
general</header><text>In the case of any taxable year beginning in a calendar
year after 2008, the dollar amount in subparagraph (A) shall be increased by an
amount equal to—</text>
<subclause id="H77EC94A252CF451B8F04AE00738836DC"><enum>(I)</enum><text>such dollar
amount, multiplied by</text>
</subclause><subclause id="H5D96CC22883846EF873BBCF2CAD26C0"><enum>(II)</enum><text>the cost-of-living
adjustment determined under section 1(f)(3) for the calendar year in which the
taxable year begins, by substituting <quote>calendar year 2007</quote> for
<quote>calendar year 1992</quote> in subparagraph (B) thereof.</text>
</subclause></clause><clause id="H86AF15F099C94D29837FB7F48F6CE4D9"><enum>(ii)</enum><header>Rounding</header><text>If
any amount as adjusted under clause (i) is not a multiple of $1,000, such
amount shall be rounded to the nearest multiple of $1,000.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HEB7C476327E443C99D16382DDDA79C01"><enum>(b)</enum><header>Election To
defer tax</header>
<paragraph id="H1055BAACAD2946B9964ED74FB66BEF3"><enum>(1)</enum><header>In
general</header><text>If the taxpayer elects the application of this subsection
with respect to any property treated as sold by reason of subsection (a), the
time for payment of the additional tax attributable to such property shall be
extended until the due date of the return for the taxable year in which such
property is disposed of (or, in the case of property disposed of in a
transaction in which gain is not recognized in whole or in part, until such
other date as the Secretary may prescribe).</text>
</paragraph><paragraph id="HAADBAEFBA82943699E46D24BC1C0304"><enum>(2)</enum><header>Determination of
tax with respect to property</header><text>For purposes of paragraph (1), the
additional tax attributable to any property is an amount which bears the same
ratio to the additional tax imposed by this chapter for the taxable year solely
by reason of subsection (a) as the gain taken into account under subsection (a)
with respect to such property bears to the total gain taken into account under
subsection (a) with respect to all property to which subsection (a)
applies.</text>
</paragraph><paragraph id="H3306232E6BC8463C934FB7DCAF95A216"><enum>(3)</enum><header>Termination of
extension</header><text>The due date for payment of tax may not be extended
under this subsection later than the due date for the return of tax imposed by
this chapter for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security provided with respect to
the property fails to meet the requirements of paragraph (4), unless the
taxpayer corrects such failure within the time specified by the
Secretary).</text>
</paragraph><paragraph id="H4A41ED96AC9E45B580B281FBDD10E19F"><enum>(4)</enum><header>Security</header>
<subparagraph id="H0DD0B305A046452ABBCA91CCB16D796D"><enum>(A)</enum><header>In
general</header><text>No election may be made under paragraph (1) with respect
to any property unless adequate security is provided with respect to such
property.</text>
</subparagraph><subparagraph id="HA304571967364B08B03D00DD002B69E8"><enum>(B)</enum><header>Adequate
security</header><text>For purposes of subparagraph (A), security with respect
to any property shall be treated as adequate security if—</text>
<clause id="H973300CCD99F467CA4F507FEE018A7C3"><enum>(i)</enum><text>it
is a bond which is furnished to, and accepted by, the Secretary, which is
conditioned on the payment of tax (and interest thereon), and which meets the
requirements of section 6325, or</text>
</clause><clause id="HEBF33B35C269450ABF57A7E8F782A397"><enum>(ii)</enum><text>it is another
form of security for such payment (including letters of credit) that meets such
requirements as the Secretary may prescribe.</text>
</clause></subparagraph></paragraph><paragraph id="H28E3DC4CD99A4955B8F31CDD3607038B"><enum>(5)</enum><header>Waiver of
certain rights</header><text>No election may be made under paragraph (1) unless
the taxpayer makes an irrevocable waiver of any right under any treaty of the
United States which would preclude assessment or collection of any tax imposed
by reason of this section.</text>
</paragraph><paragraph id="HB4C5D58557BC4B19835DD540BFD58681"><enum>(6)</enum><header>Elections</header><text>An
election under paragraph (1) shall only apply to property described in the
election and, once made, is irrevocable.</text>
</paragraph><paragraph id="H6F6906EDE7A1470AA04BD27BCC1C3F26"><enum>(7)</enum><header>Interest</header><text>For
purposes of section 6601, the last date for the payment of tax shall be
determined without regard to the election under this subsection.</text>
</paragraph></subsection><subsection id="HB44C61A99A3F4776BE1C8C7CA2A5BE3"><enum>(c)</enum><header>Exception for
certain property</header><text>Subsection (a) shall not apply to—</text>
<paragraph id="HD885273B1F0D4BE1AF034935A5F39818"><enum>(1)</enum><text>any deferred
compensation item (as defined in subsection (d)(4)),</text>
</paragraph><paragraph id="H1711E3A200A04AECA073721B2E4EA956"><enum>(2)</enum><text>any specified tax
deferred account (as defined in subsection (e)(2)), and</text>
</paragraph><paragraph id="HBD78E5ED9AC6486D8938252FD400E91C"><enum>(3)</enum><text>any interest in a
nongrantor trust (as defined in subsection (f)(3)).</text>
</paragraph></subsection><subsection id="HDD6A3C4191F3424D9C308B1C7300A329"><enum>(d)</enum><header>Treatment of
deferred compensation items</header>
<paragraph id="H1BEFEB6785284BF1BEEDC7FB6FCB484"><enum>(1)</enum><header>Withholding on
eligible deferred compensation items</header>
<subparagraph id="H1610056EAF1D43D8A55B65C75C4C4372"><enum>(A)</enum><header>In
general</header><text>In the case of any eligible deferred compensation item,
the payor shall deduct and withhold from any taxable payment to a covered
expatriate with respect to such item a tax equal to 30 percent thereof.</text>
</subparagraph><subparagraph id="HAA7F3A7B1E44403E9C8B862CF7ED34D"><enum>(B)</enum><header>Taxable
payment</header><text display-inline="yes-display-inline">For purposes of
subparagraph (A), the term <term>taxable payment</term> means with respect to a
covered expatriate any payment to the extent it would be includible in the
gross income of the covered expatriate if such expatriate continued to be
subject to tax as a citizen or resident of the United States. A deferred
compensation item shall be taken into account as a payment under the preceding
sentence when such item would be so includible.</text>
</subparagraph></paragraph><paragraph id="HD12C4FA38AB144C9B14F3CCAB6EDA734"><enum>(2)</enum><header>Other deferred
compensation items</header><text>In the case of any deferred compensation item
which is not an eligible deferred compensation item—</text>
<subparagraph display-inline="no-display-inline" id="H05246D10C2A44FE6AA74C91CAF454BC9"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="H3CB054EC0C004ED08655DDC8061FFDD"><enum>(i)</enum><text display-inline="yes-display-inline">with respect to any deferred compensation
item to which clause (ii) does not apply, an amount equal to the present value
of the covered expatriate’s accrued benefit shall be treated as having been
received by such individual on the day before the expatriation date as a
distribution under the plan, and</text>
</clause><clause commented="no" id="H7192C3CC45854CA99CCB38B8818EA887" indent="up1"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to any deferred compensation
item referred to in paragraph (4)(D), the rights of the covered expatriate to
such item shall be treated as becoming transferable and not subject to a
substantial risk of forfeiture on the day before the expatriation date,</text>
</clause></subparagraph><subparagraph display-inline="no-display-inline" id="H175DA5D6857344A2B265DB29200487F"><enum>(B)</enum><text>no early
distribution tax shall apply by reason of such treatment, and</text>
</subparagraph><subparagraph id="HE6D166BCE4D54024BC17A4D292BBB534"><enum>(C)</enum><text display-inline="yes-display-inline">appropriate adjustments shall be made to
subsequent distributions from the plan to reflect such treatment.</text>
</subparagraph></paragraph><paragraph id="HF69573DF86014E70AEBE3B7728004B1F"><enum>(3)</enum><header>Eligible
deferred compensation items</header><text>For purposes of this subsection, the
term <term>eligible deferred compensation item</term> means any deferred
compensation item with respect to which—</text>
<subparagraph id="HE0163672321F4E9BAE578B328251A14"><enum>(A)</enum><text display-inline="yes-display-inline">the payor of such item is—</text>
<clause id="H41E64772079F4FB58EB9C510E934F5DE"><enum>(i)</enum><text>a
United States person, or</text>
</clause><clause id="H45943543D5284E2CB5CCF7B4B173A8FF"><enum>(ii)</enum><text>a
person who is not a United States person but who elects to be treated as a
United States person for purposes of paragraph (1) and meets such requirements
as the Secretary may provide to ensure that the payor will meet the
requirements of paragraph (1), and</text>
</clause></subparagraph><subparagraph id="H0E6F2CAD21D540BBBEE55C8F967F87F3"><enum>(B)</enum><text>the covered
expatriate—</text>
<clause id="H810EC93B7EBE4E669FBEFE2FE0982703"><enum>(i)</enum><text>notifies the payor
of his status as a covered expatriate, and</text>
</clause><clause id="HE366051C6DE347168765D6DAA8DAF4FC"><enum>(ii)</enum><text>makes an
irrevocable waiver of any right to claim any reduction under any treaty with
the United States in withholding on such item.</text>
</clause></subparagraph></paragraph><paragraph id="H4A4ECA4471614526A3EFC2B93F58293"><enum>(4)</enum><header>Deferred
compensation item</header><text>For purposes of this subsection, the term
<term>deferred compensation item</term> means—</text>
<subparagraph id="H5FD02E7D7F1D4639BE2600BAADC85915"><enum>(A)</enum><text>any interest in a
plan or arrangement described in section 219(g)(5),</text>
</subparagraph><subparagraph id="HD11136F27A8949DBB5BF94E38EE299EF"><enum>(B)</enum><text>any interest in a
foreign pension plan or similar retirement arrangement or program,</text>
</subparagraph><subparagraph id="HF109AA4F7941461CABB9835618E2B4D"><enum>(C)</enum><text>any item of
deferred compensation, and</text>
</subparagraph><subparagraph id="H6203F6BA0F3242DC993D73B6D967532"><enum>(D)</enum><text>any property, or
right to property, which the individual is entitled to receive in connection
with the performance of services to the extent not previously taken into
account under section 83 or in accordance with section 83.</text>
</subparagraph></paragraph><paragraph id="H18A4E3C66330450BBD49B7E874960734"><enum>(5)</enum><header>Exception</header><text>Paragraphs
(1) and (2) shall not apply to any deferred compensation item which is
attributable to services performed outside the United States while the covered
expatriate was not a citizen or resident of the United States.</text>
</paragraph><paragraph id="H743DACD137E3448991546E65F0E0FCFF"><enum>(6)</enum><header>Special
rules</header>
<subparagraph id="H4D5FF18AF09B478BAABE75257EC0ACC4"><enum>(A)</enum><header>Application of
withholding rules</header><text>Rules similar to the rules of subchapter B of
chapter 3 shall apply for purposes of this subsection.</text>
</subparagraph><subparagraph id="HA8B96623AEA94D9D98474C39CD2FC27E"><enum>(B)</enum><header>Application of
tax</header><text>Any item subject to the withholding tax imposed under
paragraph (1) shall be subject to tax under section 871.</text>
</subparagraph><subparagraph id="H7104FBC1343147B4B15E6847A1D781A6"><enum>(C)</enum><header>Coordination
with other withholding requirements</header><text>Any item subject to
withholding under paragraph (1) shall not be subject to withholding under
section 1441 or chapter 24.</text>
</subparagraph></paragraph></subsection><subsection id="HEE051745DE0E41D49E0346DFB182B997"><enum>(e)</enum><header>Treatment of
specified tax deferred accounts</header>
<paragraph id="H0ADB121A13944C44A300F4F04F373891"><enum>(1)</enum><header>Account treated
as distributed</header><text display-inline="yes-display-inline">In the case of
any interest in a specified tax deferred account held by a covered expatriate
on the day before the expatriation date—</text>
<subparagraph id="HB9D7E0FD4FD341C88FDB519BB3E74789"><enum>(A)</enum><text>the covered
expatriate shall be treated as receiving a distribution of his entire interest
in such account on the day before the expatriation date,</text>
</subparagraph><subparagraph id="H98A67331A2DC4A3D8220D4F464F4C02"><enum>(B)</enum><text>no early
distribution tax shall apply by reason of such treatment, and</text>
</subparagraph><subparagraph id="HB6CC7499AB3A4DF488CEAEC64235A831"><enum>(C)</enum><text display-inline="yes-display-inline">appropriate adjustments shall be made to
subsequent distributions from the account to reflect such treatment.</text>
</subparagraph></paragraph><paragraph id="HF6700A2A852449D1A4C8717414BACCAE"><enum>(2)</enum><header>Specified tax
deferred account</header><text>For purposes of paragraph (1), the term
<term>specified tax deferred account</term> means an individual retirement plan
(as defined in section 7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition program (as defined
in section 529), a Coverdell education savings account (as defined in section
530), a health savings account (as defined in section 223), and an Archer MSA
(as defined in section 220).</text>
</paragraph></subsection><subsection id="H2BCBEB60A060486D97F634903042C02"><enum>(f)</enum><header>Special rules for
nongrantor trusts</header>
<paragraph id="HED102B84030F42319F754F96ADA854DA"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of a
distribution (directly or indirectly) of any property from a nongrantor trust
to a covered expatriate—</text>
<subparagraph id="H908E2E61E4BA4D79A52CC5A60750C623"><enum>(A)</enum><text>the trustee shall
deduct and withhold from such distribution an amount equal to 30 percent of the
