I 

110TH CONGRESS 

2D SESSION H. R. 5720 

To amend the Internal Revenue Code of 1986 to provide assistance for 

housing. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 8, 2008 

Mr. RANGEL (for himself, Mr. MCDERMOTT, Mr. LEWIS of Georgia, Mr. POMEROY, Mr. THOMPSON of California, Mr. EMANUEL, Mr. BLUMENAUER, 

Ms. BERKLEY, Mr. CROWLEY, Mr. ELLISON, Ms. GIFFORDS, Mr. JOHNSON of Georgia, Mr. MAHONEY of Florida, Mr. RODRIGUEZ, Ms. SHEAPORTER, Mr. SIRES, Mr. WELCH of Vermont, and Mrs. JONES of Ohio) 

introduced the following bill; which was referred to the Committee on 

Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

assistance for housing. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Housing Assistance Tax Act of 2008’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 


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1 to, or repeal of, a section or other provision, the reference 

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

4 (c) TABLE OF CONTENTS.—The table of contents of 

5 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—HOUSING TAX INCENTIVES 

Subtitle A—Multi-Family Housing 

PART 1—LOW-INCOME HOUSING TAX CREDIT

Sec. 101. Temporary increase in volume cap for low-income housing tax credit. 

Sec. 102. Determination of credit rate. 

Sec. 103. Modifications to definition of eligible basis. 

Sec. 104. Other simplification and reform of low-income housing tax incentives. 

PART 2—MODIFICATIONS TO TAX-EXEMPT HOUSING BOND RULES

Sec. 111. Recycling of tax-exempt debt for financing residential rental projects. 

Sec. 112. Coordination of certain rules applicable to low-income housing credit 

and qualified residential rental project exempt facility bonds. 

PART 3—REFORMS RELATED TO THE LOW-INCOME HOUSING CREDIT AND

TAX-EXEMPT HOUSING BONDS

Sec. 121. Hold harmless for reductions in area median gross income. 

Sec. 122. Exception to annual current income determination requirement where 

determination not relevant. 

Subtitle B—Single Family Housing 

Sec. 131. First-time homebuyer credit. 

Sec. 132. Additional standard deduction for real property taxes for nonitemizers. 

Subtitle C—General Provisions 

Sec. 141. Temporary liberalization of tax-exempt housing bond rules. 

Sec. 142. Repeal of alternative minimum tax limitations on tax-exempt housing 

bonds, low-income housing tax credit, and rehabilitation credit. 

Sec. 143. Bonds guaranteed by Federal home loan banks eligible for treatment 

as tax-exempt bonds. 

Sec. 144. Modification of rules pertaining to FIRPTA nonforeign affidavits. 

Sec. 145. Modification of definition of tax-exempt use property for purposes of 

the rehabilitation credit. 

TITLE II—REFORMS RELATED TO REAL ESTATE INVESTMENT 

TRUSTS 

Subtitle A—Foreign Currency and Other Qualified Activities 


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Sec. 201. Revisions to REIT income tests. 

Sec. 202. Revisions to REIT asset tests. 

Sec. 203. Conforming foreign currency revisions. 

Subtitle B—Taxable REIT Subsidiaries 

Sec. 211. Conforming taxable REIT subsidiary asset test. 

Subtitle C—Dealer Sales 

Sec. 221. Holding period under safe harbor. 

Sec. 222. Determining value of sales under safe harbor. 

Subtitle D—Health Care REITs 

Sec. 231. Conformity for health care facilities. 

Subtitle E—Effective Dates 

Sec. 241. Effective dates. 

TITLE III—REVENUE PROVISIONS 

Sec. 301. Broker reporting of customer’s basis in securities transactions. 

Sec. 302. Delay in application of worldwide allocation of interest. 

Sec. 303. Time for payment of corporate estimated taxes. 

1 TITLE I—HOUSING TAX 

2 INCENTIVES 

3 Subtitle A—Multi-Family Housing 

4 PART 1—LOW-INCOME HOUSING TAX CREDIT 

5 SEC. 101. TEMPORARY INCREASE IN VOLUME CAP FOR 

6 LOW-INCOME HOUSING TAX CREDIT. 

7 Paragraph (3) of section 42(h) is amended by adding 

8 at the end the following new subparagraph: 

9 ‘‘(I) INCREASE IN STATE HOUSING CREDIT

10 CEILING FOR 2008AND 2009.—In the case of 

11 calendar years 2008 and 2009, the dollar 

12 amount in effect under subparagraph (C)(ii)(I) 

13 for such calendar year (after any increase under 


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1 subparagraph (H)) shall be increased by 

2 $0.20.’’. 

3 SEC. 102. DETERMINATION OF CREDIT RATE. 

4 (a) ELIMINATION OF DISTINCTION BETWEEN NEW

5 AND EXISTING BUILDINGS; MINIMUM CREDIT RATE FOR

6 NON-FEDERALLY SUBSIDIZED BUILDINGS.— 

7 (1) IN GENERAL.—Subsection (b) section 42 is 

8 amended to read as follows: 

9 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

10 this section— 

11 ‘‘(1) IN GENERAL.—The term ‘applicable per12 centage’ means, with respect to any building, the ap13 propriate percentage prescribed by the Secretary for 

14 the earlier of— 

15 ‘‘(A) the month in which such building is 

16 placed in service, or 

17 ‘‘(B) at the election of the taxpayer— 

18 ‘‘(i) the month in which the taxpayer 

19 and the housing credit agency enter into 

20 an agreement with respect to such building 

21 (which is binding on such agency, the tax22 payer, and all successors in interest) as to 

23 the housing credit dollar amount to be allo24 cated to such building, or 


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1 ‘‘(ii) in the case of any building to 

2 which subsection (h)(4)(B) applies, the 

3 month in which the tax-exempt obligations 

4 are issued. 

5 A month may be elected under clause (ii) only if the 

6 election is made not later than the 5th day after the 

7 close of such month. Such an election, once made, 

8 shall be irrevocable. 

9 ‘‘(2) METHOD OF PRESCRIBING PERCENT10 AGES.— 

11 ‘‘(A) IN GENERAL.—For purposes of para12 graph (1), the percentages prescribed by the 

13 Secretary for any month shall be— 

14 ‘‘(i) in the case of any building which 

15 is not federally subsidized for the taxable 

16 year, the greater of— 

17 ‘‘(I) 9 percent, or 

18 ‘‘(II) the percentage which will 

19 yield over a 10-year period amounts of 

20 credit under subsection (a) which have 

21 a present value equal to 70 percent of 

22 the qualified basis of such building, 

23 and 

24 ‘‘(ii) in the case of any other building, 

25 the percentage which will yield over a 10- 


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1 year period amounts of credit under sub2 section (a) which have a present value 

3 equal to 30 percent of the qualified basis 

4 of such building. 

5 ‘‘(B) METHOD OF DISCOUNTING.—The 

6 present value under subparagraph (A) shall be 

7 determined— 

8 ‘‘(i) as of the last day of the 1st year 

9 of the 10-year period referred to in sub10 paragraph (A), 

11 ‘‘(ii) by using a discount rate equal to 

12 72 percent of the average of the annual 

13 Federal mid-term rate and the annual 

14 Federal long-term rate applicable under 

15 section 1274(d)(1) to the month applicable 

16 under subparagraph (A) and compounded 

17 annually, and 

18 ‘‘(iii) by assuming that the credit al19 lowable under this section for any year is 

20 received on the last day of such year. 

21 ‘‘(3) CROSS REFERENCES.— 

22 ‘‘(A) For treatment of certain rehabilita23 tion expenditures as separate buildings, see sub24 section (e). 


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1 ‘‘(B) For determination of applicable per2 centage for increases in qualified basis after the 

3 1st year of the credit period, see subsection 

4 (f)(3). 

5 ‘‘(C) For authority of housing credit agen6 cy to limit applicable percentage and qualified 

7 basis which may be taken into account under 

8 this section with respect to any building, see 

9 subsection (h)(7).’’. 

10 (2) CONFORMING AMENDMENTS.— 

11 (A) Subparagraph (B) of section 42(e)(3) 

12 is amended by striking ‘‘subsection 

13 (b)(2)(B)(ii)’’ and inserting ‘‘subsection 

14 (b)(2)(A)(ii)’’. 

15 (B) Subparagraph (A) of section 42(i)(2) 

16 is amended by striking ‘‘new building’’ and in17 serting ‘‘building’’. 

18 (b) MODIFICATIONS TO DEFINITION OF FEDERALLY

19 SUBSIDIZED BUILDING.— 

20 (1) IN GENERAL.—Subparagraph (A) of section 

21 42(i)(2) is amended by striking ‘‘, or any below mar22 ket Federal loan,’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Subparagraph (B) of section 42(i)(2) 

25 is amended— 


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1 (i) by striking ‘‘BALANCE OF LOAN

2 OR’’ in the heading thereof, 

3 (ii) by striking ‘‘loan or’’ in the mat4 ter preceding clause (i), and 

5 (iii) by striking ‘‘subsection (d)—’’ 

6 and all that follows and inserting ‘‘sub7 section (d) the proceeds of such obliga8 tion’’. 

9 (B) Subparagraph (C) of section 42(i)(2) 

10 is amended— 

11 (i) by striking ‘‘or below market Fed12 eral loan’’ in the matter preceding clause 

13 (i), 

14 (ii) in clause (i)— 

15 (I) by striking ‘‘or loan (when 

16 issued or made)’’ and inserting 

17 ‘‘(when issued)’’, and 

18 (II) by striking ‘‘the proceeds of 

19 such obligation or loan’’ and inserting 

20 ‘‘the proceeds of such obligation’’, and 

21 (iii) by striking ‘‘, and such loan is re22 paid,’’ in clause (ii). 

23 (C) Paragraph (2) of section 42(i) is 

24 amended by striking subparagraphs (D) and 

25 (E). 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this subsection shall apply to buildings placed in service 

3 after the date of the enactment of this Act. 

