A bill to amend the Internal Revenue Code of 1986 to exclude from gross income the gain from the sale of a principal residence by certain employees of the intelligence community.

Summary: Amends the Internal Revenue Code to allow certain employees of the intelligence community to exclude from their gross income the gain from the sale of their principal residences without regard to otherwise applicable five-year residential use and holding requirements.

SECTION 1. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY 
              CERTAIN EMPLOYEES OF THE INTELLIGENCE COMMUNITY.

    (a) In General.--Subparagraph (A) of section 121(d)(9) of the 
Internal Revenue Code (relating to exclusion of gain from sale of 
principal residence) is amended by striking ``duty'' and all that 
follows and inserting ``duty--
                            ``(i) as a member of the uniformed 
                        services,
                            ``(ii) as a member of the Foreign Service 
                        of the United States, or
                            ``(iii) as an employee of the intelligence 
                        community.''.
    (b) Employee of Intelligence Community Defined.--Subparagraph (C) 
of section 121(d)(9) of the Internal Revenue Code of 1986 is amended by 
redesignating clause (iv) as clause (v) and by inserting after clause 
(iii) the following new clause:
                            ``(iv) Employee of intelligence 
                        community.--The term `employee of the 
                        intelligence community' means an employee (as 
                        defined by section 2105 of title 5, United 
                        States Code) of--
                                    ``(I) the Office of the Director of 
                                National Intelligence,
                                    ``(II) the Central Intelligence 
                                Agency,
                                    ``(III) the National Security 
                                Agency,
                                    ``(IV) the Defense Intelligence 
                                Agency,
                                    ``(V) the National Geospatial-
                                Intelligence Agency,
                                    ``(VI) the National Reconnaissance 
                                Office,
                                    ``(VII) any other office within the 
                                Department of Defense for the 
                                collection of specialized national 
                                intelligence through reconnaissance 
                                programs,
                                    ``(VIII) any of the intelligence 
                                elements of the Army, the Navy, the Air 
                                Force, the Marine Corps, the Federal 
                                Bureau of Investigation, the Department 
                                of Treasury, the Department of Energy, 
                                and the Coast Guard,
                                    ``(IX) the Bureau of Intelligence 
                                and Research of the Department of 
                                State, or
                                    ``(X) any of the elements of the 
                                Department of Homeland Security 
                                concerned with the analyses of foreign 
                                intelligence information.''.
    (c) Special Rule.--Subparagraph (C) of section 121(d)(9) of the 
Internal Revenue Code of 1986, as amended by subsection (b), is amended 
by adding at the end the following new clause:
                            ``(vi) Special rule relating to 
                        intelligence community.--An employee of the 
                        intelligence community shall not be treated as 
                        serving on qualified extended duty unless--
                                    ``(I) for purposes of such duty 
                                such employee has moved from 1 duty 
                                station to another, and
                                    ``(II) at least 1 of such duty 
                                stations is located outside of the 
                                Washington, District of Columbia, and 
                                Baltimore metropolitan statistical 
                                areas (as defined by the Secretary of 
                                Commerce).''.
    (d) Conforming Amendment.--The heading for section 121(d)(9) of the 
Internal Revenue Code of 1986 is amended to read as follows: 
``Uniformed services, foreign service, and intelligence community''.
    (e) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall take effect as if included in the amendments made by 
        section 312 of the Taxpayer Relief Act of 1997.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.