taxable portion of the distribution, and</text>
</subparagraph><subparagraph id="HE86B4910F992492E00FEED7B7E64668"><enum>(B)</enum><text>if the fair market
value of such property exceeds its adjusted basis in the hands of the trust,
gain shall be recognized to the trust as if such property were sold to the
expatriate at its fair market value.</text>
</subparagraph></paragraph><paragraph id="HBCCF5F103BC84614BFC300FC36F44145"><enum>(2)</enum><header>Taxable
portion</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>taxable portion</term> means, with respect to any
distribution, that portion of the distribution which would be includible in the
gross income of the covered expatriate if such expatriate continued to be
subject to tax as a citizen or resident of the United States.</text>
</paragraph><paragraph id="H3DB98FACBEEA4C44A6FDA4F3875B82D1"><enum>(3)</enum><header>Nongrantor
trust</header><text>For purposes of this subsection, the term <term>nongrantor
trust</term> means the portion of any trust that the individual is not
considered the owner of under subpart E of part I of subchapter J. The
determination under the preceding sentence shall be made immediately before the
expatriation date.</text>
</paragraph><paragraph id="HA24814D65B10432C82C1859DDFC6DBD4"><enum>(4)</enum><header>Special rules
relating to withholding</header><text display-inline="yes-display-inline">For
purposes of this subsection—</text>
<subparagraph id="HFA20D03E884544C89D00FCD9E8C0027"><enum>(A)</enum><text>rules similar to
the rules of subsection (d)(6) shall apply, and</text>
</subparagraph><subparagraph id="H67AFDEA091FC4C569ECCD20B8BD2864"><enum>(B)</enum><text>the covered
expatriate shall be treated as having waived any right to claim any reduction
under any treaty with the United States in withholding on any distribution to
which paragraph (1)(A) applies.</text>
</subparagraph></paragraph><paragraph id="HD318E1B5439241E3AFC34672976CA2E3"><enum>(5)</enum><header>Application</header><text display-inline="yes-display-inline">This subsection shall apply to a nongrantor
trust only if the covered expatriate was a beneficiary of the trust on the day
before the expatriation date.</text>
</paragraph></subsection><subsection id="HD9C4DEFAD4E04FF8B3A61BAA7BAFE62"><enum>(g)</enum><header>Definitions and
special rules relating to expatriation</header><text>For purposes of this
section—</text>
<paragraph id="H3587ACF2376E4CA698ADFF10D7EAB4C7"><enum>(1)</enum><header>Covered
expatriate</header>
<subparagraph id="HAA4EC5D15F0540B8A9ED29BAF93700D3"><enum>(A)</enum><header>In
general</header><text>The term <term>covered expatriate</term> means an
expatriate who meets the requirements of subparagraph (A), (B), or (C) of
section 877(a)(2).</text>
</subparagraph><subparagraph id="H0CC2E2DDCD5046BFA1D5C16B935E525"><enum>(B)</enum><header>Exceptions</header><text display-inline="yes-display-inline">An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of section 877(a)(2)
if—</text>
<clause id="HD4911E68F3414B17A0FCE7E501056DF3"><enum>(i)</enum><text>the
individual—</text>
<subclause id="HDA349BC551024F419C007FE964283031"><enum>(I)</enum><text>became at birth a
citizen of the United States and a citizen of another country and, as of the
expatriation date, continues to be a citizen of, and is taxed as a resident of,
such other country, and</text>
</subclause><subclause id="H5FBD5EA896CD4B15A6D6B0357FAA371F"><enum>(II)</enum><text>has been a
resident of the United States (as defined in section 7701(b)(1)(A)(ii)) for not
more than 10 taxable years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or</text>
</subclause></clause><clause id="HFE2F5DABD79C484593ED8F6FFA185305"><enum>(ii)</enum><subclause commented="no" display-inline="yes-display-inline" id="H656A38D16AA443D8B90065F360BB1D68"><enum>(I)</enum><text>the individual’s
relinquishment of United States citizenship occurs before such individual
attains age 18<fraction>½</fraction>, and</text>
</subclause><subclause id="HC5730491EB78460683F06E6FF3F4C03" indent="up1"><enum>(II)</enum><text>the individual has been a resident of
the United States (as so defined) for not more than 10 taxable years before the
date of relinquishment.</text>
</subclause></clause></subparagraph><subparagraph id="HF74AC325F7034AFE9616EE235CD581E5"><enum>(C)</enum><header>Covered
expatriates also subject to tax as citizens or residents</header><text display-inline="yes-display-inline">In the case of any covered expatriate who
is subject to tax as a citizen or resident of the United States for any period
beginning after the expatriation date, such individual shall not be treated as
a covered expatriate during such period for purposes of subsections (d)(1) and
(f) and section 2801.</text>
</subparagraph></paragraph><paragraph id="HB7F12BF11A8F42F58B5E623C57C2421D"><enum>(2)</enum><header>Expatriate</header><text>The
term <term>expatriate</term> means—</text>
<subparagraph id="HAF9A8D5C4D22478F9441460011841B47"><enum>(A)</enum><text>any United States
citizen who relinquishes his citizenship, and</text>
</subparagraph><subparagraph id="H31B436BB3F4B4D4BB65E9F2946AB6900"><enum>(B)</enum><text>any long-term
resident of the United States who ceases to be a lawful permanent resident of
the United States (within the meaning of section 7701(b)(6)).</text>
</subparagraph></paragraph><paragraph id="H12D2BF050E9F49C698090048CBCAFFF"><enum>(3)</enum><header>Expatriation
date</header><text>The term <term>expatriation date</term> means—</text>
<subparagraph id="H45903399040A43628D93F2F60300941C"><enum>(A)</enum><text>the date an
individual relinquishes United States citizenship, or</text>
</subparagraph><subparagraph id="H89BAEC653F974634A74610D3E412ECEE"><enum>(B)</enum><text>in the case of a
long-term resident of the United States, the date on which the individual
ceases to be a lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).</text>
</subparagraph></paragraph><paragraph id="H04B3B165FADF4C54AABCDBBDF3B3C750"><enum>(4)</enum><header>Relinquishment
of citizenship</header><text>A citizen shall be treated as relinquishing his
United States citizenship on the earliest of—</text>
<subparagraph id="H2EACDF6A0E2A49729117EF41E1314390"><enum>(A)</enum><text>the date the
individual renounces his United States nationality before a diplomatic or
consular officer of the United States pursuant to paragraph (5) of section
349(a) of the <act-name parsable-cite="INA">Immigration and Nationality
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/8/1481">8 U.S.C. 1481(a)(5)</external-xref>),</text>
</subparagraph><subparagraph id="H79C439CC397C432CA1845D671D78CAD8"><enum>(B)</enum><text>the date the
individual furnishes to the United States Department of State a signed
statement of voluntary relinquishment of United States nationality confirming
the performance of an act of expatriation specified in paragraph (1), (2), (3),
or (4) of section 349(a) of the <act-name parsable-cite="INA">Immigration and
Nationality Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/8/1481">8 U.S.C. 1481(a)(1)</external-xref>–(4)),</text>
</subparagraph><subparagraph id="H627A977C7B1349959536E67C94CFD99F"><enum>(C)</enum><text>the date the
United States Department of State issues to the individual a certificate of
loss of nationality, or</text>
</subparagraph><subparagraph id="H5B1070F3EE984FC0AEAA39FBB07745F"><enum>(D)</enum><text>the date a court of
the United States cancels a naturalized citizen’s certificate of
naturalization.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Subparagraph (A) or (B) shall not
apply to any individual unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a certificate of
loss of nationality by the United States Department of State.</continuation-text></paragraph><paragraph id="HE40067FA03964374BF412F77DD9764AF"><enum>(5)</enum><header>Long-term
resident</header><text>The term <term>long-term resident</term> has the meaning
given to such term by section 877(e)(2).</text>
</paragraph><paragraph id="H32C9CFD3F5034DF895FA166635C3F00"><enum>(6)</enum><header>Early
distribution tax</header><text>The term <term>early distribution tax</term>
means any increase in tax imposed under section 72(t), 220(e)(4), 223(f)(4),
409A(a)(1)(B), 529(c)(6), or 530(d)(4).</text>
</paragraph></subsection><subsection id="HDE8688D004F5459BB36634D4F5CEAC08"><enum>(h)</enum><header>Other
rules</header>
<paragraph id="HA75C84A7FE7A4FFC90732D976ED17BDA"><enum>(1)</enum><header>Termination of
deferrals, etc</header><text>In the case of any covered expatriate,
notwithstanding any other provision of this title—</text>
<subparagraph id="H0C40CA8D64B8434AB1FF48F8B4A6EF66"><enum>(A)</enum><text display-inline="yes-display-inline">any time period for acquiring property
which would result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall terminate on the day
before the expatriation date, and</text>
</subparagraph><subparagraph id="H83C37517BB894290B6807CA7C01EB986"><enum>(B)</enum><text>any extension of
time for payment of tax shall cease to apply on the day before the expatriation
date and the unpaid portion of such tax shall be due and payable at the time
and in the manner prescribed by the Secretary.</text>
</subparagraph></paragraph><paragraph id="H685C53F441CE49E889896CDA894B08D"><enum>(2)</enum><header>Step-up in
basis</header><text>Solely for purposes of determining any tax imposed by
reason of subsection (a), property which was held by an individual on the date
the individual first became a resident of the United States (within the meaning
of section 7701(b)) shall be treated as having a basis on such date of not less
than the fair market value of such property on such date. The preceding
sentence shall not apply if the individual elects not to have such sentence
apply. Such an election, once made, shall be irrevocable.</text>
</paragraph><paragraph id="HE6B1E6E163514513B7EB505414A2CC8"><enum>(3)</enum><header>Coordination with
section 684</header><text>If the expatriation of any individual would result in
the recognition of gain under section 684, this section shall be applied after
the application of section 684.</text>
</paragraph></subsection><subsection id="HC2309B18E9FC484E9E41EDD73F1E0021"><enum>(i)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFFDB48FCC71D4B539B9500B5E86E9CFD"><enum>(b)</enum><header>Tax on gifts and
bequests received by United States citizens and residents from
expatriates</header>
<paragraph id="HFA1B1712072F4AFA9E87F51D5398B15"><enum>(1)</enum><header>In
general</header><text>Subtitle B (relating to estate and gift taxes) is amended
by inserting after chapter 14 the following new chapter:</text>
<quoted-block id="HB56FDBCA7FCD44988C70B410EBD48762" style="OLC">
<chapter id="H2DBA6F130D064EA992D01BC5C57CA8CA"><enum>15</enum><header>GIFTS AND
BEQUESTS FROM EXPATRIATES</header>
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 2801. Imposition of
tax.</toc-entry>
</toc>
<section id="HD3DD61AA66D74A2CBD34145EA83F0010"><enum>2801.</enum><header>Imposition of
tax</header>
<subsection id="H7C6958D92F2A4CC588F2D24BC1004EC3"><enum>(a)</enum><header>In
General</header><text>If, during any calendar year, any United States citizen
or resident receives any covered gift or bequest, there is hereby imposed a tax
equal to the product of—</text>
<paragraph id="H7AA5603FDCB040E29C41C105894C03C3"><enum>(1)</enum><text>the highest rate
of tax specified in the table contained in section 2001(c) as in effect on the
date of such receipt (or, if greater, the highest rate of tax specified in the
table applicable under section 2502(a) as in effect on the date), and</text>
</paragraph><paragraph id="HFD9A2E23E36346CDAE0900B191197DA"><enum>(2)</enum><text>the value of such
covered gift or bequest.</text>
</paragraph></subsection><subsection id="HD8B9DA3F5F6341B08554EEC66B586B43"><enum>(b)</enum><header>Tax To be paid
by recipient</header><text>The tax imposed by subsection (a) on any covered
gift or bequest shall be paid by the person receiving such gift or
bequest.</text>
</subsection><subsection id="HA4BE7A86AAA840A0A7A851588303E81B"><enum>(c)</enum><header>Exception for
certain gifts</header><text>Subsection (a) shall apply only to the extent that
the value of covered gifts and bequests received by any person during the
calendar year exceeds $10,000.</text>
</subsection><subsection id="HD1787D9E76E0482E99B67F2E9CD2DF90"><enum>(d)</enum><header>Tax reduced by
foreign gift or estate tax</header><text>The tax imposed by subsection (a) on
any covered gift or bequest shall be reduced by the amount of any gift or
estate tax paid to a foreign country with respect to such covered gift or
bequest.</text>
</subsection><subsection id="H70E132ACC9784DB393C2D461BE2196DF"><enum>(e)</enum><header>Covered gift or
bequest</header>
<paragraph id="H2389AAF50C7F4F0F9707E6391704ED70"><enum>(1)</enum><header>In
general</header><text>For purposes of this chapter, the term <term>covered gift
or bequest</term> means—</text>
<subparagraph id="HA65A5ABF7DE54EE48B5B16D9A7480060"><enum>(A)</enum><text>any property
acquired by gift directly or indirectly from an individual who, at the time of
such acquisition, is a covered expatriate, and</text>
</subparagraph><subparagraph id="H3ED144AB95674F168DD3E5659DECED96"><enum>(B)</enum><text>any property
acquired directly or indirectly by reason of the death of an individual who,
immediately before such death, was a covered expatriate.</text>
</subparagraph></paragraph><paragraph id="HE53B68031F37425AABCF63D5DB3DBBB"><enum>(2)</enum><header>Exceptions for
transfers otherwise subject to estate or gift tax</header><text>Such term shall
not include—</text>
<subparagraph id="HD2AAFE9FE456478DA07B2291DD3B6C30"><enum>(A)</enum><text>any property shown
on a timely filed return of tax imposed by chapter 12 which is a taxable gift
by the covered expatriate, and</text>
</subparagraph><subparagraph id="HA6B4EB4F1BDD4E1DB771A17B005FA28D"><enum>(B)</enum><text>any property