4 SEC. 103. MODIFICATIONS TO DEFINITION OF ELIGIBLE 

5 BASIS. 

6 (a) INCREASE IN CREDIT FOR CERTAIN STATE DES7 IGNATED BUILDINGS.—Subparagraph (C) of section 

8 42(d)(5) (relating to increase in credit for buildings in 

9 high cost areas), before redesignation under subsection 

10 (d), is amended by adding at the end the following new 

11 clause: 

12 ‘‘(v) BUILDINGS DESIGNATED BY

13 STATE HOUSING CREDIT AGENCY.—Any 

14 building which is designated by the State 

15 housing credit agency as requiring the in16 crease in credit under this subparagraph in 

17 order for such building to be financially 

18 feasible as part of a qualified low-income 

19 housing project shall be treated for pur20 poses of this subparagraph as located in a 

21 difficult development area which is des22 ignated for purposes of this subparagraph. 

23 The preceding sentence shall not apply to 

24 any building if paragraph (1) of subsection 

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1 igible basis of such building by reason of 

2 paragraph (4) of such subsection.’’. 

3 (b) MODIFICATION TO REHABILITATION REQUIRE4 MENTS.— 

5 (1) IN GENERAL.—Clause (ii) of section 

6 42(e)(3)(A) is amended— 

7 (A) by striking ‘‘10 percent’’ in subclause 

8 (I) and inserting ‘‘20 percent’’, and 

9 (B) by striking ‘‘$3,000’’ in subclause (II) 

10 and inserting ‘‘$6,000’’. 

11 (2) INFLATION ADJUSTMENT.—Paragraph (3) 

12 of section 42(e) is amended by adding at the end the 

13 following new subparagraph: 

14 ‘‘(D) INFLATION ADJUSTMENT.—In the 

15 case of any expenditures which are treated 

16 under paragraph (4) as placed in service during 

17 any calendar year after 2009, the $6,000 

18 amount in subparagraph (A)(ii)(II) shall be in19 creased by an amount equal to— 

20 ‘‘(i) such dollar amount, multiplied by 

21 ‘‘(ii) the cost-of-living adjustment de22 termined under section 1(f)(3) for such 

23 calendar year by substituting ‘calendar 

24 year 2008’ for ‘calendar year 1992’ in sub25 paragraph (B) thereof. 


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1 Any increase under the preceding sentence 

2 which is not a multiple of $100 shall be round3 ed to the nearest multiple of $100.’’. 

4 (3) CONFORMING AMENDMENT.—Subclause (II) 

5 of section 42(f)(5)(B)(ii) is amended by striking ‘‘if 

6 subsection (e)(3)(A)(ii)(II)’’ and all that follows and 

7 inserting ‘‘if the dollar amount in effect under sub8 section (e)(3)(A)(ii)(II) were two-thirds of such 

9 amount.’’. 

10 (c) INCREASE IN ALLOWABLE COMMUNITY SERVICE

11 FACILITY SPACE FOR SMALL PROJECTS.—Clause (ii) of 

12 section 42(d)(4)(C) (relating to limitation) is amended by 

13 striking ‘‘10 percent of the eligible basis of the qualified 

14 low-income housing project of which it is a part. For pur15 poses of’’ and inserting ‘‘the sum of— 

16 ‘‘(I) 15 percent of so much of the 

17 eligible basis of the qualified low-in18 come housing project of which it is a 

19 part as does not exceed $5,000,000, 

20 plus 

21 ‘‘(II) 10 percent of so much of 

22 the eligible basis of such project as is 

23 not taken into account under sub24 clause (I). 

25 For purposes of’’. 


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1 (d) CLARIFICATION OF TREATMENT OF FEDERAL

2 GRANTS.—Subparagraph (A) of section 42(d)(5) is 

3 amended to read as follows: 

4 ‘‘(A) FEDERAL GRANTS NOT TAKEN INTO

5 ACCOUNT IN DETERMINING ELIGIBLE BASIS.— 

6 The eligible basis of a building shall not include 

7 any costs financed directly or indirectly with the 

8 proceeds of a Federally funded grant.’’. 

9 (e) SIMPLIFICATION OF RELATED PARTY RULES.— 

10 Clause (iii) of section 42(d)(2)(D) is amended— 

11 (1) by striking all that precedes subclause (II), 

12 (2) by redesignating subclause (II) as clause 

13 (iii) and moving such clause two ems to the left, and 

14 (3) by striking the last sentence thereof. 

15 (f) REPEAL OF DEADWOOD.— 

16 (1) Clause (ii) of section 42(d)(2)(B) is amend17 ed by striking ‘‘the later of—’’ and all that follows 

18 and inserting ‘‘the date the building was last placed 

19 in service,’’. 

20 (2) Subparagraph (D) of section 42(d)(2) is 

21 amended by striking clause (i) and by redesignating 

22 clauses (ii) and (iii) as clauses (i) and (ii), respec23 tively. 


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1 (3) Paragraph (5) of section 42(d) is amended 

2 by striking subparagraph (B) and by redesignating 

3 subparagraph (C) as subparagraph (B). 

4 (g) EFFECTIVE DATE.—The amendments made by 

5 this subsection shall apply to buildings placed in service 

6 after the date of the enactment of this Act. 

7 SEC. 104. OTHER SIMPLIFICATION AND REFORM OF LOW8 INCOME HOUSING TAX INCENTIVES. 

9 (a) REPEAL PROHIBITION ON MODERATE REHABILI10 TATION ASSISTANCE.—Paragraph (2) of section 42(c) (de11 fining qualified low-income building) is amended by strik12 ing the flush sentence at the end. 

13 (b) MODIFICATION OF TIME LIMIT FOR INCURRING

14 10 PERCENT OF PROJECT’S COST.—Clause (ii) of section 

15 42(h)(1)(E) is amended by striking ‘‘(as of the later of 

16 the date which is 6 months after the date that the alloca17 tion was made or the close of the calendar year in which 

18 the allocation is made)’’ and inserting ‘‘(as of the date 

19 which is 1 year after the date that the allocation was 

20 made)’’. 

21 (c) REPEAL OF BONDING REQUIREMENT ON DIS22 POSITION OF BUILDING.—Paragraph (6) of section 42(j) 

23 (relating to no recapture on disposition of building (or in24 terest therein) where bond posted) is amended to read as 

25 follows: 


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1 ‘‘(6) NO RECAPTURE ON DISPOSITION OF

2 BUILDING WHICH CONTINUES IN QUALIFIED USE.— 

3 ‘‘(A) IN GENERAL.—The increase in tax 

4 under this subsection shall not apply solely by 

5 reason of the disposition of a building (or an in6 terest therein) if it is reasonably expected that 

7 such building will continue to be operated as a 

8 qualified low-income building for the remaining 

9 compliance period with respect to such building. 

10 ‘‘(B) STATUTE OF LIMITATIONS.—If a 

11 building (or an interest therein) is disposed of 

12 during any taxable year and there is any reduc13 tion in the qualified basis of such building 

14 which results in an increase in tax under this 

15 subsection for such taxable or any subsequent 

16 taxable year, then— 

17 ‘‘(i) the statutory period for the as18 sessment of any deficiency with respect to 

19 such increase in tax shall not expire before 

20 the expiration of 3 years from the date the 

21 Secretary is notified by the taxpayer (in 

22 such manner as the Secretary may pre23 scribe) of such reduction in qualified basis, 

24 and 


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1 ‘‘(ii) such deficiency may be assessed 

2 before the expiration of such 3-year period 

3 notwithstanding the provisions of any 

4 other law or rule of law which would other5 wise prevent such assessment.’’. 

6 (d) ENERGY EFFICIENCY AND HISTORIC NATURE

7 TAKEN INTO ACCOUNT IN MAKING ALLOCATIONS.—Sub8 paragraph (C) of section 42(m)(1) (relating to plans for 

9 allocation of credit among projects) is amended by striking 

10 ‘‘and’’ at the end of clause (vii), by striking the period 

11 at the end of clause (viii), and by adding at the end the 

12 following new clauses: 

13 ‘‘(ix) the energy efficiency of the 

14 project, and 

15 ‘‘(x) the historic nature of the 

16 project.’’. 

17 (e) CONTINUED ELIGIBILITY FOR STUDENTS WHO

18 RECEIVED FOSTER CARE ASSISTANCE.—Clause (i) of sec19 tion 42(i)(3)(D) is amended by striking ‘‘or’’ at the end 

20 of subclause (I), by redesignating subclause (II) as sub21 clause (III), and by inserting after subclause (I) the fol22 lowing new subclause: 

23 ‘‘(II) a student who was pre24 viously under the care and placement 

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1 sponsible for administering a plan 

2 under part B or part E of title IV of 

3 the Social Security Act, or’’. 

4 (f) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the amendments made by 

7 this section shall apply to buildings placed in service 

8 after the date of the enactment of this Act. 

9 (2) REPEAL OF BONDING REQUIREMENT ON

10 DISPOSITION OF BUILDING.—The amendment made 

11 by subsection (c) shall apply to— 

12 (A) interests in buildings disposed after 

13 the date of the enactment of this Act, and 

14 (B) interests in buildings disposed of on or 

15 before such date if— 

16 (i) it is reasonably expected that such 

17 building will continue to be operated as a 

18 qualified low-income building (within the 

19 meaning of section 42 of the Internal Rev20 enue Code of 1986) for the remaining com21 pliance period (within the meaning of such 

22 section) with respect to such building, and 

23 (ii) the taxpayer elects the application 

24 of this subparagraph with respect to such 

25 disposition. 


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1 (3) ENERGY EFFICIENCY AND HISTORIC NA2 TURE TAKEN INTO ACCOUNT IN MAKING ALLOCA3 TIONS.—The amendments made by subsection (d) 

4 shall apply to allocations made after December 31, 

5 2008. 

6 (4) CONTINUED ELIGIBILITY FOR STUDENTS

7 WHO RECEIVED FOSTER CARE ASSISTANCE.—The 

8 amendments made by subsection (e) shall apply to 

9 determinations made after the date of the enactment 

10 of this Act. 