included in the gross estate of the covered expatriate for purposes of chapter
11 and shown on a timely filed return of tax imposed by chapter 11 of the
estate of the covered expatriate.</text>
</subparagraph></paragraph><paragraph id="HE081BA8863BC41D3AE4D6CC5CFEA9409"><enum>(3)</enum><header>Transfers in
trust</header>
<subparagraph id="H491104EBA3A147C99CDF603C26C0070"><enum>(A)</enum><header>Domestic
trusts</header><text>In the case of a covered gift or bequest made to a
domestic trust—</text>
<clause id="H9D6A400E152740B499360000E99981D5"><enum>(i)</enum><text>subsection (a)
shall apply in the same manner as if such trust were a United States citizen,
and</text>
</clause><clause id="H104A3FAAA1DC468BBF6D1B74C3B2D2E3"><enum>(ii)</enum><text>the tax imposed
by subsection (a) on such gift or bequest shall be paid by such trust.</text>
</clause></subparagraph><subparagraph id="HA925199C59444A85998CDF7375F8E5CA"><enum>(B)</enum><header>Foreign
trusts</header>
<clause id="H9C27BECA0FAF4C4783F6CC19F100CB92"><enum>(i)</enum><header>In
general</header><text>In the case of a covered gift or bequest made to a
foreign trust, subsection (a) shall apply to any distribution attributable to
such gift or bequest from such trust (whether from income or corpus) to a
United States citizen or resident in the same manner as if such distribution
were a covered gift or bequest.</text>
</clause><clause id="H06A7D965BCBB4398B5863949D28E18F1"><enum>(ii)</enum><header>Deduction for
tax paid by recipient</header><text>There shall be allowed as a deduction under
section 164 the amount of tax imposed by this section which is paid or accrued
by a United States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on the portion of
such distribution which is included in the gross income of such citizen or
resident.</text>
</clause><clause id="H38BB48B8677341C59B7C75D49703AEA7"><enum>(iii)</enum><header>Election to be
treated as domestic trust</header><text>Solely for purposes of this section, a
foreign trust may elect to be treated as a domestic trust. Such an election may
be revoked with the consent of the Secretary.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HB91C7338E0334A1299278E04DB283DD"><enum>(f)</enum><header>Covered
expatriate</header><text>For purposes of this section, the term <term>covered
expatriate</term> has the meaning given to such term by section
877A(g)(1).</text>
</subsection></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H853D6F4BBCBB4C8B8FE0BF10406CD3B5"><enum>(2)</enum><header>Clerical
amendment</header><text>The table of chapters for subtitle B is amended by
inserting after the item relating to chapter 14 the following new item:</text>
<quoted-block id="H5B41E7753E1D4245A04EB281BC5474E8" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="chapter">Chapter 15. Gifts and bequests from
expatriates.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HF5B89987E0E142C3008928A610077B2"><enum>(c)</enum><header>Definition of
termination of United States citizenship</header>
<paragraph id="HD32DA8CF721049378924DCB06765DE56"><enum>(1)</enum><header>In
general</header><text>Section 7701(a) is amended by adding at the end the
following new paragraph:</text>
<quoted-block id="H8BC37A1D6E7B400B9527F42D879F5077" style="OLC">
<paragraph id="H049638E3590D4881A0E8F2732CB109C5"><enum>(50)</enum><header>Termination of
United States citizenship</header>
<subparagraph id="HF8197BCA3D134076A42DCA4D89D72B7"><enum>(A)</enum><header>In
general</header><text>An individual shall not cease to be treated as a United
States citizen before the date on which the individual’s citizenship is treated
as relinquished under section 877A(g)(4).</text>
</subparagraph><subparagraph id="H78A1ABB650C345DB9BD21ED9393E4557"><enum>(B)</enum><header>Dual
citizens</header><text>Under regulations prescribed by the Secretary,
subparagraph (A) shall not apply to an individual who became at birth a citizen
of the United States and a citizen of another
country.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H538103C9B14B49BA86D9003000F6ED00"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="H2CD0E5AC00D74E37BAEB2B70AB956023"><enum>(A)</enum><text>Paragraph (1) of
section 877(e) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H5FC14F11B2574446B303F639FEBFF1FB" style="OLC">
<paragraph id="H8F3B0BC6D22E4740B0ADFEC7B8BFC1AD"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Any long-term
resident of the United States who ceases to be a lawful permanent resident of
the United States (within the meaning of section 7701(b)(6)) shall be treated
for purposes of this section and sections 2107, 2501, and 6039G in the same
manner as if such resident were a citizen of the United States who lost United
States citizenship on the date of such cessation or
commencement.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H20EF488F550E4B49B83520AE25203600"><enum>(B)</enum><text>Paragraph (6) of
section 7701(b) is amended by adding at the end the following flush
sentence:</text>
<quoted-block display-inline="no-display-inline" id="HB910359A7238427699102857C3CFE416" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="paragraph">An
individual shall cease to be treated as a lawful permanent resident of the
United States if such individual commences to be treated as a resident of a
foreign country under the provisions of a tax treaty between the United States
and the foreign country, does not waive the benefits of such treaty applicable
to residents of the foreign country, and notifies the Secretary of the
commencement of such
treatment.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H6B8834C0E79948D185767488F0B074F4"><enum>(C)</enum><text>Section 7701 is
amended by striking subsection (n) and by redesignating subsections (o) and (p)
as subsections (n) and (o), respectively.</text>
</subparagraph></paragraph></subsection><subsection id="H26807EC823F64A64A8010015001700A7"><enum>(d)</enum><header>Information
returns</header><text>Section 6039G is amended—</text>
<paragraph id="HD4372567ADE64F968760D643992062D1"><enum>(1)</enum><text>by inserting
<quote>or 877A</quote> after <quote>section 877(b)</quote> in subsection (a),
and</text>
</paragraph><paragraph id="H26DB95E408EB449C8BB23C13EC2397ED"><enum>(2)</enum><text>by inserting
<quote>or 877A</quote> after <quote>section 877(a)</quote> in subsection
(d).</text>
</paragraph></subsection><subsection id="H390B7607FC81436CAFC8FDFD64B1DF8"><enum>(e)</enum><header>Clerical
amendment</header><text>The table of sections for subpart A of part II of
subchapter N of chapter 1 is amended by inserting after the item relating to
section 877 the following new item:</text>
<quoted-block id="H51D0243F782E4C89A1DC32E86970E176" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 877A. Tax responsibilities of
expatriation.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H59B2FBDFF3B044AC88FD3027EC009982"><enum>(f)</enum><header>Effective
date</header>
<paragraph id="H25380FBAD7CA4A558FD96102A83EF6EF"><enum>(1)</enum><header>In
general</header><text>Except as provided in this subsection, the amendments
made by this section shall apply to expatriates (as defined in section 877A(g)
of the Internal Revenue Code of 1986, as added by this section) whose
expatriation date (as so defined) is on or after the date of the enactment of
this Act.</text>
</paragraph><paragraph id="H80A9E5205B2E487C8D344E9ED2052556"><enum>(2)</enum><header>Gifts and
bequests</header><text><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/15">Chapter 15</external-xref> of the Internal Revenue Code of 1986 (as
added by subsection (b)) shall apply to covered gifts and bequests (as defined
in section 2801 of such Code, as so added) received on or after the date of the
enactment of this Act, regardless of when the transferor expatriated.</text>
</paragraph></subsection></section><section id="HEE34B320D8B140278FA1495023CBB8BD"><enum>505.</enum><header>Repeal of
suspension of certain penalties and interest</header>
<subsection id="HC87FE357D35C46EABE630090B4F124C0"><enum>(a)</enum><header>In
general</header><text>Section 6404 is amended by striking subsection (g) and by
redesignating subsection (h) as subsection (g).</text>
</subsection><subsection id="HD140D38AB9D24A648C70F38D76EBE5C8"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to notices
provided by the Secretary of the Treasury, or his delegate, after the date
which is 6 months after the date of the enactment of the Small Business and
Work Opportunity Tax Act of 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H44337B9DD41F4D009441C897308BB7D3" section-type="subsequent-section"><enum>506.</enum><header>Unused merchandise
drawback</header>
<subsection id="HF684F660DFE447978FDAAA1E521BA2B"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 313(j)(2) of
the Tariff Act of 1930 (<external-xref legal-doc="usc" parsable-cite="usc/19/1313">19 U.S.C. 1313(j)(2)</external-xref>) is amended by adding at the end
the following: <quote>For purposes of subparagraph (A) of this paragraph, wine
of the same color having a price variation not to exceed 50 percent between the
imported wine and the exported wine shall be deemed to be commercially
interchangeable.</quote>.</text>
</subsection><subsection id="H66988ED8CC7B4A12A05163F6891CBC61"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
subsection (a) shall apply with respect to claims filed for drawback under
section 313(j)(2) of the Tariff Act of 1930 on or after the date of the
enactment of this Act.</text>
</subsection></section><enum>VI</enum><header>Revenue
Provisions</header>
<subtitle id="H19E86813107C44998E9665405B03A66F"><enum>A</enum><header>Nonqualified
deferred compensation from certain tax indifferent parties</header>
<section display-inline="no-display-inline" id="H3DF9B750BF8044CF8D6D0551E455B9B" section-type="subsequent-section"><enum>601.</enum><header>Nonqualified
deferred compensation from certain tax indifferent parties</header>
<subsection id="H0F26B87B70114E22BB223904B7C84FD8"><enum>(a)</enum><header>In
general</header><text>Subpart B of part II of subchapter E of chapter 1
(relating to taxable year for which items of gross income included) is amended
by inserting after section 457 the following new section:</text>
<quoted-block display-inline="no-display-inline" id="HB93CCE29555940E7A3FB246D9F1B00AB" style="OLC">
<section id="H0639B16AEF11455DA693741EA0EA2F59"><enum>457A.</enum><header>Nonqualified
deferred compensation from certain tax indifferent parties</header>
<subsection id="H4BC8001B098C4EC48C38286B0700A4E6"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Any compensation
which is deferred under a nonqualified deferred compensation plan of a
nonqualified entity shall be taken into account for purposes of this chapter
when there is no substantial risk of forfeiture of the rights to such
compensation.</text>
</subsection><subsection id="H1DB7393E7B1E44F0A57D5E1BF662A81"><enum>(b)</enum><header>Nonqualified
entity</header><text>For purposes of this section, the term <term>nonqualified
entity</term> means—</text>
<paragraph id="HAB9EBE8A76EC4D91A963DCA72DEDD7BC"><enum>(1)</enum><text display-inline="yes-display-inline">any foreign corporation unless
substantially all of such income is—</text>
<subparagraph id="HD35D501CD7684E3D8752C7890763FF7C"><enum>(A)</enum><text>effectively
connected with the conduct of a trade or business in the United States,
or</text>
</subparagraph><subparagraph id="H5514B010D19A43CC825BEBBF7C4C4300"><enum>(B)</enum><text>subject to a
comprehensive foreign income tax, and</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H4125E16D703B400EA8B84B5CD32F82BA"><enum>(2)</enum><text display-inline="yes-display-inline">any partnership unless substantially all of
such income is allocated to persons other than—</text>
<subparagraph id="HC05F05190BD2445BA697B81D001FEDFD"><enum>(A)</enum><text>foreign persons
with respect to whom such income is not subject to a comprehensive foreign
income tax, and</text>
</subparagraph><subparagraph id="H2A7E04C5C385464DB3B1A232EC46A7EB"><enum>(B)</enum><text>organizations
which are exempt from tax under this title.</text>
</subparagraph></paragraph></subsection><subsection id="HB19090BD439543FB9315D18D6C1E8E45"><enum>(c)</enum><header>Ascertainability
of amounts of compensation</header>
<paragraph id="H71B5DEF677804592A6C246D9CC57D8C6"><enum>(1)</enum><header>In
general</header><text>If the amount of any compensation is not ascertainable at
the time that such compensation is otherwise to be taken into account under
subsection (a)—</text>
<subparagraph id="H6731D0BD8F4A4531989B7981555064E3"><enum>(A)</enum><text>such amount shall
be so taken into account when ascertainable, and</text>
</subparagraph><subparagraph id="H591D3D3BA94F4221997FDFAA96253E"><enum>(B)</enum><text>the tax imposed
under this chapter for the taxable year in which such compensation is taken
into account under subparagraph (A) shall be increased by the sum of—</text>
<clause id="H6245C19967994BFDB65BFA842DBCC04D"><enum>(i)</enum><text>the amount of
interest determined under paragraph (2), and</text>
</clause><clause id="HAEC8AE3E3D424EE7A2B3E8DE55A26C99"><enum>(ii)</enum><text>an amount equal
to 20 percent of the amount of such compensation.</text>
</clause></subparagraph></paragraph><paragraph id="H8BF4A9672AD845F1B4DEC00A0C8CA22"><enum>(2)</enum><header>Interest</header><text display-inline="yes-display-inline">For purposes of paragraph (1)(B)(i), the
interest determined under this paragraph for any taxable year is the amount of
interest at the underpayment rate under section 6621 plus 1 percentage point on
the underpayments that would have occurred had the deferred compensation been
includible in gross income for the taxable year in which first deferred or, if
later, the first taxable year in which such deferred compensation is not
subject to a substantial risk of forfeiture.</text>