11 PART 2—MODIFICATIONS TO TAX-EXEMPT 

12 HOUSING BOND RULES 

13 SEC. 111. RECYCLING OF TAX-EXEMPT DEBT FOR FINANC14 ING RESIDENTIAL RENTAL PROJECTS. 

15 (a) IN GENERAL.—Subsection (i) of section 146 (re16 lating to treatment of refunding issues) is amended by 

17 adding at the end the following new paragraph: 

18 ‘‘(6) TREATMENT OF CERTAIN RESIDENTIAL

19 RENTAL PROJECT BONDS AS REFUNDING BONDS IR20 RESPECTIVE OF OBLIGOR.— 

21 ‘‘(A) IN GENERAL.—If, during the 6- 

22 month period beginning on the date of a repay23 ment of a loan financed by an issue 95 percent 

24 or more of the net proceeds of which are used 

25 to provide projects described in section 142(d), 


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1 such repayment is used to provide a new loan 

2 for any project so described, any bond which is 

3 issued to refinance such issue shall be treated 

4 as a refunding issue to the extent the principal 

5 amount of such refunding issue does not exceed 

6 the principal amount of the bonds refunded. 

7 ‘‘(B) LIMITATIONS.—Subparagraph (A) 

8 shall apply to only one refunding of the original 

9 issue and only if— 

10 ‘‘(i) the refunding issue is issued not 

11 later than 4 years after the date on which 

12 the original issue was issued, 

13 ‘‘(ii) the latest maturity date of any 

14 bond of the refunding issue is not later 

15 than 34 years after the date on which the 

16 refunded bond was issued, and 

17 ‘‘(iii) the refunding issue is approved 

18 in accordance with section 147(f) before 

19 the issuance of the refunding issue.’’. 

20 (b) LOW-INCOME HOUSING CREDIT.—Clause (ii) of 

21 section 42(h)(4)(A) is amended by inserting ‘‘or such fi22 nancing is refunded as described in section 146(i)(6)’’ be23 fore the period at the end. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to repayments of loans received 

3 after the date of the enactment of this Act. 

4 SEC. 112. COORDINATION OF CERTAIN RULES APPLICABLE 

5 TO LOW-INCOME HOUSING CREDIT AND 

6 QUALIFIED RESIDENTIAL RENTAL PROJECT 

7 EXEMPT FACILITY BONDS. 

8 (a) DETERMINATION OF NEXT AVAILABLE UNIT.— 

9 Paragraph (3) of section 142(d) (relating to current in10 come determinations) is amended by adding at the end 

11 the following new subparagraph: 

12 ‘‘(C) EXCEPTION FOR PROJECTS WITH RE13 SPECT TO WHICH AFFORDABLE HOUSING CRED14 IT IS ALLOWED.—In the case of a project with 

15 respect to which credit is allowed under section 

16 42, the second sentence of subparagraph (B) 

17 shall be applied by substituting ‘building (with18 in the meaning of section 42)’ for ‘project’.’’. 

19 (b) STUDENTS.—Paragraph (2) of section 142(d) 

20 (relating to definitions and special rules) is amended by 

21 adding at the end the following new subparagraph: 

22 ‘‘(C) STUDENTS.—Rules similar to the 

23 rules of 42(i)(3)(D) shall apply for purposes of 

24 this subsection.’’. 


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1 (c) SINGLE-ROOM OCCUPANCY UNITS.—Paragraph 

2 (2) of section 142(d) (relating to definitions and special 

3 rules), as amended by this Act, is further amended by add4 ing at the end the following new subparagraph: 

5 ‘‘(D) SINGLE-ROOM OCCUPANCY UNITS.—A 

6 unit shall not fail to be treated as a residential 

7 unit merely because such unit is a single-room 

8 occupancy unit (within the meaning of section 

9 42).’’. 

10 (d) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to determinations of the status of 

12 qualified residential rental projects for periods beginning 

13 after the date of the enactment of this Act, with respect 

14 to bonds issued before, on, or after such date. 

15 PART 3—REFORMS RELATED TO THE LOW-IN16 COME HOUSING CREDIT AND TAX-EXEMPT 

17 HOUSING BONDS 

18 SEC. 121. HOLD HARMLESS FOR REDUCTIONS IN AREA ME19 DIAN GROSS INCOME. 

20 (a) IN GENERAL.—Paragraph (2) of section 142(d) 

21 is amended by adding at the end the following new sub22 paragraph: 

23 ‘‘(C) HOLD HARMLESS FOR REDUCTIONS

24 IN AREA MEDIAN GROSS INCOME.— 


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1 ‘‘(i) IN GENERAL.—Any determination 

2 of area median gross income under sub3 paragraph (B) with respect to any project 

4 for any calendar year after 2008 shall not 

5 be less than the area median gross income 

6 determined under such subparagraph with 

7 respect to such project for the calendar 

8 year preceding the calendar year for which 

9 such determination is made. 

10 ‘‘(ii) SPECIAL RULE FOR CERTAIN

11 CENSUS CHANGES.—In the case of a HUD 

12 hold harmless impacted project, the area 

13 median gross income with respect to such 

14 project for any calendar year after 2008 

15 (hereafter in this clause referred to as the 

16 current calendar year) shall be the greater 

17 of the amount determined without regard 

18 to this clause or the sum of— 

19 ‘‘(I) the area median gross in20 come determined under the HUD hold 

21 harmless policy with respect to such 

22 project for calendar year 2008, plus 

23 ‘‘(II) any increase in the area 

24 median gross income determined 

25 under subparagraph (B) (determined 


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1 without regard to the HUD hold 

2 harmless policy and this subpara3 graph) with respect to such project 

4 for the current calendar year over the 

5 area median gross income (as so de6 termined) with respect to such project 

7 for calendar year 2008. 

8 ‘‘(iii) HUD HOLD HARMLESS POL9 ICY.—The term ‘HUD hold harmless pol10 icy’ means the regulations under which a 

11 policy similar to the rules of clause (i) ap12 plied to prevent a change in the method of 

13 determining area median gross income 

14 from resulting in a reduction in the area 

15 median gross income determined with re16 spect to certain projects in calendar years 

17 2007 and 2008. 

18 ‘‘(iv) HUD HOLD HARMLESS IM19 PACTED PROJECT.—The term ‘HUD hold 

20 harmless impacted project’ means any 

21 project with respect to which area median 

22 gross income was determined under sub23 paragraph (B) for calendar year 2007 or 

24 2008 if such determination would have 


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1 been less but for the HUD hold harmless 

2 policy.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to determinations of area median 

5 gross income for calendar years after 2008. 

6 SEC. 122. EXCEPTION TO ANNUAL CURRENT INCOME DE7 TERMINATION REQUIREMENT WHERE DE8 TERMINATION NOT RELEVANT. 

9 (a) IN GENERAL.—Subparagraph (A) of section 

10 142(d)(3) is amended by adding at the end the following 

11 new sentence: ‘‘The preceding sentence shall not apply 

12 with respect to any project for any year if during such 

13 year no residential unit in the project is occupied by a 

14 new resident whose income exceeds the applicable income 

15 limit.’’ 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to years ending after the date of 

18 the enactment of this Act. 

19 Subtitle B—Single Family Housing 

20 SEC. 131. FIRST-TIME HOMEBUYER CREDIT. 

21 (a) IN GENERAL.—Subpart C of part IV of sub22 chapter A of chapter 1 is amended by redesignating sec23 tion 36 as section 37 and by inserting after section 35 

24 the following new section: 


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1 ‘‘SEC. 36. FIRST-TIME HOMEBUYER CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual who is a first-time homebuyer of a principal resi4 dence in the United States during a taxable year, there 

5 shall be allowed as a credit against the tax imposed by 

6 this subtitle for such taxable year an amount equal to 10 

7 percent of the purchase price of the residence. 

8 ‘‘(b) LIMITATIONS.— 

9 ‘‘(1) DOLLAR LIMITATION.— 

10 ‘‘(A) IN GENERAL.—Except as otherwise 

11 provided in this paragraph, the credit allowed 

12 under subsection (a) shall not exceed $7,500. 

13 ‘‘(B) MARRIED INDIVIDUALS FILING SEPA14 RATELY.—In the case of a married individual 

15 filing a separate return, subparagraph (A) shall 

16 be applied by substituting ‘$3,750’ for ‘$7,500’. 

17 ‘‘(C) OTHER INDIVIDUALS.—If two or 

18 more individuals who are not married purchase 

19 a principal residence, the amount of the credit 

20 allowed under subsection (a) shall be allocated 

21 among such individuals in such manner as the 

22 Secretary may prescribe, except that the total 

23 amount of the credits allowed to all such indi24 viduals shall not exceed $7,500. 

25 ‘‘(2) LIMITATION BASED ON MODIFIED AD26 JUSTED GROSS INCOME.— 


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1 ‘‘(A) IN GENERAL.—The amount allowable 

2 as a credit under subsection (a) (determined 

3 without regard to this paragraph) for the tax4 able year shall be reduced (but not below zero) 

5 by the amount which bears the same ratio to 

6 the amount which is so allowable as— 

7 ‘‘(i) the excess (if any) of— 

8 ‘‘(I) the taxpayer’s modified ad9 justed gross income for such taxable 

10 year, over 

11 ‘‘(II) $70,000 ($110,000 in the 

12 case of a joint return), bears to 

13 ‘‘(ii) $20,000. 

14 ‘‘(B) MODIFIED ADJUSTED GROSS IN15 COME.—For purposes of subparagraph (A), the 

16 term ‘modified adjusted gross income’ means 

17 the adjusted gross income of the taxpayer for 

18 the taxable year increased by any amount ex19 cluded from gross income under section 911, 

20 931, or 933. 

21 ‘‘(c) DEFINITIONS.—For purposes of this section— 

22 ‘‘(1) FIRST-TIME HOMEBUYER.—The term 

23 ‘first-time homebuyer’ means any individual if such 

24 individual (and if married, such individual’s spouse) 

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1 dence during the 3-year period ending on the date 

2 of the purchase of the principal residence to which 

3 this section applies. 

4 ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin5 cipal residence’ has the same meaning as when used 

6 in section 121. 

7 ‘‘(3) PURCHASE.— 

8 ‘‘(A) IN GENERAL.—The term ‘purchase’ 

9 means any acquisition, but only if— 

10 ‘‘(i) the property is not acquired from 

11 a person related to the person acquiring it, 

12 and 

13 ‘‘(ii) the basis of the property in the 

14 hands of the person acquiring it is not de15 termined— 

16 ‘‘(I) in whole or in part by ref17 erence to the adjusted basis of such 

18 property in the hands of the person 

19 from whom acquired, or 

20 ‘‘(II) under section 1014(a) (re21 lating to property acquired from a de22 cedent). 

23 ‘‘(B) CONSTRUCTION.—A residence which 

24 is constructed by the taxpayer shall be treated 


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1 as purchased by the taxpayer on the date the 

2 taxpayer first occupies such residence. 

3 ‘‘(4) PURCHASE PRICE.—The term ‘purchase 

4 price’ means the adjusted basis of the principal resi5 dence on the date such residence is purchased. 

6 ‘‘(5) RELATED PERSONS.—A person shall be 

7 treated as related to another person if the relation8 ship between such persons would result in the dis9 allowance of losses under section 267 or 707(b) (but, 

10 in applying section 267(b) and (c) for purposes of 

11 this section, paragraph (4) of section 267(c) shall be 

12 treated as providing that the family of an individual 

13 shall include only his spouse, ancestors, and lineal 

14 descendants). 

15 ‘‘(d) EXCEPTIONS.—No credit under subsection (a) 

16 shall be allowed to any taxpayer for any taxable year with 

17 respect to the purchase of a residence if— 

18 ‘‘(1) a credit under section 1400C (relating to 

19 first-time homebuyer in the District of Columbia) is 

20 allowable to the taxpayer (or the taxpayer’s spouse) 

21 for such taxable year or any prior taxable year, 

22 ‘‘(2) the residence is financed by the proceeds 

23 of a qualified mortgage issue the interest on which 

24 is exempt from tax under section 103, 

25 ‘‘(3) the taxpayer is a nonresident alien, or 


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1 ‘‘(4) the taxpayer disposes of such residence (or 

2 such residence ceases to be the principal residence of 

3 the taxpayer (and, if married, the taxpayer’s 

4 spouse)) before the close of such taxable year. 

5 ‘‘(e) REPORTING.—If the Secretary requires informa6 tion reporting under section 6045 by a person described 

7 in subsection (e)(2) thereof to verify the eligibility of tax8 payers for the credit allowable by this section, the excep9 tion provided by section 6045(e) shall not apply. 

10 ‘‘(f) RECAPTURE OF CREDIT.— 

11 ‘‘(1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, if a credit under subsection 

13 (a) is allowed to a taxpayer, the tax imposed by this 

chapter shall be increased by 62 14 ⁄3 percent of the 

15 amount of such credit for each taxable year in the 

16 recapture period. 

17 ‘‘(2) ACCELERATION OF RECAPTURE.—If a tax18 payer disposes of the principal residence with respect 

19 to which a credit was allowed under subsection (a) 

20 (or such residence ceases to be the principal resi21 dence of the taxpayer (and, if married, the tax22 payer’s spouse)) before the end of the recapture pe23 riod— 

24 ‘‘(A) the tax imposed by this chapter for 

25 the taxable year of such disposition or cesVerDate Aug 31 2005 03:40 Apr 09, 2008 Jkt 069200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H5720.IH H5720

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1 sation, shall be increased by the excess of the 

2 amount of the credit allowed over the amounts 

3 of tax imposed by paragraph (1) for preceding 

4 taxable years, and 

5 ‘‘(B) paragraph (1) shall not apply with 

6 respect to such credit for such taxable year or 

7 any subsequent taxable year . 

8 ‘‘(3) LIMITATION BASED ON GAIN.—In the case 

9 of the sale of the principal residence to a person who 

10 is not related to the taxpayer, the increase in tax de11 termined under paragraph (2) shall not exceed the 

12 amount of gain (if any) on such sale. Solely for pur13 poses of the preceding sentence, the adjusted basis 

14 of such residence shall be reduced by the amount of 

15 the credit allowed under subsection (a) to the extent 

16 not previously recaptured under paragraph (1). 

17 ‘‘(4) EXCEPTIONS.— 

18 ‘‘(A) DEATH OF TAXPAYER.—Paragraphs 

19 (1) and (2) shall not apply to any taxable year 

20 ending after the date of the taxpayer’s death. 

21 ‘‘(B) INVOLUNTARY CONVERSION.—Para22 graph (2) shall not apply in the case of a resi23 dence which is compulsorily or involuntarily 

24 converted (within the meaning of section 

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1 cipal residence during the 2-year period begin2 ning on the date of the disposition or cessation 

3 referred to in paragraph (2). Paragraph (2) 

4 shall apply to such new principal residence dur5 ing the recapture period in the same manner as 

6 if such new principal residence were the con7 verted residence. 

8 ‘‘(C) TRANSFERS BETWEEN SPOUSES OR

9 INCIDENT TO DIVORCE.—In the case of a trans10 fer of a residence to which section 1041(a) ap11 plies— 

12 ‘‘(i) paragraph (2) shall not apply to 

13 such transfer, and 

14 ‘‘(ii) in the case of taxable years end15 ing after such transfer, paragraphs (1) and 

16 (2) shall apply to the transferee in the 

17 same manner as if such transferee were 

18 the transferor (and shall not apply to the 

19 transferor). 

20 ‘‘(5) JOINT RETURNS.—In the case of a credit 

21 allowed under subsection (a) with respect to a joint 

22 return, half of such credit shall be treated as having 

23 been allowed to each individual filing such return for 

24 purposes of this subsection. 


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1 ‘‘(6) RECAPTURE PERIOD.—For purposes of 

2 this subsection, the term ‘recapture period’ means 

3 the 15 taxable years beginning with the second tax4 able year following the taxable year in which the 

5 purchase of the principal residence for which a cred6 it is allowed under subsection (a) was made. 

7 ‘‘(g) APPLICATION OF SECTION.—This section shall 

8 only apply to a principal residence purchased by the tax9 payer after ll, and before April 1, 2009.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 26(b)(2) is amended by striking 

12 ‘‘and’’ at the end of subparagraph (U), by striking 

13 the period and inserting ‘‘, and’’ and the end of sub14 paragraph (V), and by inserting after subparagraph 

15 (V) the following new subparagraph: 

16 ‘‘(W) section 36(f) (relating to recapture of 

17 homebuyer credit).’’. 

18 (2) Section 6211(b)(4)(A) is amended by strik19 ing ‘‘ and 35,’’ and inserting ‘‘35, 36,’’. 

20 (3) Section 1324(b)(2) of title 31, United 

21 States Code, is amended by inserting ‘‘, 36,’’ after 

22 ‘‘section 35’’. 

23 (4) The table of sections for subpart C of part 

24 IV of subchapter A of chapter 1 is amended by re25 designating the item relating to section 36 as an 


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1 item relating to section 37 and by inserting before 

2 such item the following new item: 

‘‘Sec. 36. First-time homebuyer credit.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to ll. 

5 SEC. 132. ADDITIONAL STANDARD DEDUCTION FOR REAL 

6 PROPERTY TAXES FOR NONITEMIZERS. 

7 (a) IN GENERAL.—Section 63(c)(1) (defining stand8 ard deduction) is amended by striking ‘‘and’’ at the end 

9 of subparagraph (A), by striking the period at the end 

10 of subparagraph (B) and inserting ‘‘, and’’, and by adding 

11 at the end the following new subparagraph: 

12 ‘‘(C) in the case of any taxable year begin13 ning in 2008, the real property tax deduction.’’. 

14 (b) DEFINITION.—Section 63(c) is amended by add15 ing at the end the following new paragraph: 

16 ‘‘(8) REAL PROPERTY TAX DEDUCTION.—For 

17 purposes of paragraph (1), the real property tax de18 duction is so much of the amount of State and local 

19 real property taxes (within the meaning of section 

20 164) paid or accrued by the taxpayer during the tax21 able year which do not exceed $350 ($700 in the 

22 case of a joint return).’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to taxable years beginning after 

25 December 31, 2007. 


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1 Subtitle C—General Provisions 

2 SEC. 141. TEMPORARY LIBERALIZATION OF TAX-EXEMPT 

3 HOUSING BOND RULES. 

4 (a) TEMPORARY INCREASE IN VOLUME CAP.— 

5 (1) IN GENERAL.—Subsection (d) of section 

6 146 is amended by adding at the end the following 

7 new paragraph: 

8 ‘‘(5) INCREASE AND SET ASIDE FOR HOUSING

9 BONDS FOR 2008.— 

10 ‘‘(A) INCREASE FOR 2008.—In the case of 

11 calendar year 2008, the State ceiling for each 

12 State shall be increased by an amount equal to 

13 $10,000,000,000 multiplied by a fraction— 

14 ‘‘(i) the numerator of which is the 

15 population of such State, and 

16 ‘‘(ii) the denominator of which is the 

17 total population of all States. 

18 ‘‘(B) SET ASIDE.— 

19 ‘‘(i) IN GENERAL.—Any amount of 

20 the State ceiling for any State which is at21 tributable to an increase under this para22 graph shall be allocated solely for one or 

23 more qualified housing issues. 


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1 ‘‘(ii) QUALIFIED HOUSING ISSUE.— 

2 For purposes of this paragraph, the term 

3 ‘qualified housing issue’ means— 

4 ‘‘(I) an issue described in section 

5 142(a)(7) (relating to qualified resi6 dential rental projects), or 

7 ‘‘(II) a qualified mortgage issue 

8 (determined by substituting ‘12-month 

9 period’ for ‘42-month period’ each 

10 place it appears in section 

11 143(a)(2)(D)(i)).’’. 

12 (2) CARRYFORWARD OF UNUSED LIMITA13 TIONS.—Subsection (f) of section 146 is amended by 

14 adding at the end the following new paragraph: 

15 ‘‘(6) SPECIAL RULES FOR INCREASED VOLUME

16 CAP UNDER SUBSECTION (d)(5).—No amount which 

17 is attributable to the increase under subsection 

18 (d)(5) may be used— 

19 ‘‘(A) for any issue other than a qualified 

20 housing issue (as defined in subsection (d)(5)), 

21 or 

22 ‘‘(B) to issue any bond after calendar year 

23 2010.’’. 


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1 (b) TEMPORARY RULE FOR USE OF QUALIFIED

2 MORTGAGE BONDS PROCEEDS FOR SUBPRIME REFI3 NANCING LOANS.— 

4 (1) IN GENERAL.—Section 143(k) (relating to 

5 other definitions and special rules) is amended by 

6 adding at the end the following new paragraph: 

7 ‘‘(12) SPECIAL RULES FOR SUBPRIME

8 REFINANCINGS.— 

9 ‘‘(A) IN GENERAL.—Notwithstanding the 

10 requirements of subsection (i)(1), the proceeds 

11 of a qualified mortgage issue may be used to re12 finance a mortgage on a residence which was 

13 originally financed by the mortgagor through a 

14 qualified subprime loan. 