</paragraph></subsection><subsection id="HB0520291CF104534A7009C05F8EF4B30"><enum>(d)</enum><header>Other
definitions and special rules</header><text>For purposes of this
section—</text>
<paragraph display-inline="no-display-inline" id="HF9CA6430170F4700B706CC655637AF28"><enum>(1)</enum><header>Substantial risk
of forfeiture</header><text>The rights of a person to compensation shall be
treated as subject to a substantial risk of forfeiture only if such person’s
rights to such compensation are conditioned upon the future performance of
substantial services by any individual.</text>
</paragraph><paragraph id="HB92B04B80FED4A5EBA0067674CDC4E3D"><enum>(2)</enum><header>Comprehensive
foreign income tax</header><text>The term <term>comprehensive foreign income
tax</term> means, with respect to any foreign person, the income tax of a
foreign country if—</text>
<subparagraph id="HD4570F845D5C4A7898C3CDFDE1D0F9DC"><enum>(A)</enum><text>such person is
eligible for the benefits of a comprehensive income tax treaty between such
foreign country and the United States, or</text>
</subparagraph><subparagraph id="H189B7AB2027A4676B627D276BDFBC9B2"><enum>(B)</enum><text>such person
demonstrates to the satisfaction of the Secretary that such foreign country has
a comprehensive income tax.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Such term
shall not include any tax unless such tax includes rules for the deductibility
of deferred compensation which are similar to the rules of this title.</continuation-text></paragraph><paragraph id="H9150ABF0899C44A48490F4BBD6989981"><enum>(3)</enum><header>Nonqualified
deferred compensation plan</header><text>The term <term>nonqualified deferred
compensation plan</term> has the meaning given such term under section 409A(d),
except that such term shall include any plan that provides a right to
compensation based on the appreciation in value of a specified number of equity
units of the service recipient.</text>
</paragraph><paragraph id="H1513375644D64864A420F8A620EE782F"><enum>(4)</enum><header>Application of
rules</header><text display-inline="yes-display-inline">Rules similar to the
rules of paragraphs (5) and (6) of section 409A(d) shall apply.</text>
</paragraph></subsection><subsection id="H72D6538B611C4AEDAA7DFDD8FF44DF2E"><enum>(e)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the purposes of
this section, including regulations disregarding a substantial risk of
forfeiture in cases where necessary to carry out the purposes of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HBBB07FADDCF849D69FF9E31839BBE287"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 26(b)(2) is amended by striking
<quote>and</quote> at the end of subparagraph (S), by striking the period at
the end of subparagraph (T) and inserting <quote>, and</quote>, and by adding
at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="H8F69DF6320664B4F807510D612003119" style="OLC">
<subparagraph id="H36F29D0BFBA84FC2ABCADF4DF57D1C3F"><enum>(U)</enum><text display-inline="yes-display-inline">section 457A(c)(1)(B) (relating to
ascertainability of amounts of
compensation).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE1FC56F3279C49DDAC163FDFFFBD8867"><enum>(c)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections of subpart B of part II of subchapter E of chapter 1 is amended by
inserting after the item relating to section 457 the following new item:</text>
<quoted-block display-inline="no-display-inline" id="HF829D94FD8D0409B877438E2E89DC3B" style="OLC">
<toc container-level="quoted-block-container" idref="HB93CCE29555940E7A3FB246D9F1B00AB" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H0639B16AEF11455DA693741EA0EA2F59" level="section">Sec. 457A. Nonqualified deferred compensation from certain tax
indifferent
parties.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HD8E7798CD13C4392A1058FE00349D621"><enum>(d)</enum><header>Effective
date</header>
<paragraph id="H3367797655574EDEB4B6A70019F41395"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the
amendments made by this section shall apply to amounts deferred which are
attributable to services performed after December 31, 2007.</text>
</paragraph><paragraph id="HD6349B4D46E14C79ABF52CEB85A46BA2"><enum>(2)</enum><header>Application to
existing deferrals</header><text>In the case of any amount deferred to which
the amendments made by this section do not apply solely by reason of the fact
that the amount is attributable to services performed before January 1, 2008,
to the extent such amount is not includible in gross income in a taxable year
beginning before 2017, such amounts shall be includible in gross income in the
later of—</text>
<subparagraph id="HB45BF4CEF3B947829CDE431F11B563C8"><enum>(A)</enum><text>the last taxable
year beginning before 2017, or</text>
</subparagraph><subparagraph id="HF9FDCFD744934BB39D80F8144DBB4459"><enum>(B)</enum><text>the taxable year
in which there is no substantial risk of forfeiture of the rights to such
compensation (determined in the same manner as determined for purposes of
<external-xref legal-doc="usc" parsable-cite="usc/26/457A">section 457A</external-xref> of the Internal Revenue Code of 1986, as added by this
section).</text>
</subparagraph></paragraph><paragraph id="H07758B0AA1854D24A163FF9D72F4A436"><enum>(3)</enum><header>Accelerated
payments</header><text display-inline="yes-display-inline">No later than 60
days after the date of the enactment of this Act, the Secretary shall issue
guidance providing a limited period of time during which a nonqualified
deferred compensation arrangement attributable to services performed on or
before December 31, 2007, may, without violating the requirements of section
409A(a) of the Internal Revenue Code of 1986, be amended to conform the date of
distribution to the date the amounts are required to be included in
income.</text>
</paragraph></subsection></section></subtitle><subtitle id="HFEDCF81900D34B6A9416DD2266F43DE3"><enum>B</enum><header>Provisions related
to certain investment partnerships</header>
<section display-inline="no-display-inline" id="H22B0DD2563604FEEB7E036007222CA7F" section-type="subsequent-section"><enum>611.</enum><header>Income of partners
for performing investment management services treated as ordinary income
received for performance of services</header>
<subsection id="H672FB9D702B44D9F0089CBC3727B41E1"><enum>(a)</enum><header>In
general</header><text>Part I of subchapter K of chapter 1 is amended by adding
at the end the following new section:</text>
<quoted-block display-inline="no-display-inline" id="H2137B2ABF8FA4A6FB7767B73B9FE003F" style="OLC">
<section id="HB1C16CAB8C5744E4A0C8562DC551C161"><enum>710.</enum><header>Special rules
for partners providing investment management services to partnership</header>
<subsection id="H8C720FD9E7F5492397B1DF846000B530"><enum>(a)</enum><header>Treatment of
distributive share of partnership items</header><text display-inline="yes-display-inline">For purposes of this title, in the case of
an investment services partnership interest—</text>
<paragraph id="H1389970B511B418787853C6896F66695"><enum>(1)</enum><header>In
general</header><text>Notwithstanding section 702(b)—</text>
<subparagraph id="H8E3E5A604BE84A0E8500BC9523457BCB"><enum>(A)</enum><text>any net income
with respect to such interest for any partnership taxable year shall be treated
as ordinary income for the performance of services, and</text>
</subparagraph><subparagraph id="HA19EF03F4AEA42C39711C3AB908153FF"><enum>(B)</enum><text>any net loss with
respect to such interest for such year, to the extent not disallowed under
paragraph (2) for such year, shall be treated as an ordinary loss.</text>
</subparagraph></paragraph><paragraph id="H077EBD6269164C0AB529D4DB94E0952E"><enum>(2)</enum><header>Treatment of
losses</header>
<subparagraph id="H0F7C07AE05194F31A79CBEE76783D00"><enum>(A)</enum><header>Limitation</header><text>Any
net loss with respect to such interest shall be allowed for any partnership
taxable year only to the extent that such loss does not exceed the excess (if
any) of—</text>
<clause id="HDABE2F4DC8564BB0BA74551452D4ACBA"><enum>(i)</enum><text>the aggregate net
income with respect to such interest for all prior partnership taxable years,
over</text>
</clause><clause id="HC3A59B0784034D04AE3131CF425EF79"><enum>(ii)</enum><text>the aggregate net
loss with respect to such interest not disallowed under this subparagraph for
all prior partnership taxable years.</text>
</clause></subparagraph><subparagraph id="H7FD135654E0E4662AFC7F8B81DA514F"><enum>(B)</enum><header>Carryforward</header><text>Any
net loss for any partnership taxable year which is not allowed by reason of
subparagraph (A) shall be treated as an item of loss with respect to such
partnership interest for the succeeding partnership taxable year.</text>
</subparagraph><subparagraph id="HA95C4221377C42CD93006F3919D89063"><enum>(C)</enum><header>Basis
adjustment</header><text>No adjustment to the basis of a partnership interest
shall be made on account of any net loss which is not allowed by reason of
subparagraph (A).</text>
</subparagraph><subparagraph id="H96BA3079FEBF42BF004C274F4769DF1C"><enum>(D)</enum><header>Exception for
basis attributable to purchase of a partnership interest</header><text>In the
case of an investment services partnership interest acquired by purchase,
paragraph (1)(B) shall not apply to so much of any net loss with respect to
such interest for any taxable year as does not exceed the excess of—</text>
<clause id="H6FCF7C4D69F043848E2F0179BB38C5AF"><enum>(i)</enum><text>the basis of such
interest immediately after such purchase, over</text>
</clause><clause id="HBD75E0E134D848B09FE51CEA6EA897A8"><enum>(ii)</enum><text>the aggregate net
loss with respect to such interest to which paragraph (1)(B) did not apply by
reason of this subparagraph for all prior taxable years.</text>
</clause><continuation-text continuation-text-level="subparagraph">Any net
loss to which paragraph (1)(B) does not apply by reason of this subparagraph
shall not be taken into account under subparagraph (A).</continuation-text></subparagraph><subparagraph id="H5372284BBFF3455C828D002736AE174C"><enum>(E)</enum><header>Prior
partnership years</header><text>Any reference in this paragraph to prior
partnership taxable years shall only include prior partnership taxable years to
which this section applies.</text>
</subparagraph></paragraph><paragraph id="H35973C27ABC0472B91D35983460538F"><enum>(3)</enum><header>Net income and
loss</header><text>For purposes of this section—</text>
<subparagraph id="H0BFBAE1B34E44429ABD300697EB3AD53"><enum>(A)</enum><header>Net
income</header><text>The term <term>net income</term> means, with respect to
any investment services partnership interest, for any partnership taxable year,
the excess (if any) of—</text>
<clause id="H71C128FC8D2844B4B2B1C166126B14B4"><enum>(i)</enum><text>all items of
income and gain taken into account by the holder of such interest under section
702 with respect to such interest for such year, over</text>
</clause><clause id="H557AC135743C4114A2A59C9CCB32CF12"><enum>(ii)</enum><text>all items of
deduction and loss so taken into account.</text>
</clause></subparagraph><subparagraph id="HF09BBCB04D074D85A629008BF7531F0"><enum>(B)</enum><header>Net
loss</header><text>The term <term>net loss</term> means with respect to such
interest for such year, the excess (if any) of the amount described in
subparagraph (A)(ii) over the amount described in subparagraph (A)(i).</text>
</subparagraph></paragraph></subsection><subsection id="H27296C29A74643A6BBA2C02900321400"><enum>(b)</enum><header>Dispositions of
partnership interests</header>
<paragraph id="H33BB399FD42A499CA6F137F2FCBAF39F"><enum>(1)</enum><header>Gain</header><text>Any
gain on the disposition of an investment services partnership interest shall be
treated as ordinary income for the performance of services.</text>
</paragraph><paragraph id="HB886B76BDA2244929F8EB921FB00CC2C"><enum>(2)</enum><header>Loss</header><text>Any
loss on the disposition of an investment services partnership interest shall be
treated as an ordinary loss to the extent of the excess (if any) of—</text>
<subparagraph id="HC6EA7D4E9F484F50B0F9DFF5C12B1992"><enum>(A)</enum><text>the aggregate net
income with respect to such interest for all partnership taxable years,
over</text>
</subparagraph><subparagraph id="HCE4B2FA0565C4B0280D8EC892DB00D1"><enum>(B)</enum><text>the aggregate net
loss with respect to such interest allowed under subsection (a)(2) for all
partnership taxable years.</text>
</subparagraph></paragraph><paragraph id="HF933021BB56A4BC18E535F663D7BBE9E"><enum>(3)</enum><header>Disposition of
portion of interest</header><text>In the case of any disposition of an
investment services partnership interest, the amount of net loss which
otherwise would have (but for subsection (a)(2)(C)) applied to reduce the basis
of such interest shall be disregarded for purposes of this section for all
succeeding partnership taxable years.</text>
</paragraph><paragraph id="H083FA7F8E14048919E45A19D28933EF"><enum>(4)</enum><header>Distributions of
partnership property</header><text>In the case of any distribution of
appreciated property by a partnership with respect to any investment services
partnership interest, gain shall be recognized by the partnership in the same
manner as if the partnership sold such property at fair market value at the
time of the distribution. For purposes of this paragraph, the term
<term>appreciated property</term> means any property with respect to which gain
would be determined if sold as described in the preceding sentence.</text>
</paragraph><paragraph id="HA053E3ED64104E9FA954D2171199C528"><enum>(5)</enum><header>Application of
section 751</header><text>In applying section 751(a), an investment services
partnership interest shall be treated as an inventory item.</text>
</paragraph></subsection><subsection id="HC1802CB7D776440992AD56DAF8102522"><enum>(c)</enum><header>Investment