15 ‘‘(B) SPECIAL RULES.—In applying sub16 paragraph (A) to any refinancing— 

17 ‘‘(i) subsection (a)(2)(D)(i) shall be 

18 applied by substituting ‘12-month period’ 

19 for ‘42-month period’ each place it ap20 pears, 

21 ‘‘(ii) subsection (d) (relating to 3-year 

22 requirement) shall not apply, and 

23 ‘‘(iii) subsection (e) (relating to pur24 chase price requirement) shall be applied 

25 by using the market value of the residence 


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1 at the time of refinancing in lieu of the ac2 quisition cost. 

3 ‘‘(C) QUALIFIED SUBPRIME LOAN.—The 

4 term ‘qualified subprime loan’ means an adjust5 able rate single-family residential mortgage loan 

6 made after December 31, 2001, and before 

7 January 1, 2008, that the bond issuer deter8 mines would be reasonably likely to cause finan9 cial hardship to the borrower if not refinanced. 

10 ‘‘(D) TERMINATION.—This paragraph 

11 shall not apply to any bonds issued after De12 cember 31, 2010.’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to bonds issued after the date of 

15 the enactment of this Act. 

16 SEC. 142. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITA17 TIONS ON TAX-EXEMPT HOUSING BONDS, 

18 LOW-INCOME HOUSING TAX CREDIT, AND RE19 HABILITATION CREDIT. 

20 (a) TAX-EXEMPT INTEREST ON CERTAIN HOUSING

21 BONDS EXEMPTED FROM ALTERNATIVE MINIMUM

22 TAX.— 

23 (1) IN GENERAL.—Subparagraph (C) of section 

24 57(a)(5) (relating to specified private activity bonds) 

25 is amended by redesignating clauses (iii) and (iv) as 


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1 clauses (iv) and (v), respectively, and by inserting 

2 after clause (ii) the following new clause: 

3 ‘‘(iii) EXCEPTION FOR CERTAIN HOUS4 ING BONDS.—For purposes of clause (i), 

5 the term ‘private activity bond’ shall not 

6 include any bond issued after the date of 

7 the enactment of this clause if such bond 

8 is— 

9 ‘‘(I) an exempt facility bond 

10 issued as part of an issue 95 percent 

11 or more of the net proceeds of which 

12 are to be used to provide qualified res13 idential rental projects (as defined in 

14 section 142(d)), 

15 ‘‘(II) a qualified mortgage bond 

16 (as defined in section 143(a)), or 

17 ‘‘(III) a qualified veterans’ mort18 gage bond (as defined in section 

19 143(b)). 

20 The preceding sentence shall not apply to 

21 any refunding bond unless such preceding 

22 sentence applied to the refunded bond (or 

23 in the case of a series of refundings, the 

24 original bond).’’. 


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1 (2) NO ADJUSTMENT TO ADJUSTED CURRENT

2 EARNINGS.—Subparagraph (B) of section 56(g)(4) 

3 is amended by adding at the end the following new 

4 clause: 

5 ‘‘(iii) TAX EXEMPT INTEREST ON CER6 TAIN HOUSING BONDS.—Clause (i) shall 

7 not apply in the case of any interest on a 

8 bond to which section 57(a)(5)(C)(iii) ap9 plies.’’. 

10 (b) ALLOWANCE OF LOW-INCOME HOUSING CREDIT

11 AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph 

12 (B) of section 38(c)(4) (relating to specified credits) is 

13 amended by redesignating clauses (ii) through (iv) as 

14 clauses (iii) through (v) and inserting after clause (i) the 

15 following new clause: 

16 ‘‘(ii) the credit determined under sec17 tion 42 to the extent attributable to build18 ings placed in service after December 31, 

19 2007,’’. 

20 (c) ALLOWANCE OF REHABILITATION CREDIT

21 AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph 

22 (B) of section 38(c)(4), as amended by subsection (b), is 

23 amended by striking ‘‘and’’ at the end of clause (iv), by 

24 redesignating clause (v) as clause (vi), and by inserting 

25 after clause (iv) the following new clause: 


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1 ‘‘(v) the credit determined under sec2 tion 47 to the extent attributable to quali3 fied rehabilitation expenditures properly 

4 taken into account for periods after De5 cember 31, 2007, and’’. 

6 (d) EFFECTIVE DATE.— 

7 (1) HOUSING BONDS.—The amendments made 

8 by subsection (a) shall apply to bonds issued after 

9 the date of the enactment of this Act. 

10 (2) LOW INCOME HOUSING CREDIT.—The 

11 amendments made by subsection (b) shall apply to 

12 credits determined under section 42 of the Internal 

13 Revenue Code of 1986 to the extent attributable to 

14 buildings placed in service after December 31, 2007. 

15 (3) REHABILITATION CREDIT.—The amend16 ments made by subsection (c) shall apply to credits 

17 determined under section 47 of the Internal Revenue 

18 Code of 1986 to the extent attributable to qualified 

19 rehabilitation expenditures properly taken into ac20 count for periods after December 31, 2007. 

21 SEC. 143. BONDS GUARANTEED BY FEDERAL HOME LOAN 

22 BANKS ELIGIBLE FOR TREATMENT AS TAX23 EXEMPT BONDS. 

24 (a) IN GENERAL.—Subparagraph (A) of section 

25 149(b)(3) of the Internal Revenue Code of 1986 (relating 


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1 to exceptions for certain insurance programs) is amended 

2 by striking ‘‘or’’ at the end of clause (ii), by striking the 

3 period at the end of clause (iii) and inserting ‘‘, or’’ and 

4 by adding at the end the following new clause: 

5 ‘‘(iv) any guarantee by a Federal 

6 home loan bank made in connection with 

7 the original issuance of a bond during the 

8 period beginning on the date of the enact9 ment of this Act and ending on December 

10 31, 2010 (or a renewal or extension of a 

11 guarantee so made).’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to guarantees made after the date 

14 of the enactment of this Act. 

15 SEC. 144. MODIFICATION OF RULES PERTAINING TO 

16 FIRPTA NONFOREIGN AFFIDAVITS. 

17 (a) IN GENERAL.—Subsection (b) of section 1445 

18 (relating to exemptions) is amended by adding at the end 

19 the following: 

20 ‘‘(9) ALTERNATIVE PROCEDURE FOR FUR21 NISHING NONFOREIGN AFFIDAVIT.—For purposes of 

22 paragraphs (2) and (7)— 

23 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

24 be treated as applying to a transaction if, in 


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1 connection with a disposition of a United States 

2 real property interest— 

3 ‘‘(i) the affidavit specified in para4 graph (2) is furnished to a qualified sub5 stitute, and 

6 ‘‘(ii) the qualified substitute furnishes 

7 a statement to the transferee stating, 

8 under penalty of perjury, that the qualified 

9 substitute has such affidavit in his posses10 sion. 

11 ‘‘(B) REGULATIONS.—The Secretary shall 

12 prescribe such regulations as may be necessary 

13 or appropriate to carry out this paragraph.’’. 

14 (b) QUALIFIED SUBSTITUTE.—Subsection (f) of sec15 tion 1445 (relating to definitions) is amended by adding 

16 at the end the following new paragraph: 

17 ‘‘(6) QUALIFIED SUBSTITUTE.—The term 

18 ‘qualified substitute’ means, with respect to a dis19 position of a United States real property interest— 

20 ‘‘(A) the person (including any attorney or 

21 title company) responsible for closing the trans22 action, other than the transferor’s agent, and 

23 ‘‘(B) the transferee’s agent.’’. 

24 (c) EXEMPTION NOT TO APPLY IF KNOWLEDGE OR

25 NOTICE THAT AFFIDAVIT OR STATEMENT IS FALSE.— 


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1 (1) IN GENERAL.—Paragraph (7) of section 

2 1445(b) (relating to special rules for paragraphs (2) 

3 and (3)) is amended to read as follows: 

4 ‘‘(7) SPECIAL RULES FOR PARAGRAPHS (2), (3), 

5 AND (9).—Paragraph (2), (3), or (9) (as the case 

6 may be) shall not apply to any disposition— 

7 ‘‘(A) if— 

8 ‘‘(i) the transferee or qualified sub9 stitute has actual knowledge that the affi10 davit referred to in such paragraph, or the 

11 statement referred to in paragraph 

12 (9)(A)(ii), is false, or 

13 ‘‘(ii) the transferee or qualified sub14 stitute receives a notice (as described in 

15 subsection (d)) from a transferor’s agent, 

16 transferee’s agent, or qualified substitute 

17 that such affidavit or statement is false, or 

18 ‘‘(B) if the Secretary by regulations re19 quires the transferee or qualified substitute to 

20 furnish a copy of such affidavit or statement to 

21 the Secretary and the transferee or qualified 

22 substitute fails to furnish a copy of such affi23 davit or statement to the Secretary at such 

24 time and in such manner as required by such 

25 regulations.’’. 


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1 (2) LIABILITY.— 

2 (A) NOTICE.—Paragraph (1) of section 

3 1445(d) (relating to notice of false affidavit; 

4 foreign corporations) is amended to read as fol5 lows: 

6 ‘‘(1) NOTICE OF FALSE AFFIDAVIT; FOREIGN

7 CORPORATIONS.—If— 

8 ‘‘(A) the transferor furnishes the trans9 feree or qualified substitute an affidavit de10 scribed in paragraph (2) of subsection (b) or a 

11 domestic corporation furnishes the transferee 

12 an affidavit described in paragraph (3) of sub13 section (b), and 

14 ‘‘(B) in the case of— 

15 ‘‘(i) any transferor’s agent— 

16 ‘‘(I) such agent has actual knowl17 edge that such affidavit is false, or 

18 ‘‘(II) in the case of an affidavit 

19 described in subsection (b)(2) fur20 nished by a corporation, such corpora21 tion is a foreign corporation, or 

22 ‘‘(ii) any transferee’s agent or quali23 fied substitute, such agent or substitute 

24 has actual knowledge that such affidavit is 

25 false, 


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1 such agent or qualified substitute shall so notify 

2 the transferee at such time and in such manner 

3 as the Secretary shall require by regulations.’’. 