services partnership interest</header><text display-inline="yes-display-inline">For purposes of this section—</text>
<paragraph id="H7C66559D74EB448897A416C2518FDADF"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>investment services partnership interest</term> means any interest in a
partnership which is held by any person if such person provides (directly or
indirectly) a substantial quantity of any of the following services with
respect to the assets of the partnership in the conduct of the trade or
business of providing such services:</text>
<subparagraph id="HBB6F2F57057E4DD690378470009B54E5"><enum>(A)</enum><text>Advising as to the
advisability of investing in, purchasing, or selling any specified
asset.</text>
</subparagraph><subparagraph id="H70F58EA60983459E97E91444DCD3DDA0"><enum>(B)</enum><text>Managing,
acquiring, or disposing of any specified asset.</text>
</subparagraph><subparagraph id="HB8730559A7384B8FAC847C0948B74E07"><enum>(C)</enum><text>Arranging
financing with respect to acquiring specified assets.</text>
</subparagraph><subparagraph id="H07AEBF695ECA4B44BFE71FB790071CB1"><enum>(D)</enum><text>Any activity in
support of any service described in subparagraphs (A) through (C).</text>
</subparagraph><continuation-text continuation-text-level="paragraph">For
purposes of this paragraph, the term <term>specified asset</term> means
securities (as defined in section 475(c)(2) without regard to the last sentence
thereof), real estate, commodities (as defined in section 475(e)(2))), or
options or derivative contracts with respect to securities (as so defined),
real estate, or commodities (as so defined).</continuation-text></paragraph><paragraph id="HB0E384F1F7444A3D8207ADA1A0A1D46"><enum>(2)</enum><header>Exception for
certain capital interests</header>
<subparagraph commented="no" id="H8BDDFE13C70A46B58E6E002722B3E2D9"><enum>(A)</enum><header>In
general</header><text>If—</text>
<clause commented="no" id="H7A77D29863A14334969CB2B8EA009B87"><enum>(i)</enum><text>a portion of an
investment services partnership interest is acquired on account of a
contribution of invested capital, and</text>
</clause><clause commented="no" id="HCDE0EB4CEAF24A4F8D870000FF53AD00"><enum>(ii)</enum><text>the partnership
makes a reasonable allocation of partnership items between the portion of the
distributive share that is with respect to invested capital and the portion of
such distributive share that is not with respect to invested capital,</text>
</clause><continuation-text continuation-text-level="subparagraph">then
subsection (a) shall not apply to the portion of the distributive share that is
with respect to invested capital. An allocation will not be treated as
reasonable for purposes of this subparagraph if such allocation would result in
the partnership allocating a greater portion of income to invested capital than
any other partner not providing services would have been allocated with respect
to the same amount of invested capital.</continuation-text></subparagraph><subparagraph id="HE69CBFACBD1B4D0A9F392FE068E792FB"><enum>(B)</enum><header>Special rule for
dispositions</header><text display-inline="yes-display-inline">In any case to
which subparagraph (A) applies, subsection (b) shall not apply to any gain or
loss allocable to invested capital. The portion of any gain or loss
attributable to invested capital is the proportion of such gain or loss which
is based on the distributive share of gain or loss that would have been
allocable to invested capital under subparagraph (A) if the partnership sold
all of its assets immediately before the disposition.</text>
</subparagraph><subparagraph id="HFA28C761A9B74F09A3A4E7547805226"><enum>(C)</enum><header>Invested
capital</header><text>For purposes of this paragraph, the term <term>invested
capital</term> means, the fair market value at the time of contribution of any
money or other property contributed to the partnership.</text>
</subparagraph><subparagraph id="H1DCF63C751804C0D8597188537F1F41"><enum>(D)</enum><header>Treatment of
certain loans</header>
<clause id="H396C52CAF27F4C5EA204CAE26EA900C0"><enum>(i)</enum><header>Proceeds of
partnership loans not treated as invested capital of service providing
partners</header><text>For purposes of this paragraph, an investment services
partnership interest shall not be treated as acquired on account of a
contribution of invested capital to the extent that such capital is
attributable to the proceeds of any loan or other advance made or guaranteed,
directly or indirectly, by any partner or the partnership.</text>
</clause><clause id="HC68DC51CE14542DCB4D25FFF632ABD9"><enum>(ii)</enum><header>Loans from
nonservice providing partners to the partnership treated as invested
capital</header><text>For purposes of this paragraph, any loan or other advance
to the partnership made or guaranteed, directly or indirectly, by a partner not
providing services to the partnership shall be treated as invested capital of
such partner and amounts of income and loss treated as allocable to invested
capital shall be adjusted accordingly.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HCE65378D66E947868EB983D7BEF7DCC4"><enum>(d)</enum><header>Other income and
gain in connection with investment management services</header>
<paragraph id="HB0EEEAB243EB46C180D56B052B29AFCB"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">If—</text>
<subparagraph id="H8A3D7A5490A143878456C6BC80C6D287"><enum>(A)</enum><text>a person performs
(directly or indirectly) investment management services for any entity,</text>
</subparagraph><subparagraph id="HB804A1D842264A07A3AD5865DFAE5F11"><enum>(B)</enum><text>such person holds
a disqualified interest with respect to such entity, and</text>
</subparagraph><subparagraph id="HFBA963F5BA1648689C9D823B27B7F700"><enum>(C)</enum><text display-inline="yes-display-inline">the value of such interest (or payments
thereunder) is substantially related to the amount of income or gain (whether
or not realized) from the assets with respect to which the investment
management services are performed,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">any income
or gain with respect to such interest shall be treated as ordinary income for
the performance of services. Rules similar to the rules of subsection (c)(2)
shall apply where such interest was acquired on account of invested capital in
such entity.</continuation-text></paragraph><paragraph id="H86F5FC0AD39F49E8811B5ED99743E86C"><enum>(2)</enum><header>Definitions</header><text>For
purposes of this subsection—</text>
<subparagraph id="H61FDB3EF418647C8893CCE42FA13CFB3"><enum>(A)</enum><header>Disqualified
interest</header><text>The term <term>disqualified interest</term> means, with
respect to any entity—</text>
<clause id="HE5BFF01E8F6145938E25987514DDD8F5"><enum>(i)</enum><text>any interest in
such entity other than indebtedness,</text>
</clause><clause id="H223864CE7C174E968D83822015F2DAD1"><enum>(ii)</enum><text>convertible or
contingent debt of such entity,</text>
</clause><clause id="HF37A81D121B447798D3B1EB7C10BE74"><enum>(iii)</enum><text>any option or
other right to acquire property described in clause (i) or (ii), and</text>
</clause><clause id="H35CDFEEB20A0446F8EC6982FDCADA7D6"><enum>(iv)</enum><text>any derivative
instrument entered into (directly or indirectly) with such entity or any
investor in such entity.</text>
</clause><continuation-text continuation-text-level="subparagraph">Such
term shall not include a partnership interest and shall not include stock in a
taxable corporation.</continuation-text></subparagraph><subparagraph id="H4CA4FCCEF9EF47DABAE5EE7300C452A2"><enum>(B)</enum><header>Taxable
corporation</header><text>The term <term>taxable corporation</term>
means—</text>
<clause id="HAC2DCF6B596C438D9F3B005384717B1F"><enum>(i)</enum><text>a
domestic C corporation, or</text>
</clause><clause id="H422D9FB013BE4ABA8EC10961AC3BB74D"><enum>(ii)</enum><text>a
foreign corporation subject to a comprehensive foreign income tax (as defined
in section 457A(d)(4)).</text>
</clause></subparagraph><subparagraph id="HC11B4923B0B14D5BB32DB93E7D8705D"><enum>(C)</enum><header>Investment
management services</header><text>The term <term>investment management
services</term> means a substantial quantity of any of the services described
in subsection (c)(1) which are provided in the conduct of the trade or business
of providing such services.</text>
</subparagraph></paragraph></subsection><subsection commented="no" id="H754D6F00E199406F90FD21E8625E19A3"><enum>(e)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as are necessary or appropriate to
carry out the purposes of this section, including regulations to—</text>
<paragraph commented="no" id="H9DC434395AAC4015B985AB9D446F7E56"><enum>(1)</enum><text>prevent the
avoidance of the purposes of this section, and</text>
</paragraph><paragraph commented="no" id="HDEA831EF84D246B283062E0571DA9FD6"><enum>(2)</enum><text>coordinate this
section with the other provisions of this subchapter.</text>
</paragraph></subsection><subsection commented="no" id="HB38C1B5EB64C46DF006F00E4D974B1EA"><enum>(f)</enum><header>Cross
reference</header><text>For 40 percent no fault penalty on certain
underpayments due to the avoidance of this section, see section
6662.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H690D75ED06C84554BFA261B5D1806F22"><enum>(b)</enum><header>Application to
real estate investment trusts</header><text>Subsection (c) of section 856 is
amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H61B87FC5CD64489FAE331CFC00CE04A2" style="OLC">
<paragraph id="H86CDFEF2DD974D1AAD531F83196B0037"><enum>(8)</enum><header>Exception from
recharacterization of income from investment services partnership
interests</header>
<subparagraph id="HA28731C3C7FB42D400602EE3BFCDE99"><enum>(A)</enum><header>In
general</header><text>Paragraphs (2), (3), and (4) shall be applied without
regard to section 710 (relating to special rules for partners providing
investment management services to partnership).</text>
</subparagraph><subparagraph id="H6C5EE9248DA744D4BD70F5DD7EE2FDE"><enum>(B)</enum><header>Special rule for
partnerships owned by REITs</header><text>Section 7704 shall be applied without
regard to section 710 in the case of a partnership which meets each of the
following requirements:</text>
<clause id="H94E1AB8D067F4A6AA921B629E65E7434"><enum>(i)</enum><text>Such partnership
is treated as publicly traded under section 7704 solely by reason of interests
in such partnership being convertible into interests in a real estate
investment trust which is publicly traded.</text>
</clause><clause id="H1391EEBABC0441E1A5CB9816D487FDF4"><enum>(ii)</enum><text display-inline="yes-display-inline">50 percent or more of the capital and
profits interests of such partnership are owned, directly or indirectly, at all
times during the taxable year by such real estate investment trust (determined
with the application of section 267(c)).</text>
</clause><clause id="HF243090EDB31458FAAA3ED5C57EB6982"><enum>(iii)</enum><text>Such partnership
meets the requirements of paragraphs (2), (3), and (4) (applied without regard
to section
710).</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H567850D7D36A470993B6D3809192D6EB"><enum>(c)</enum><header>Imposition of
penalty on underpayments</header>
<paragraph id="H79995245614E48FEA7F6D4C314D400A9"><enum>(1)</enum><header>In
general</header><text>Subsection (b) of section 6662 is amended by inserting
after paragraph (5) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HD6FB078C43C64BE7B449CCE00296FD6" style="OLC">
<paragraph id="H0EC5EB4E18054BF7AEBD7C29186DAF05"><enum>(6)</enum><text>The application of
subsection (d) of section 710 or the regulations prescribed under section
710(e) to prevent the avoidance of the purposes of section
710.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HE437781F136D4D429EB2C84562969085"><enum>(2)</enum><header>Amount of
penalty</header>
<subparagraph id="HABABB95EE07846FB84D3EA0083195DD8"><enum>(A)</enum><header>In
general</header><text>Section 6662 is amended by adding at the end the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HA4D48CEF776C45BFAA83566DFD00E5FB" style="OLC">
<subsection id="H7280797579424F88BDD527C1FA34B15B"><enum>(i)</enum><header>Increase in
penalty in case of property transferred for investment management
services</header><text>In the case of any portion of an underpayment to which
this section applies by reason of subsection (b)(6), subsection (a) shall be
applied with respect to such portion by substituting <quote>40 percent</quote>
for <quote>20
percent</quote>.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph display-inline="no-display-inline" id="HFF30282557FC4B05A862B7D7D89749E2"><enum>(B)</enum><header>Conforming
amendments</header><text>Subparagraph (B) of section 6662A(e)(2) is
amended—</text>
<clause id="HA921D37733F24F1FA1CCE59DF305A13C"><enum>(i)</enum><text>by
striking <quote>section 6662(h)</quote> and inserting <quote>subsection (h) or
(i) of section 6662</quote>, and</text>
</clause><clause id="HD9FE77AA58894E95BE8BEC845C4BB200"><enum>(ii)</enum><text>by
striking <quote><header-in-text level="subparagraph" style="OLC">gross
valuation misstatement penalty</header-in-text></quote> in the heading and
inserting <quote><header-in-text level="subparagraph" style="OLC">certain
increased underpayment penalties</header-in-text></quote>.</text>
</clause></subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HFD83153666174BBDAA857483A02B9B"><enum>(3)</enum><header>Reasonable cause
exception not applicable</header><text>Subsection (c) of section 6664 is
amended—</text>
<subparagraph id="H8BEB3A3C6E804C9B8C2F944D05A11361"><enum>(A)</enum><text>by redesignating
paragraphs (2) and (3) as paragraphs (3) and (4), respectively,</text>
</subparagraph><subparagraph id="H7E9B344BC8DA43FE9BE9CD0926CA0FF"><enum>(B)</enum><text>by striking