4 (B) FAILURE TO FURNISH NOTICE.—Para5 graph (2) of section 1445(d) (relating to failure 

6 to furnish notice) is amended to read as follows: 

7 ‘‘(2) FAILURE TO FURNISH NOTICE.— 

8 ‘‘(A) IN GENERAL.—If any transferor’s 

9 agent, transferee’s agent, or qualified substitute 

10 is required by paragraph (1) to furnish notice, 

11 but fails to furnish such notice at such time or 

12 times and in such manner as may be required 

13 by regulations, such agent or substitute shall 

14 have the same duty to deduct and withhold that 

15 the transferee would have had if such agent or 

16 substitute had complied with paragraph (1). 

17 ‘‘(B) LIABILITY LIMITED TO AMOUNT OF

18 COMPENSATION.—An agent’s or substitute’s li19 ability under subparagraph (A) shall be limited 

20 to the amount of compensation the agent or 

21 substitute derives from the transaction.’’. 

22 (C) CONFORMING AMENDMENT.—The 

23 heading for section 1445(d) is amended by 

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1 serting ‘‘, TRANSFEREE’S AGENTS, OR QUALI2 FIED SUBSTITUTES’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to dispositions of United States 

5 real property interests after the date of the enactment of 

6 this Act. 

7 SEC. 145. MODIFICATION OF DEFINITION OF TAX-EXEMPT 

8 USE PROPERTY FOR PURPOSES OF THE RE9 HABILITATION CREDIT. 

10 (a) IN GENERAL.—Clause (I) of section 

11 47(c)(2)(B)(v) is amended by striking ‘‘section 168(h)’’ 

12 and inserting ‘‘section 168(h), except that ‘50 percent’ 

13 shall be substituted for ‘35 percent’ in paragraph 

14 (1)(B)(iii) thereof’’. 

15 (b) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to expenditures properly taken into 

17 account for periods after December 31, 2007. 


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1 TITLE II—REFORMS RELATED 

2 TO REAL ESTATE INVEST3 MENT TRUSTS 

4 Subtitle A—Foreign Currency and 

5 Other Qualified Activities 

6 SEC. 201. REVISIONS TO REIT INCOME TESTS. 

7 (a) ADDITION OF PERMISSIBLE INCOME CAT8 EGORIES.—Section 856(c) (relating to limitations) is 

9 amended— 

10 (1) by striking ‘‘and’’ at the end of paragraph 

11 (2)(G) and by inserting after paragraph (2)(H) the 

12 following new subparagraphs: 

13 ‘‘(I) passive foreign exchange gains; and 

14 ‘‘(J) any other item of income or gain as 

15 determined by the Secretary;’’, and 

16 (2) by striking ‘‘and’’ at the end of paragraphs 

17 (3)(H) and (3)(I) and by inserting after paragraph 

18 (3)(I) the following new subparagraphs: 

19 ‘‘(J) real estate foreign exchange gains; 

20 and 

21 ‘‘(K) any other item of income or gain as 

22 determined by the Secretary; and’’. 

23 (b) RULES REGARDING FOREIGN CURRENCY TRANS24 ACTIONS.—Section 856 (defining real estate investment 


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1 trust) is amended by adding at the end the following new 

2 subsection: 

3 ‘‘(n) RULES REGARDING FOREIGN CURRENCY

4 TRANSACTIONS.—With respect to any taxable year— 

5 ‘‘(1) REAL ESTATE FOREIGN EXCHANGE

6 GAINS.—For purposes of subsection (c)(3)(J), the 

7 term ‘real estate foreign exchange gains’ means— 

8 ‘‘(A) foreign currency gains (as defined in 

9 section 988(b)(1)) which are attributable to— 

10 ‘‘(i) any item described in subsection 

11 (c)(3) (other than in subparagraph (J) 

12 thereof), 

13 ‘‘(ii) the acquisition or ownership of 

14 obligations secured by mortgages on real 

15 property or on interests in real property 

16 (other than foreign currency gains attrib17 utable to any item described in clause (i)), 

18 or 

19 ‘‘(iii) becoming or being the obligor 

20 under obligations secured by mortgages on 

21 real property or on interests in real prop22 erty (other than foreign currency gains at23 tributable to any item described in clause 

24 (i)), 


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1 ‘‘(B) gains described in section 987 attrib2 utable to a qualified business unit (as defined 

3 by section 989) of the real estate investment 

4 trust, but only if such qualified business unit 

5 meets the requirements under— 

6 ‘‘(i) subsection (c)(3) (without regard 

7 to subparagraph (J) thereof) for the tax8 able year, and 

9 ‘‘(ii) subsection (c)(4)(A) at the close 

10 of each quarter that the real estate invest11 ment trust has directly or indirectly held 

12 the qualified business unit, and 

13 ‘‘(C) any other foreign currency gains as 

14 determined by the Secretary. 

15 ‘‘(2) PASSIVE FOREIGN EXCHANGE GAINS.—For 

16 purposes of subsection (c)(2)(I), the term ‘passive 

17 foreign exchange gains’ means— 

18 ‘‘(A) real estate foreign exchange gains, 

19 ‘‘(B) foreign currency gains (as defined in 

20 section 988(b)(1)) which are not described in 

21 subparagraph (A) and which are attributable to 

22 any item described in subsection (c)(2) (other 

23 than in subparagraph (I) thereof), and 

24 ‘‘(C) any other foreign currency gains as 

25 determined by the Secretary.’’. 


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1 (c) ADDITION TO REIT HEDGING RULE.—Subpara2 graph (G) of section 856(c)(5) is amended to read as fol3 lows: 

4 ‘‘(G) TREATMENT OF CERTAIN HEDGING

5 INSTRUMENTS.—Except to the extent as deter6 mined by the Secretary— 

7 ‘‘(i) any income of a real estate in8 vestment trust from a hedging transaction 

9 (as defined in clause (ii) or (iii) of section 

10 1221(b)(2)(A)) which is clearly identified 

11 pursuant to section 1221(a)(7), including 

12 gain from the sale or disposition of such a 

13 transaction, shall not constitute gross in14 come under paragraphs (2) and (3) to the 

15 extent that the transaction hedges any in16 debtedness incurred or to be incurred by 

17 the trust to acquire or carry real estate as18 sets, and 

19 ‘‘(ii) any income of a real estate in20 vestment trust from a transaction entered 

21 into by the trust primarily to manage risk 

22 of currency fluctuations with respect to 

23 any item described in paragraph (2) or (3), 

24 including gain from the termination of 

25 such a transaction, shall not constitute 


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1 gross income under paragraphs (2) and 

2 (3), but only if such transaction is clearly 

3 identified as such before the close of the 

4 day on which it was acquired, originated, 

5 or entered into (or such other time as the 

6 Secretary may prescribe).’’. 

7 (d) AUTHORITY TO EXCLUDE ITEMS OF INCOME

8 FROM REIT INCOME TESTS.—Section 856(c)(5) is 

9 amended by adding at the end the following new subpara10 graph: 

11 ‘‘(H) SECRETARIAL AUTHORITY TO EX12 CLUDE OTHER ITEMS OF INCOME.—The Sec13 retary is authorized to determine whether any 

14 item of income or gain which does not otherwise 

15 qualify under paragraph (2) or (3) may be con16 sidered as not constituting gross income solely 

17 for purposes of this part.’’. 

18 SEC. 202. REVISIONS TO REIT ASSET TESTS. 

19 (a) CLARIFICATION OF VALUATION TEST.—The first 

20 sentence in the matter following section 

21 856(c)(4)(B)(iii)(III) is amended by inserting ‘‘(including 

22 a discrepancy caused solely by the change in the foreign 

23 currency exchange rate used to value a foreign asset)’’ 

24 after ‘‘such requirements’’. 


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1 (b) CLARIFICATION OF PERMISSIBLE ASSET CAT2 EGORY.—Section 856(c)(5), as amended by section 

3 301(d), is amended by adding at the end the following new 

4 subparagraph: 

5 ‘‘(I) CASH.—The term ‘cash’ includes for6 eign currency if the real estate investment trust 

7 or its qualified business unit (as defined in sec8 tion 989) uses such foreign currency as its 

9 functional currency (as defined in section 

10 985(b)).’’. 

11 SEC. 203. CONFORMING FOREIGN CURRENCY REVISIONS. 

12 (a) NET INCOME FROM FORECLOSURE PROPERTY.— 

13 Clause (i) of section 857(b)(4)(B) is amended to read as 

14 follows: 

15 ‘‘(i) gain (including any foreign cur16 rency gain, as defined in section 988(b)(1)) 

17 from the sale or other disposition of fore18 closure property described in section 

19 1221(a)(1) and the gross income for the 

20 taxable year derived from foreclosure prop21 erty (as defined in section 856(e)), but 

22 only to the extent such gross income is not 

23 described in (or, in the case of foreign cur24 rency gain, not attributable to gross inVerDate Aug 31 2005 03:40 Apr 09, 2008 Jkt 069200 PO 00000 Frm 00051 Fmt 6652 Sfmt 6201 E:\BILLS\H5720.IH H5720

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1 come described in) section 856(c)(3) other 

2 than subparagraph (F) thereof, over’’. 

3 (b) NET INCOME FROM PROHIBITED TRANS4 ACTIONS.—Clause (i) of section 857(b)(6)(B) is amended 

5 to read as follows: 

6 ‘‘(i) the term ‘net income derived from 

7 prohibited transactions’ means the excess 

8 of the gain (including any foreign currency 

9 gain, as defined in section 988(b)(1)) from 

10 prohibited transactions over the deductions 

11 (including any foreign currency loss, as de12 fined in section 988(b)(2)) allowed by this 

13 chapter which are directly connected with 

14 prohibited transactions;’’. 

15 Subtitle B—Taxable REIT 

16 Subsidiaries 

17 SEC. 211. CONFORMING TAXABLE REIT SUBSIDIARY ASSET 

18 TEST. 

19 Section 856(c)(4)(B)(ii) is amended by striking ‘‘20 

20 percent’’ and inserting ‘‘25 percent’’. 

21 Subtitle C—Dealer Sales 

22 SEC. 221. HOLDING PERIOD UNDER SAFE HARBOR. 

23 Section 857(b)(6) (relating to income from prohibited 

24 transactions) is amended— 


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1 (1) by striking ‘‘4 years’’ in subparagraphs 

2 (C)(i), (C)(iv), and (D)(i) and inserting ‘‘2 years’’, 

3 (2) by striking ‘‘4-year period’’ in subpara4 graphs (C)(ii), (D)(ii), and (D)(iii) and inserting ‘‘2- 

5 year period’’, and 

6 (3) by striking ‘‘real estate asset’’and all that 

7 follows through ‘‘if’’ in the matter preceding clause 

8 (i) of subparagraphs (C) and (D), respectively, and 

9 inserting ‘‘real estate asset (as defined in section 

10 856(c)(5)(B)) and which is described in section 

11 1221(a)(1) if’’. 

12 SEC. 222. DETERMINING VALUE OF SALES UNDER SAFE 

13 HARBOR. 

14 Section 857(b)(6) is amended— 

15 (1) by striking the semicolon at the end of sub16 paragraph (C)(iii) and inserting ‘‘, or (III) the fair 

17 market value of property (other than sales of fore18 closure property or sales to which section 1033 ap19 plies) sold during the taxable year does not exceed 

20 10 percent of the fair market value of all of the as21 sets of the trust as of the beginning of the taxable 

22 year;’’, and 

23 (2) by adding ‘‘or’’ at the end of subclause (II) 

24 of subparagraph (D)(iv) and by adding at the end 

25 of such subparagraph the following new subclause: 


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1 ‘‘(III) the fair market value of prop2 erty (other than sales of foreclosure prop3 erty or sales to which section 1033 applies) 

4 sold during the taxable year does not ex5 ceed 10 percent of the fair market value of 

6 all of the assets of the trust as of the be7 ginning of the taxable year,’’. 

8 Subtitle D—Health Care REITs 

9 SEC. 231. CONFORMITY FOR HEALTH CARE FACILITIES. 

10 (a) RELATED PARTY RENTALS.—Subparagraph (B) 

11 of section 856(d)(8) (relating to special rule for taxable 

12 REIT subsidiaries) is amended to read as follows: 

13 ‘‘(B) EXCEPTION FOR CERTAIN LODGING

14 FACILITIES AND HEALTH CARE PROPERTY.— 

15 The requirements of this subparagraph are met 

16 with respect to an interest in real property 

17 which is a qualified lodging facility or a quali18 fied health care property (as defined in sub19 section (e)(6)(D)(i)) leased by the trust to a 

20 taxable REIT subsidiary of the trust if the 

21 property is operated on behalf of such sub22 sidiary by a person who is an eligible inde23 pendent contractor. For purposes of this sec24 tion, a taxable REIT subsidiary is not consid25 ered to be operating or managing a qualified 


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1 health care property or qualified lodging facility 

2 solely because it directly or indirectly possesses 

3 a license, permit or similar instrument enabling 

4 it to do so.’’. 

5 (b) ELIGIBLE INDEPENDENT CONTRACTOR.—Sub6 paragraphs (A) and (B) of section 856(d)(9) (relating to 

7 eligible independent contractor) are amended to read as 

8 follows: 

9 ‘‘(A) IN GENERAL.—The term ‘eligible 

10 independent contractor’ means, with respect to 

11 any qualified lodging facility or qualified health 

12 care property (as defined in subsection 

13 (e)(6)(D)(i)), any independent contractor if, at 

14 the time such contractor enters into a manage15 ment agreement or other similar service con16 tract with the taxable REIT subsidiary to oper17 ate such qualified lodging facility or qualified 

18 health care property, such contractor (or any 

19 related person) is actively engaged in the trade 

20 or business of operating qualified lodging facili21 ties or qualified health care properties, respec22 tively, for any person who is not a related per23 son with respect to the real estate investment 

24 trust or the taxable REIT subsidiary. 


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1 ‘‘(B) SPECIAL RULES.—Solely for purposes 

2 of this paragraph and paragraph (8)(B), a per3 son shall not fail to be treated as an inde4 pendent contractor with respect to any qualified 

5 lodging facility or qualified health care property 

6 (as so defined) by reason of the following: 

7 ‘‘(i) The taxable REIT subsidiary 

8 bears the expenses for the operation of 

9 such qualified lodging facility or qualified 

10 health care property pursuant to the man11 agement agreement or other similar service 

12 contract. 

13 ‘‘(ii) The taxable REIT subsidiary re14 ceives the revenues from the operation of 

15 such qualified lodging facility or qualified 

16 health care property, net of expenses for 

17 such operation and fees payable to the op18 erator pursuant to such agreement or con19 tract. 

20 ‘‘(iii) The real estate investment trust 

21 receives income from such person with re22 spect to another property that is attrib23 utable to a lease of such other property to 

24 such person that was in effect as of the 

25 later of— 


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1 ‘‘(I) January 1, 1999, or 

2 ‘‘(II) the earliest date that any 

3 taxable REIT subsidiary of such trust 

4 entered into a management agreement 

5 or other similar service contract with 

6 such person with respect to such 

7 qualified lodging facility or qualified 

8 health care property.’’. 

9 (c) TAXABLE REIT SUBSIDIARIES.—The last sen10 tence of section 856(l)(3) is amended— 

11 (1) by inserting ‘‘or a health care facility’’ after 

12 ‘‘a lodging facility’’, and 

13 (2) by inserting ‘‘or health care facility’’ after 

14 ‘‘such lodging facility’’. 

15 Subtitle E—Effective Dates 

16 SEC. 241. EFFECTIVE DATES. 

17 (a) IN GENERAL.—Except as otherwise provided in 

18 this section, the amendments made by this title shall apply 

19 to taxable years beginning after the date of the enactment 

20 of this Act. 

21 (b) REIT INCOME TESTS.— 

22 (1) The amendment made by section 201(a) 

23 and (b) shall apply to gains and items of income rec24 ognized after the date of the enactment of this Act. 


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1 (2) The amendment made by section 201(c) 

2 shall apply to transactions entered into after the 

3 date of the enactment of this Act. 

4 (3) The amendment made by section 201(d) 

5 shall apply after the date of the enactment of this 

6 Act. 

7 (c) CONFORMING FOREIGN CURRENCY REVISIONS.— 

8 (1) The amendment made by section 203(a) 

9 shall apply to gains recognized after the date of the 

10 enactment of this Act. 

11 (2) The amendment made by section 203(b) 

12 shall apply to gains and deductions recognized after 

13 the date of the enactment of this Act. 

14 (d) DEALER SALES.—The amendments made by sub15 title C shall apply to sales made after the date of the en16 actment of this Act. 

17 TITLE III—REVENUE 

18 PROVISIONS 

19 SEC. 301. BROKER REPORTING OF CUSTOMER’S BASIS IN 

20 SECURITIES TRANSACTIONS. 

21 (a) IN GENERAL.— 

22 (1) BROKER REPORTING FOR SECURITIES

23 TRANSACTIONS.—Section 6045 (relating to returns 

24 of brokers) is amended by adding at the end the fol25 lowing new subsection: 


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1 ‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE

2 CASE OF SECURITIES TRANSACTIONS.— 

3 ‘‘(1) IN GENERAL.—If a broker is otherwise re4 quired to make a return under subsection (a) with 

5 respect to the gross proceeds of the sale of a covered 

6 security, the broker shall include in such return the 

7 information described in paragraph (2). 

8 ‘‘(2) ADDITIONAL INFORMATION REQUIRED.— 

9 ‘‘(A) IN GENERAL.—The information re10 quired under paragraph (1) to be shown on a 

11 return with respect to a covered security of a 

12 customer shall include the customer’s adjusted 

13 basis in such security and whether any gain or 

14 loss with respect to such security is long-term 

15 or short-term (within the meaning of section 

16 1222). 

17 ‘‘(B) DETERMINATION OF ADJUSTED

18 BASIS.—For purposes of subparagraph (A)— 

19 ‘‘(i) IN GENERAL.—The customer’s 

20 adjusted basis shall be determined— 

21 ‘‘(I) in the case of any security 

22 (other than any stock for which an av23 erage basis method is permissible 

24 under section 1012), in accordance 

25 with the first-in first-out method unVerDate Aug 31 2005 03:40 Apr 09, 2008 Jkt 069200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 E:\BILLS\H5720.IH H5720

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1 less the customer notifies the broker 

2 by means of making an adequate 

3 identification of the stock sold or 

4 transferred, 

5 ‘‘(II) in the case of any stock for 

6 which an average basis method is per7 missible under section 1012 and 

8 which is acquired before January 1, 

9 2012, in accordance with any accept10 able method under section 1012 with 

11 respect to the account in which such 

12 interest is held, and 

13 ‘‘(III) in the case of any stock for 

14 which an average basis method is per15 missible under section 1012 and 

16 which is acquired after December 31, 

17 2011, in accordance with the broker’s 

18 default method unless the customer 

19 notifies the broker that he elects an20 other acceptable method under section 

21 1012 with respect to the account in 

22 which such interest is held. 

23 ‘‘(ii) EXCEPTION FOR WASH SALES.— 

24 Except as otherwise provided by the Sec25 retary, the customer’s adjusted basis shall 


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1 be determined without regard to section 

2 1091 (relating to loss from wash sales of 

3 stock or securities) unless the transactions 

4 occur in the same account with respect to 

5 identical securities. 

6 ‘‘(3) COVERED SECURITY.—For purposes of 

7 this subsection— 

8 ‘‘(A) IN GENERAL.—The term ‘covered se9 curity’ means any specified security acquired on 

10 or after the applicable date if such security— 

11 ‘‘(i) was acquired through a trans12 action in the account in which such secu13 rity is held, or 

14 ‘‘(ii) was transferred to such account 

15 from an account in which such security 

16 was a covered security, but only if the 

17 broker received a statement under section 

18 6045A with respect to the transfer. 

19 ‘‘(B) SPECIFIED SECURITY.—The term 

20 ‘specified security’ means— 

21 ‘‘(i) any share of stock in a corpora22 tion, 

23 ‘‘(ii) any note, bond, debenture, or 

24 other evidence of indebtedness, 


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1 ‘‘(iii) any commodity, or contract or 

2 derivative with respect to such commodity, 

3 if the Secretary determines that adjusted 

4 basis reporting is appropriate for purposes 

5 of this subsection, and 

6 ‘‘(iv) any other financial instrument 

7 with respect to which the Secretary deter8 mines that adjusted basis reporting is ap9 propriate for purposes of this subsection. 