<quote>paragraph (2)</quote> in paragraph (4), as so redesignated, and
inserting <quote>paragraph (3)</quote>, and</text>
</subparagraph><subparagraph id="HA3251280BD014935BBE5BB6FC1B4C94C"><enum>(C)</enum><text>by inserting after
paragraph (1) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H9AB932139CB243E5994E70B865414BA" style="OLC">
<paragraph id="H7AD4519FF1944C698850F7826F297825"><enum>(2)</enum><header>Exception</header><text>Paragraph
(1) shall not apply to any portion of an underpayment to which this section
applies by reason of subsection
(b)(6).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="HB014EFE05DC74463865BF1BB6349F46C"><enum>(d)</enum><header>Conforming
amendments</header>
<paragraph id="H0998048975B74A4CB68FA0E0FE578567"><enum>(1)</enum><text>Subsection (d) of
section 731 is amended by inserting <quote>section 710(b)(4) (relating to
distributions of partnership property),</quote> before <quote>section
736</quote>.</text>
</paragraph><paragraph id="HF344245E13F445BABC6DE197E925696C"><enum>(2)</enum><text>Section 741 is
amended by inserting <quote>or section 710 (relating to special rules for
partners providing investment management services to partnership)</quote>
before the period at the end.</text>
</paragraph><paragraph id="H2B79373BD7E84C99A9C3A22C9C036EDA"><enum>(3)</enum><text>Paragraph (13) of
section 1402(a) is amended—</text>
<subparagraph id="HC3EC2DCAA12A493CA6601B213964CCD7"><enum>(A)</enum><text>by striking
<quote>other than guaranteed</quote> and
inserting</text>
<quoted-block display-inline="yes-display-inline" id="H7DDF557B0C57493F854FCCA629ECFFCB" style="OLC">
<text>other
than—</text><subparagraph id="HA402470D80D44E69931B3C492455D345"><enum>(A)</enum><text>guaranteed</text>
</subparagraph><after-quoted-block>,</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HA09C8C7FAE504AE19F34C8B45B2E5700"><enum>(B)</enum><text>by striking the
semi-colon at the end and inserting <quote>, and</quote>, and</text>
</subparagraph><subparagraph id="H9E92790AAE9D445FA04EAF9FB703348"><enum>(C)</enum><text>by adding at the
end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="H384C854BA653480B9E8075F9C04C9B50" style="OLC">
<subparagraph id="HFA09923559DE4FDA87E52EDD70FBF28"><enum>(B)</enum><text>any income treated
as ordinary income under section 710 received by an individual who provides
investment management services (as defined in section
710(d)(2));</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H018E54813844410F822266B7985C0001"><enum>(4)</enum><text>Paragraph (12) of
section 211(a) of the Social Security Act is amended—</text>
<subparagraph id="H36A46DED29A84C73B75DBFF0A9F06C77"><enum>(A)</enum><text>by striking
<quote>other than guaranteed</quote> and
inserting</text>
<quoted-block display-inline="yes-display-inline" id="H7F6009A13C4C4F5B87DD05C2363D6474" style="OLC">
<text>other
than—</text><subparagraph id="HDDDCEFD1033F42EC84A6E0D971AB7100"><enum>(A)</enum><text>guaranteed</text>
</subparagraph><after-quoted-block>,</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H366262E15787464F9B4D9F74EB2941F7"><enum>(B)</enum><text>by striking the
semi-colon at the end and inserting <quote>, and</quote>, and</text>
</subparagraph><subparagraph id="HDCF2ECF5725F46FE8B384522F3091417"><enum>(C)</enum><text>by adding at the
end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HA76AE03CF1D0484088575CFCC9C6B5C3" style="OLC">
<subparagraph id="H17BB086EB68F414EA45BE754F1E97BD4"><enum>(B)</enum><text>any income treated
as ordinary income under <external-xref legal-doc="usc" parsable-cite="usc/26/710">section 710</external-xref> of the Internal Revenue Code of 1986
received by an individual who provides investment management services (as
defined in section 710(d)(2) of such
Code);</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="H21A2ECF120D84BB28E3DBD8692F49700"><enum>(5)</enum><text display-inline="yes-display-inline">The table of sections for part I of
subchapter K of chapter 1 is amended by adding at the end the following new
item:</text>
<quoted-block display-inline="no-display-inline" id="HAC21C18F3ED14F1DA6656B6416009500" style="OLC">
<toc container-level="quoted-block-container" idref="H2137B2ABF8FA4A6FB7767B73B9FE003F" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HB1C16CAB8C5744E4A0C8562DC551C161" level="section">Sec. 710. Special rules for partners providing investment
management services to
partnership.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HBBDB19C0DEFA474C9C9865B24042B0C7"><enum>(e)</enum><header>Effective
date</header>
<paragraph id="H17F2D6893C9A4BB8BFAA746E93502633"><enum>(1)</enum><header>In
general</header><text>Except as otherwise provided in this subsection, the
amendments made by this section shall apply to taxable years ending after
November 1, 2007.</text>
</paragraph><paragraph id="H9C919B12450245AD97127472A0558657"><enum>(2)</enum><header>Partnership
taxable years which include effective date</header><text>In applying section
710(a) of the Internal Revenue Code of 1986 (as added by this section) in the
case of any partnership taxable year which includes November 1, 2007, the
amount of the net income referred to in such section shall be treated as being
the lesser of the net income for the entire partnership taxable year or the net
income determined by only taking into account items attributable to the portion
of the partnership taxable year which is after such date.</text>
</paragraph><paragraph id="HAD5E94D1F69842B5B0DB66A0D84F7B0"><enum>(3)</enum><header>Dispositions of
partnership interests</header><text display-inline="yes-display-inline">Section
710(b) of the Internal Revenue Code of 1986 (as added by this section) shall
apply to dispositions and distributions after November 1, 2007.</text>
</paragraph><paragraph id="H7377D9FEBC67450BBA40932259796500"><enum>(4)</enum><header>Other income and
gain in connection with investment management services</header><text display-inline="yes-display-inline">Section 710(d) of such Code (as added by
this section) shall take effect on November 1, 2007.</text>
</paragraph><paragraph id="H5EC0446722F146799717BF4B90D4007F"><enum>(5)</enum><header>Publicly traded
partnerships</header><text>For purposes of applying section 7704, the
amendments made by this section shall apply to taxable years beginning after
December 31, 2009.</text>
</paragraph></subsection></section><section display-inline="no-display-inline" id="HBAAC25DF0AB14BF4805BD7A4D2929C57" section-type="subsequent-section"><enum>612.</enum><header>Indebtedness
incurred by a partnership in acquiring securities and commodities not treated
as acquisition indebtedness for organizations which are partners with limited
liability</header>
<subsection id="HA71857F768EE4B67ABD0B310C1412C95"><enum>(a)</enum><header>In
general</header><text>Subsection (c) of section 514 (relating to acquisition
indebtedness) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H5173217AA96A401AB9003CA51E534313" style="OLC">
<paragraph id="H9813BA5D97044B22987DF5B154EAF800"><enum>(10)</enum><header>Securities and
commodities acquired by partnerships in which an organization is a partner with
limited liability</header>
<subparagraph id="H5A115047D7424C2BA4E1B26FC859867"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of any
organization which is a partner with limited liability in a partnership, the
term <term>acquisition indebtedness</term> does not, for purposes of this
section, include indebtedness incurred or continued by such partnership in
purchasing or carrying any qualified security or commodity.</text>
</subparagraph><subparagraph id="H42BA30085C564C6AB3CC2C27A9BDB304"><enum>(B)</enum><header>Qualified
security or commodity</header><text display-inline="yes-display-inline">For
purposes of this paragraph, the term <term>qualified security or
commodity</term> means any security (as defined in section 475(c)(2) without
regard to the last sentence thereof), any commodity (as defined in section
475(e)(2)), or any option or derivative contract with respect to such a
security or commodity.</text>
</subparagraph><subparagraph id="H4EC627035AAF48F29D354E3650EDEE63"><enum>(C)</enum><header>Application to
tiered partnerships and other pass-thru entities</header><text display-inline="yes-display-inline">Rules similar to the rules of subparagraph
(A) shall apply in the case of tiered partnerships and other pass-thru
entities.</text>
</subparagraph><subparagraph id="HF8D29D42435743068FFD983C00D8ACCB"><enum>(D)</enum><header>Regulations</header><text>The
Secretary may prescribe such regulations as may be necessary or appropriate to
carry out the purposes of this paragraph, including regulations to prevent the
abuse of this
paragraph.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB1EFDC918B2C4BC19CE623B4BF686DD1"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="H764B8D054C984C5BA9B4958589B6B24E" section-type="subsequent-section"><enum>613.</enum><header>Application to
partnership interests and tax sharing agreements of rule treating certain gain
on sales between related persons as ordinary income</header>
<subsection id="HCB54D527DA8E427D8B211BD7002833A8"><enum>(a)</enum><header>Partnership
interests</header><text>Subsection (a) of section 1239 is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="HC952173CE4664CF38D6F0000662E5F05" style="OLC">
<subsection id="HCBD4B82E63CE47CC84A4DCCBFC7B5313"><enum>(a)</enum><header>Treatment of
gain as ordinary income</header><text display-inline="yes-display-inline">In
the case of a sale or exchange of property, directly or indirectly, between
related persons, any gain recognized to the transferor shall be treated as
ordinary income if—</text>
<paragraph id="H75CE11AB6B9E4591BEF89074786441C"><enum>(1)</enum><text>such property is,
in the hands of the transferee, of a character which is subject to the
allowance for depreciation provided in section 167, or</text>
</paragraph><paragraph id="H75E45F3FE14E476588ACB2875E2BFA63"><enum>(2)</enum><text display-inline="yes-display-inline">such property is an interest in a
partnership, but only to the extent of gain attributable to unrealized
appreciation in property which is of a character subject to the allowance for
depreciation provided in section
167.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HCD1AD21AD187401FAC0424C7C0ABD729"><enum>(b)</enum><header>Tax sharing
agreements</header><text display-inline="yes-display-inline">Section 1239
(relating to gain from sale of depreciable property between certain related
taxpayers) is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H9A1653BACACE481DB067E7307E82F9FC" style="OLC">
<subsection id="H67B6182A29EC4AE9ADECD226E56D273B"><enum>(f)</enum><header>Application to
tax sharing agreements</header>
<paragraph id="H5BFF2C62CE714636B373C6C1BECB403"><enum>(1)</enum><header>In
general</header><text>If there is a tax sharing agreement with respect to any
sale or exchange, the transferee and the transferor shall be treated as related
persons for purposes of this section.</text>
</paragraph><paragraph id="H233257BC943B48928C004DF777953E40"><enum>(2)</enum><header>Tax sharing
agreement</header><text display-inline="yes-display-inline">For purposes of
this subsection, the term <term>tax sharing agreement</term> means any
agreement which provides for the payment to the transferor of any amount which
is determined by reference to any portion of the tax benefit realized by the
transferee with respect to the depreciation (or amortization) of the property
transferred.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3C29C118DC0546CBA43FE9B4EDC168B8"><enum>(c)</enum><header>Effective
date</header>
<paragraph id="H59B3EC8F2A3D495F97ECE1650060C5B"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to sales and exchanges after the date of the
enactment of this Act.</text>
</paragraph><paragraph id="H9B3B403BC9F74297A6F103EFB62DACB5"><enum>(2)</enum><header>Exception for
binding contracts</header><text display-inline="yes-display-inline">The
amendment made by subsection (b) shall not apply to any sale or exchange
pursuant to a written binding contract which includes a tax sharing agreement
and which is in effect on November 1, 2007, and not modified thereafter in any
material respect.</text>
</paragraph></subsection></section></subtitle><subtitle id="H42A6096E6D414E14809300E6697BCA44"><enum>C</enum><header>Other
Provisions</header>
<section display-inline="no-display-inline" id="H245D02FC8124444780CBDE3DBF00D99E" section-type="subsequent-section"><enum>621.</enum><header>Delay in application
of worldwide allocation of interest</header>
<subsection id="H2CCF2A23849D49B7A622DD605268B6E"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraphs (5)(D) and
(6) of section 864(f) are each amended by striking <quote>December 31,
2008</quote> and inserting <quote>December 31, 2017</quote>.</text>
</subsection><subsection id="H79FC6CED3558469EB5008EC841F23F3D"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.</text>
</subsection></section><section display-inline="no-display-inline" id="H2C0BBC3E43BA4C7FB86D5DA2D2AE0868" section-type="subsequent-section"><enum>622.</enum><header>Broker reporting of
customer’s basis in securities transactions</header>
<subsection id="H58F1F5924EB44C58846B1CB175D9B9D7"><enum>(a)</enum><header>In
general</header>
<paragraph id="HA863FEB428CE4517B41B17B6373EF123"><enum>(1)</enum><header>Broker reporting
for securities transactions</header><text>Section 6045 (relating to returns of
brokers) is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HBAD3BA17C091464A845DB8C8E91FB3C4" style="OLC">
<subsection id="H8E0BF07E2B8B42719DC3227F55A1F219"><enum>(g)</enum><header>Additional
information required in the case of securities transactions</header>
<paragraph id="H39A58E08ED104CF784EDEAAD4A04AF"><enum>(1)</enum><header>In
general</header><text>If a broker is otherwise required to make a return under
subsection (a) with respect to the gross proceeds of the sale of a covered
security, the broker shall include in such return the information described in
paragraph (2).</text>
</paragraph><paragraph id="HB2B2E917325A4793A12C86ECF1C60000"><enum>(2)</enum><header>Additional
information required</header>
<subparagraph id="H9B144D79C52C42EBBF86B84866CA0346"><enum>(A)</enum><header>In
general</header><text>The information required under paragraph (1) to be shown
on a return with respect to a covered security of a customer shall include the
customer’s adjusted basis in such security and whether any gain or loss with
respect to such security is long-term or short-term (within the meaning of
section 1222).</text>
</subparagraph><subparagraph id="H8DF1D1AEAA6A498185FBA113B01F73BA"><enum>(B)</enum><header>Determination of
adjusted basis</header><text>For purposes of subparagraph (A)—</text>
<clause id="H34E98316B4EB488BA30325F8D9B4746D"><enum>(i)</enum><header>In
general</header><text>The customer’s adjusted basis shall be determined—</text>
<subclause id="H6FE95025CAD744B08EC98BE92E1C14F4"><enum>(I)</enum><text>in the case of any
stock (other than any stock in an open-end fund), in accordance with the
first-in first-out method unless the customer notifies the broker by means of
making an adequate identification of the stock sold or transferred,</text>
</subclause><subclause display-inline="no-display-inline" id="H8686815D7FE64668B7C2EA399474E035"><enum>(II)</enum><text display-inline="yes-display-inline">in the case of any stock in an open-end
fund acquired before January 1, 2011, in accordance with any acceptable method
under section 1012 with respect to the account in which such interest is
held,</text>
</subclause><subclause id="H328518FE91EE4E1EA2A8A591D34FAFB"><enum>(III)</enum><text display-inline="yes-display-inline">in the case of any stock in an open-end
fund acquired after December 31, 2010, in accordance with the broker’s default
method unless the customer notifies the broker that he elects another
acceptable method under section 1012 with respect to the account in which such
interest is held, and</text>
</subclause><subclause id="H2F986AA7194F4D00AF6FA5E08B5CE52"><enum>(IV)</enum><text>in any other case,
under the method for making such determination under section 1012.</text>
</subclause></clause><clause id="H64397DF37443481B92186B34AA009CBF"><enum>(ii)</enum><header>Exception for
wash sales</header><text>Except as otherwise provided by the Secretary, the
customer’s adjusted basis shall be determined without regard to section 1091
(relating to loss from wash sales of stock or securities) unless the
transactions occur in the same account with respect to identical
securities.</text>
</clause></subparagraph></paragraph><paragraph id="HB9D3B21FDB4E4BF48D25012CFD78333E"><enum>(3)</enum><header>Covered
security</header><text>For purposes of this subsection—</text>
<subparagraph id="HABD02D88EEB74A95BB92C3589685934D"><enum>(A)</enum><header>In
general</header><text>The term <term>covered security</term> means any
specified security acquired on or after the applicable date if such
security—</text>
<clause id="H0654B57EED2A41F29C2EA0199E590012"><enum>(i)</enum><text>was acquired
through a transaction in the account in which such security is held, or</text>
</clause><clause id="H82CAFBCCF8744780AA6CBA519776066D"><enum>(ii)</enum><text>was transferred
to such account from an account in which such security was a covered security,
but only if the broker received a statement under section 6045A with respect to
the transfer.</text>
</clause></subparagraph><subparagraph id="H8196E36304874D53AE108BA583635829"><enum>(B)</enum><header>Specified
security</header><text>The term <term>specified security</term> means—</text>
<clause id="H32AD70F168A1435C8C7598337F63A4CA"><enum>(i)</enum><text display-inline="yes-display-inline">any share of stock in a corporation,</text>
</clause><clause id="HC3AB63F27ABD40B7B0CCE5857707008F"><enum>(ii)</enum><text>any note, bond,
debenture, or other evidence of indebtedness,</text>
</clause><clause id="H86C2CB8D9D134ABBB511B2E40175BB00"><enum>(iii)</enum><text>any commodity,
or contract or derivative with respect to such commodity, if the Secretary
determines that adjusted basis reporting is appropriate for purposes of this
subsection, and</text>
</clause><clause id="H98ECD2CD1A8D40398700D3DFD183C92"><enum>(iv)</enum><text>any other
financial instrument with respect to which the Secretary determines that
adjusted basis reporting is appropriate for purposes of this subsection.</text>
</clause></subparagraph><subparagraph id="H6C77E3D491534142BCE8799EFE15841"><enum>(C)</enum><header>Applicable
date</header><text>The term <term>applicable date</term> means—</text>
<clause id="H22E28E5CCD414422B35BF8D408B3EA8D"><enum>(i)</enum><text>January 1, 2009,
in the case of any specified security which is stock in a corporation,
and</text>
</clause><clause id="H59F04E33A7D54F4CBFC6C60B14368AA"><enum>(ii)</enum><text>January 1, 2011,
or such later date determined by the Secretary in the case of any other
specified security.</text>
</clause></subparagraph></paragraph><paragraph id="H32828D98C637426C91A291D17C274D21"><enum>(4)</enum><header>Open-end
fund</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>open-end fund</term> means a regulated investment
company (as defined in section 851) which is offering for sale or has
outstanding any redeemable security of which it is the issuer and the shares of
which are not traded on an established securities
exchange.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="H77A4396427154E6A8995479670E8BC7"><enum>(2)</enum><header>Broker
information required with respect to options</header><text>Section 6045, as
amended by subsection (a), is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HF563B082A9FB46EFBBB2C9D286ACD46" style="OLC">
<subsection commented="no" id="HCD6B6ADB07D14351B44E8F8B122E3BB8"><enum>(h)</enum><header>Application to
options on covered securities</header>
<paragraph id="H93F107E3626D4AF7A6A6F4DD36812FB"><enum>(1)</enum><header>Exercise of
option</header><text display-inline="yes-display-inline">For purposes of this
section, in the case of any exercise of an option on a covered security where
the taxpayer is the grantor of the option and the option was acquired in the
same account as the covered security, the amount received for the grant of an
option on a covered security shall be treated as an adjustment to gross
proceeds or as an adjustment to basis, as the case may be. A similar rule shall
apply in the case of the exercise of an option where the taxpayer is not the
grantor of the option.</text>
</paragraph><paragraph id="HA046E40C40D549D496FCA36575445100"><enum>(2)</enum><header>Lapse or closing
transaction</header><text>For purposes of this section, in the case of the
lapse (or closing transaction (as defined in section 1234(b)(2)(A))) of an
option on a covered security where the taxpayer is the grantor of the option,
this section shall apply as if the premium received for such option were gross
proceeds received on the date of the lapse or closing transaction, and the cost
(if any) of the closing transaction shall be taken into account as adjusted
basis. A similar rule shall apply in the case of a lapse or closing transaction
where the taxpayer is not the grantor of the option.</text>
</paragraph><paragraph id="HCEB74127495341FAB41EA2FF742CD0EB"><enum>(3)</enum><header>Prospective
application</header><text>Paragraphs (1) and (2) shall not apply to any option
which is granted or acquired before January 1, 2011.</text>
</paragraph><paragraph id="HB66BF3392B1B43229C4B458200B87B07"><enum>(4)</enum><header>Covered
security</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>covered security</term> shall have the meaning given
such term in subsection
(g)(3).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HE3F4876400AD40E28EC6D186D377E059"><enum>(3)</enum><header>Extension of
period for statements sent to customers</header>
<subparagraph id="HB231F7FA2178406BA288DFAAB6F70918"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (b) of
section 6045 is amended by striking <quote>January 31</quote> and inserting
<quote>February 15</quote>.</text>
</subparagraph><subparagraph commented="no" id="HBEDAF169EEE44D86A35DD81F051E00E2"><enum>(B)</enum><header>Statements
related to substitute payments</header><text>Subsection (d) of section 6045 is
amended—</text>
<clause commented="no" id="H938145246EE04FEE88B727B74DB0FAB5"><enum>(i)</enum><text>by striking
<quote>at such time and</quote>, and</text>
</clause><clause commented="no" id="H08758ADC28EC44A9BA2323F1DFF7343F"><enum>(ii)</enum><text>by inserting
after <quote>other item.</quote> the following new sentence: <quote>The written
statement required under the preceding sentence shall be furnished on or before
February 15 of the year following the calendar year during which such payment
was made.</quote>.</text>
</clause></subparagraph><subparagraph display-inline="no-display-inline" id="H1C272F74EDE14CAFB6592BA0FDB9257B"><enum>(C)</enum><header>Other
statements</header><text>Subsection (b) of section 6045 is amended by adding at
the end the following: <quote>In the case of a consolidated reporting statement
(as defined in regulations) with respect to any account which includes the
statement required by this subsection, any statement which would otherwise be
required to be furnished on or before January 31 under section 6042(c),
6049(c)(2)(A), or 6050N(b) with respect to any item in such account shall
instead be required to be furnished on or before February 15 if furnished as
part of such consolidated reporting statement.</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="H20FBDA8761AD4D52BF448D70E26DDFD"><enum>(b)</enum><header>Determination of
basis of certain securities on account by account method</header><text>Section
1012 (relating to basis of property–cost) is amended—</text>
<paragraph id="HB33034A4E94A4687BE4E42B3BAE6F91"><enum>(1)</enum><text>by
striking <quote>The basis of property</quote> and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="H1540286B4A7B460EA9717B6667EEF56" style="OLC">
<subsection id="H457E61E72C93474D96892697D998F6BE"><enum>(a)</enum><header>In
general</header><text>The basis of
property</text>
</subsection><after-quoted-block>,</after-quoted-block></quoted-block>
</paragraph><paragraph id="HBC93C071C5A04237A465BA6FC411D8D"><enum>(2)</enum><text>by
striking <quote>The cost of real property</quote> and inserting the
following:</text>
<quoted-block display-inline="no-display-inline" id="H0B8524686E854CE797C9A9C5B4CF120" style="OLC">
<subsection id="HC948CC9B6C37496289281E0076518166"><enum>(b)</enum><header>Special rule for
apportioned real estate taxes</header><text>The cost of real
property</text>
</subsection><after-quoted-block>,
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="H1C8334EA7D394065B0E68203FFA57073"><enum>(3)</enum><text>by adding at the
end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HAD5B0D9C2717488A81D48FC032346BB4" style="OLC">
<subsection id="H6AAC82BFD9DE4C4789B3FFEA09785C17"><enum>(c)</enum><header>Determinations
by account</header>
<paragraph id="HB90751EDD6954F53AA93374C9D41D9D3"><enum>(1)</enum><header>In
general</header><text>In the case of the sale, exchange, or other disposition
of a specified security on or after the applicable date, the conventions
prescribed by regulations under this section shall be applied on an account by
account basis.</text>
</paragraph><paragraph id="H37FB5BF65D1147DD87A9FC7CD81BD238"><enum>(2)</enum><header>Application to
open-end funds</header>
<subparagraph id="H5959E194E7EF498DAB4564B1945F4EB9"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">Except as provided in
subparagraph (B), any stock in an open-end fund acquired before January 1,
2009, shall be treated as a separate account from any such stock acquired on or
after such date.</text>
</subparagraph><subparagraph id="H02C912AD012644D683D7C939FA400B7"><enum>(B)</enum><header>Election by
open-end fund for treatment as single account</header><text>If an open-end fund
elects (at such time and in such form and manner as the Secretary may
prescribe) to have this subparagraph apply with respect to one or more of its
stockholders—</text>
<clause id="HC0C1ABFEDB6A45F4002E4CA3CABD06B2"><enum>(i)</enum><text>subparagraph (A)
shall not apply with respect to any stock in such fund held by such
stockholders, and</text>
</clause><clause id="H6579D51DD8664B56925DEFE6D5AF1D50"><enum>(ii)</enum><text>all stock in such
fund which is held by such stockholders shall be treated as covered securities
described in section 6045(g)(3) without regard to the date of the acquisition
of such stock.</text>
</clause></subparagraph></paragraph><paragraph id="H406DE5A7A82349E58F2939458D60161F"><enum>(3)</enum><header>Definitions</header><text>For
purposes of this section, the terms <term>specified security</term>,
<term>applicable date</term>, and <term>open-end fund</term> shall have the
meaning given such terms in section
6045(g).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HA8D2BC54B18C40CFB4BE237BE309D51"><enum>(c)</enum><header>Information by
transferors To aid brokers</header>
<paragraph id="HFA8C67A6AA5B412A8009806EDFB898F3"><enum>(1)</enum><header>In
general</header><text>Subpart B of part III of subchapter A of chapter 61 is
amended by inserting after section 6045 the following new section:</text>
<quoted-block id="HA18B706334E2495FBE6EB7956437411B" style="OLC">
<section id="H96A97FFD09E14FA6AD961E3CF21D5922"><enum>6045A.</enum><header>Information
required in connection with transfers of covered securities to brokers</header>
<subsection id="HC883EBEF1C1D405B949E376F5842F8C1"><enum>(a)</enum><header>Furnishing of
information</header><text>Every applicable person which transfers to a broker
(as defined in section 6045(c)(1)) a security which is a covered security (as
defined in section 6045(g)(3)) in the hands of such applicable person shall
furnish to such broker a written statement in such manner and setting forth
such information as the Secretary may by regulations prescribe for purposes of
enabling such broker to meet the requirements of section 6045(g).</text>
</subsection><subsection id="H3265CC46C5864FA489BE5E39C8FB9E24"><enum>(b)</enum><header>Applicable
person</header><text>For purposes of subsection (a), the term <term>applicable
person</term> means—</text>
<paragraph id="H65EBBE99250F47C181077025BC4B20F2"><enum>(1)</enum><text>any broker (as
defined in section 6045(c)(1)), and</text>
</paragraph><paragraph id="H1278D07551C74C6F8899B84EE1E186DF"><enum>(2)</enum><text>any other person
as provided by the Secretary in regulations.</text>
</paragraph></subsection><subsection id="H1CA64700C872434A90006EE19C30D997"><enum>(c)</enum><header>Time for
furnishing statement</header><text>Any statement required by subsection (a)
shall be furnished not later than the earlier of—</text>
<paragraph id="H33B23DF8FA8C4E0F00F0875C3032B279"><enum>(1)</enum><text>45 days after the
date of the transfer described in subsection (a), or</text>
</paragraph><paragraph commented="no" id="H620E8C8E3F51419980AC32E66F627643"><enum>(2)</enum><text>January 15 of the
year following the calendar year during which such transfer
occurred.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H371D5FE86FCC41EE86EF3ED8917DCF00"><enum>(2)</enum><header>Assessable
penalties</header><text>Paragraph (2) of section 6724(d) (defining payee
statement) is amended by redesignating subparagraphs (I) through (CC) as
subparagraphs (J) through (DD), respectively, and by inserting after
subparagraph (H) the following new subparagraph:</text>
<quoted-block id="H0CE21844C86E4AA4858E54ABEBDB8F97" style="OLC">
<subparagraph id="H007D3BD9841C4CE6BA4B1FF6D33CAB34"><enum>(I)</enum><text>section 6045A
(relating to information required in connection with transfers of covered
securities to
brokers).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H610AA156781F4776806361E701AA6013"><enum>(3)</enum><header>Clerical
amendment</header><text>The table of sections for subpart B of part III of
subchapter A of chapter 61 is amended by inserting after the item relating to
section 6045 the following new item:</text>
<quoted-block id="HEE81C460F5CE4FE0B8392E5F838DCDC2" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 6045A. Information required in
connection with transfers of covered securities to
brokers.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection display-inline="no-display-inline" id="H6D4D75DBA8144D01BAA1F9CF82F2C911"><enum>(d)</enum><header>Additional
issuer information To aid brokers</header>
<paragraph id="H543A2CB0DE544F77AA85FF9F510395D8"><enum>(1)</enum><header>In
general</header><text>Subpart B of part III of subchapter A of chapter 61 of
the Internal Revenue Code of 1986, as amended by subsection (b), is amended by
inserting after section 6045A the following new section:</text>
<quoted-block id="HB991D96011CA4497B2F3FEFC2FFED4C" style="OLC">
<section id="H333B9B6017D84D97A5F54B00996069B4"><enum>6045B.</enum><header>Returns
relating to actions affecting basis of specified securities</header>
<subsection id="H602D41F9DC57489BB401FA8D28301223"><enum>(a)</enum><header>In
general</header><text>According to the forms or regulations prescribed by the
Secretary, any issuer of a specified security shall make a return setting
forth—</text>
<paragraph id="H7A5DE995912B4538835D7EBDB053456"><enum>(1)</enum><text>a description of
any organizational action which affects the basis of such specified security of
such issuer,</text>
</paragraph><paragraph id="H7D60DC428CED44D8A81B389B06E3DD59"><enum>(2)</enum><text>the quantitative
effect on the basis of such specified security resulting from such action,
and</text>
</paragraph><paragraph id="H3EC825DCFF604551BC0363B7820474EE"><enum>(3)</enum><text>such other
information as the Secretary may prescribe.</text>
</paragraph></subsection><subsection id="HF39D56230FE2474F841057EAECDC2C"><enum>(b)</enum><header>Time for filing
return</header><text>Any return required by subsection (a) shall be filed not
later than the earlier of—</text>
<paragraph id="HE79F9CFBC320429888FD93F9ADF8C8DB"><enum>(1)</enum><text>45 days after the
date of the action described in subsection (a), or</text>
</paragraph><paragraph commented="no" id="HDAED62935D2B45CEB01CEAB87129A4E3"><enum>(2)</enum><text>January 31 of the
year following the calendar year during which such action occurred.</text>
</paragraph></subsection><subsection id="HEA799E15CFBD4DC1B712D6124200A21"><enum>(c)</enum><header>Statements To be
furnished to holders of specified securities or their
nominees</header><text>According to the forms or regulations prescribed by the
Secretary, every person required to make a return under subsection (a) with
respect to a specified security shall furnish to the nominee with respect to
the specified security (or certificate holder if there is no nominee) a written
statement showing—</text>
<paragraph id="H32EEAF8773444A4996D7A197AEE0804E"><enum>(1)</enum><text>the name, address,
and phone number of the information contact of the person required to make such
return,</text>
</paragraph><paragraph id="HB7FAFD1E2DF24D29A344B0A8ABCF71C"><enum>(2)</enum><text>the information
required to be shown on such return with respect to such security, and</text>
</paragraph><paragraph id="H3B9119A7196D466E9794BA00B73BB23D"><enum>(3)</enum><text>such other
information as the Secretary may prescribe.</text>
</paragraph><continuation-text continuation-text-level="subsection">The
written statement required under the preceding sentence shall be furnished to
the holder on or before January 31 of the year following the calendar year
during which the action described in subsection (a) occurred.</continuation-text></subsection><subsection commented="no" id="HB89059C38CE34D56A527FCC5004668E3"><enum>(d)</enum><header>Specified
security</header><text>For purposes of this section, the term <term>specified
security</term> has the meaning given such term by section 6045(g)(3)(B). No
return shall be required under this section with respect to actions described
in subsection (a) with respect to a specified security which occur before the
applicable date (as defined in section 6045(g)(3)(C) with respect to such
security.</text>
</subsection><subsection id="H1EFF4918275A4A71B72FD15F27022CDB"><enum>(e)</enum><header>Public reporting
in lieu of return</header><text display-inline="yes-display-inline">The
Secretary may waive the requirements under subsections (a) and (c) with respect
to a specified security, if the person required to make the return under
subsection (a) makes publicly available, in such form and manner as the
Secretary determines necessary to carry out the purposes of this
section—</text>
<paragraph id="H2EA6DB42A89741B7A7634C3F6D09EAD"><enum>(1)</enum><text>the name, address,
phone number, and email address of the information contact of such person,
and</text>
</paragraph><paragraph id="HC70E26652B554319AC981B5BC6C00EC"><enum>(2)</enum><text>the information
described in paragraphs (1), (2), and (3) of subsection
(a).</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H97340BC161EF4C71BDFFCDBAA3A24434"><enum>(2)</enum><header>Assessable
penalties</header>
<subparagraph id="H024C06E8C0B44018B1215500B6D300BF"><enum>(A)</enum><text>Subparagraph (B)
of section 6724(d)(1) of such Code (defining information return) is amended by
redesignating clauses (iv) through (xix) as clauses (v) through (xx),
respectively, and by inserting after clause (iii) the following new
clause:</text>
<quoted-block id="H66AE3BC7CF0743B481E2ADF57E07F81E" style="OLC">
<clause id="HBB87C2FF8DF64B5FA058C5B15F793643"><enum>(iv)</enum><text>section 6045B(a)
(relating to returns relating to actions affecting basis of specified
securities),</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H04B8940417A04043A8DCF6A88557B9D2"><enum>(B)</enum><text>Paragraph (2) of
section 6724(d) of such Code (defining payee statement), as amended by
subsection (c)(2), is amended by redesignating subparagraphs (J) through (DD)
as subparagraphs (K) through (EE), respectively, and by inserting after
subparagraph (I) the following new subparagraph:</text>
<quoted-block id="H63D99E67A0834FC4B110ABD93F3FF9D9" style="OLC">
<subparagraph id="H729CAAD555874FFB8234820027F6E1AF"><enum>(J)</enum><text>subsections (c)
and (e) of section 6045B (relating to returns relating to actions affecting
basis of specified
securities).</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="HBF3CF1F2A8A64AC3AD1EF93FEE4D756C"><enum>(3)</enum><header>Clerical
amendment</header><text>The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code, as amended by subsection (b)(3), is
amended by inserting after the item relating to section 6045A the following new
item:</text>
<quoted-block id="HE089E58E87FD4106955F9CE1CF1D5B00" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 6045B. Returns relating to actions
affecting basis of specified
securities.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H714168571B6F46BAA0B05E12F2BAF5D9"><enum>(e)</enum><header>Effective
date</header><text>The amendments made by this section shall take effect on
January 1, 2009.</text>
</subsection></section><section commented="no" id="HD5BFC2B881BF4E63BF5111C7CE1734E2"><enum>623.</enum><header>Modification of
penalty for failure to file partnership returns</header><text display-inline="no-display-inline">Section 6698 is amended by adding at the end
the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H7A88D37194B84E9A9F387F008F4916EB" style="OLC">
<subsection commented="no" id="HAAFD3289280649F2B9FC1B28924708C"><enum>(e)</enum><header>Modifications</header><text display-inline="yes-display-inline">In the case of any return required to be
filed after the date of the enactment of this subsection—</text>
<paragraph commented="no" id="H6A2E7F9F99934F618B9D08AEEF41E994"><enum>(1)</enum><text>the dollar amount
in effect under subsection (b)(1) shall be increased by $25, and</text>
</paragraph><paragraph commented="no" id="H4DA44EA65D10485983CDD0C33BC43624"><enum>(2)</enum><text>the limitation on
the number of months taken into account under subsection (a) shall not be less
than 12
months.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section commented="no" display-inline="no-display-inline" id="H69C4CA20A2B542AD99C515016026C51B" section-type="subsequent-section"><enum>624.</enum><header>Penalty for failure
to file S corporation returns</header>
<subsection commented="no" id="H1B022A4134D040D5A4A424FDB75FBB00"><enum>(a)</enum><header>In
general</header><text>Part I of subchapter B of chapter 68 (relating to
assessable penalties) is amended by adding at the end the following new
section:</text>
<quoted-block display-inline="no-display-inline" id="HFD960B47E2FC46C0BA9339B56349CA67" style="OLC">
<section commented="no" id="H8CA75568809444A39CEB297DA00046"><enum>6699A.</enum><header>Failure to file
S corporation return</header>
<subsection commented="no" id="H156CFFBDB3DF47079DA700F9DEB745B"><enum>(a)</enum><header>General
rule</header><text>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—</text>
<paragraph commented="no" id="H7F03DA6202894A10BD18B8E4158FB6C"><enum>(1)</enum><text>fails to file such
return at the time prescribed therefor (determined with regard to any extension
of time for filing), or</text>
</paragraph><paragraph commented="no" id="HAAB8C0FD8EA7405CA0F5B68D468467C5"><enum>(2)</enum><text>files a return
which fails to show the information required under section 6037,</text>
</paragraph><continuation-text commented="no" continuation-text-level="subsection">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.</continuation-text></subsection><subsection commented="no" id="H174E903E8D7A4A689CB659CBFDC7112"><enum>(b)</enum><header>Amount per
month</header><text>For purposes of subsection (a), the amount determined under
this subsection for any month is the product of—</text>
<paragraph commented="no" id="H489CF171ECE24AB39FACF3D7D1BA7A6"><enum>(1)</enum><text>$25, multiplied
by</text>
</paragraph><paragraph commented="no" id="H0EC7D5473DD8447CA0CB943529F802B4"><enum>(2)</enum><text>the number of
persons who were shareholders in the S corporation during any part of the
taxable year.</text>
</paragraph></subsection><subsection commented="no" id="HB5DCF802F7EE4A309F51F917FEAEC8D6"><enum>(c)</enum><header>Assessment of
penalty</header><text>The penalty imposed by subsection (a) shall be assessed
against the S corporation.</text>
</subsection><subsection commented="no" id="H216A1EE4A2C349E9891ECEE565EDD26"><enum>(d)</enum><header>Deficiency
procedures not to apply</header><text>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).</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="HCC48F2FA730A40C79CAB97CFDC9DA1B1"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of sections for part I of subchapter B of
chapter 68 is amended by adding at the end the following new item:</text>
<quoted-block id="H0123F061375A4934BD87FF9922118B62" style="OLC">
<toc>
<toc-entry idref="H8CA75568809444A39CEB297DA00046" level="section">Sec. 6699A. Failure to file S corporation
return.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H6CFE50052D0C4DE9A9DC4E32B0AADBD0"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to returns
required to be filed after the date of the enactment of this Act.</text>
</subsection></section><section id="H1A9210025EAA4A61AF47AF040036BAF6"><enum>625.</enum><header>Time for
payment of corporate estimated taxes</header><text display-inline="no-display-inline">Subparagraph (B) of section 401(1) of the
Tax Increase Prevention and Reconciliation Act of 2005 is amended by striking
<quote>115 percent</quote> and inserting <quote>181 percent</quote>.</text>
</section></subtitle>
Passed the House of
Representatives November 9, 2007.
Lorraine C. Miller,
Clerk.