10 ‘‘(C) APPLICABLE DATE.—The term ‘appli11 cable date’ means— 

12 ‘‘(i) January 1, 2010, in the case of 

13 any specified security which is stock in a 

14 corporation, and 

15 ‘‘(ii) January 1, 2012, or such later 

16 date determined by the Secretary in the 

17 case of any other specified security. 

18 ‘‘(4) TREATMENT OF S CORPORATIONS.—In the 

19 case of the sale of a covered security acquired by an 

20 S corporation (other than a financial institution) 

21 after December 31, 2011, such S corporation shall 

22 be treated in the same manner as a partnership for 

23 purposes of this section. 

24 ‘‘(5) SPECIAL RULES FOR SHORT SALES.— 


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1 ‘‘(A) IN GENERAL.—In the case of a short 

2 sale, reporting under this section shall be made 

3 for the year in which such sale is closed. 

4 ‘‘(B) EXCEPTION FOR CONSTRUCTIVE

5 SALES.—Subparagraph (A) shall not apply to 

6 any short sale which results in a constructive 

7 sale under section 1259 with respect to prop8 erty held in the account in which the short sale 

9 is entered into.’’. 

10 (2) BROKER INFORMATION REQUIRED WITH RE11 SPECT TO OPTIONS.—Section 6045, as amended by 

12 subsection (a), is amended by adding at the end the 

13 following new subsection: 

14 ‘‘(h) APPLICATION TO OPTIONS ON SECURITIES.— 

15 ‘‘(1) EXERCISE OF OPTION.—For purposes of 

16 this section, in the case of any exercise of an option 

17 on a covered security where the option was granted 

18 or acquired in the same account as the covered secu19 rity, the amount received or paid with respect to 

20 such exercise shall be treated as an adjustment to 

21 gross proceeds or as an adjustment to basis, as the 

22 case may be. 

23 ‘‘(2) LAPSE OR CLOSING TRANSACTION.—For 

24 purposes of this section, in the case of the lapse (or 

25 closing transaction (as defined in section 


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1 1234(b)(2)(A))) of an option on a specified security 

2 where the taxpayer is the grantor of the option, this 

3 section shall apply as if the premium received for 

4 such option were gross proceeds received on the date 

5 of the lapse or closing transaction, and the cost (if 

6 any) of the closing transaction shall be taken into 

7 account as adjusted basis. In the case of an option 

8 on a specified security where the taxpayer is the 

9 grantee of such option, this section shall apply as if 

10 the grantee received gross proceeds of zero on the 

11 date of the lapse. 

12 ‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs 

13 (1) and (2) shall not apply to any option which is 

14 granted or acquired before January 1, 2012. 

15 ‘‘(4) DEFINITIONS.—For purposes of this sub16 section, the terms ‘covered security’ and ‘specified 

17 security’ shall have the meanings given such terms 

18 in subsection (g)(3).’’. 

19 (3) EXTENSION OF PERIOD FOR STATEMENTS

20 SENT TO CUSTOMERS.— 

21 (A) IN GENERAL.—Subsection (b) of sec22 tion 6045 is amended by striking ‘‘January 31’’ 

23 and inserting ‘‘February 15’’. 


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1 (B) STATEMENTS RELATED TO SUB2 STITUTE PAYMENTS.—Subsection (d) of section 

3 6045 is amended— 

4 (i) by striking ‘‘at such time and’’, 

5 and 

6 (ii) by inserting after ‘‘other item.’’ 

7 the following new sentence: ‘‘The written 

8 statement required under the preceding 

9 sentence shall be furnished on or before 

10 February 15 of the year following the cal11 endar year in which the payment was 

12 made.’’. 

13 (C) OTHER STATEMENTS.—Subsection (b) 

14 of section 6045 is amended by adding at the 

15 end the following: ‘‘In the case of a consolidated 

16 reporting statement (as defined in regulations) 

17 with respect to any account which includes the 

18 statement required by this subsection, any 

19 statement which would otherwise be required to 

20 be furnished on or before January 31 of a cal21 endar year under section 6042(c), 

22 6049(c)(2)(A), or 6050N(b) with respect to any 

23 item in such account shall instead be required 

24 to be furnished on or before February 15 of 


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1 such calendar year if furnished as part of such 

2 consolidated reporting statement.’’. 

3 (b) DETERMINATION OF BASIS OF CERTAIN SECURI4 TIES ON ACCOUNT BY ACCOUNT OR AVERAGE BASIS

5 METHOD.—Section 1012 (relating to basis of property– 

6 cost) is amended— 

7 (1) by striking ‘‘The basis of property’’ and in8 serting the following: 

9 ‘‘(a) IN GENERAL.—The basis of property’’, 

10 (2) by striking ‘‘The cost of real property’’ and 

11 inserting the following: 

12 ‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ES13 TATE TAXES.—The cost of real property’’, and 

14 (3) by adding at the end the following new sub15 sections: 

16 ‘‘(c) DETERMINATIONS BY ACCOUNT.— 

17 ‘‘(1) IN GENERAL.—In the case of the sale, ex18 change, or other disposition of a specified security 

19 on or after the applicable date, the conventions pre20 scribed by regulations under this section shall be ap21 plied on an account by account basis. 

22 ‘‘(2) APPLICATION TO OPEN-END FUNDS.— 

23 ‘‘(A) IN GENERAL.—Except as provided in 

24 subparagraph (B), any stock in an open-end 

25 fund acquired before January 1, 2010, shall be 


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1 treated as a separate account from any such 

2 stock acquired on or after such date. 

3 ‘‘(B) ELECTION BY OPEN-END FUND FOR

4 TREATMENT AS SINGLE ACCOUNT.—If an open5 end fund elects to have this subparagraph apply 

6 with respect to one or more of its stock7 holders— 

8 ‘‘(i) subparagraph (A) shall not apply 

9 with respect to any stock in such fund held 

10 by such stockholders, and 

11 ‘‘(ii) all stock in such fund which is 

12 held by such stockholders shall be treated 

13 as covered securities described in section 

14 6045(g)(3) without regard to the date of 

15 the acquisition of such stock. 

16 A rule similar to the rule of the preceding sen17 tence shall apply with respect to a broker hold18 ing stock in an open-end fund as a nominee. 

19 ‘‘(3) DEFINITIONS.—For purposes of this sec20 tion— 

21 ‘‘(A) OPEN-END FUND.—The term ‘open22 end fund’ means a regulated investment com23 pany (as defined in section 851) which is offer24 ing for sale or has outstanding any redeemable 

25 security of which it is the issuer and the shares 


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1 of which are not traded on an established secu2 rities exchange. 

3 ‘‘(B) SPECIFIED SECURITY; APPLICABLE

4 DATE.—The terms ‘specified security’ and ‘ap5 plicable date’ shall have the meaning given such 

6 terms in section 6045(g). 

7 ‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSU8 ANT TO A DIVIDEND REINVESTMENT PLAN.— 

9 ‘‘(1) IN GENERAL.—In the case of any stock ac10 quired after December 31, 2009, in connection with 

11 a dividend reinvestment plan, the basis of such stock 

12 shall be determined using one of the methods which 

13 may be used for determining the basis of stock in an 

14 open-end fund. 

15 ‘‘(2) SEPARATE ACCOUNTS; ELECTION FOR

16 TREATMENT AS SINGLE ACCOUNT.—Rules similar to 

17 the rules of subsection (c)(2) shall apply for pur18 poses of this subsection. 

19 ‘‘(3) DIVIDEND REINVESTMENT PLAN.—For 

20 purposes of this subsection— 

21 ‘‘(A) IN GENERAL.—The term ‘dividend re22 investment plan’ means any arrangement under 

23 which dividends on any stock are reinvested in 

24 stock identical to the stock with respect to 

25 which the dividends are paid. 


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1 ‘‘(B) INITIAL STOCK ACQUISITION TREAT2 ED AS ACQUIRED IN CONNECTION WITH

3 PLAN.—Stock shall be treated as acquired in 

4 connection with a dividend reinvestment plan if 

5 such stock is acquired pursuant to such plan or 

6 if the dividends paid on such stock are subject 

7 to such plan.’’. 

8 (c) INFORMATION BY TRANSFERORS T AID BRO9 KERS.— 

10 (1) IN GENERAL.—Subpart B of part III of 

11 subchapter A of chapter 61 is amended by inserting 

12 after section 6045 the following new section: 

13 ‘‘SEC. 6045A. INFORMATION REQUIRED IN CONNECTION 

14 WITH TRANSFERS OF COVERED SECURITIES 

15 TO BROKERS. 

16 ‘‘(a) FURNISHING OF INFORMATION.—Every applica17 ble person which transfers to a broker (as defined in sec18 tion 6045(c)(1)) a security which is a covered security (as 

19 defined in section 6045(g)(3)) in the hands of such appli20 cable person shall furnish to such broker a written state21 ment in such manner and setting forth such information 

22 as the Secretary may by regulations prescribe for purposes 

23 of enabling such broker to meet the requirements of sec24 tion 6045(g). 


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1 ‘‘(b) APPLICABLE PERSON.—For purposes of sub2 section (a), the term ‘applicable person’ means— 

3 ‘‘(1) any broker (as defined in section 

4 6045(c)(1)), and 

5 ‘‘(2) any other person as provided by the Sec6 retary in regulations. 

7 ‘‘(c) TIME FOR FURNISHING STATEMENT.—Except 

8 as otherwise provided by the Secretary, any statement re9 quired by subsection (a) shall be furnished on the date 

10 of the transfer described in such subsection.’’. 

11 (2) ASSESSABLE PENALTIES.—Paragraph (2) 

12 of section 6724(d) (defining payee statement) is 

13 amended by redesignating subparagraphs (I) 

14 through (CC) as subparagraphs (J) through (DD), 

15 respectively, and by inserting after subparagraph 

16 (H) the following new subparagraph: 

17 ‘‘(I) section 6045A (relating to information 

18 required in connection with transfers of covered 

19 securities to brokers).’’. 

20 (3) CLERICAL AMENDMENT.—The table of sec21 tions for subpart B of part III of subchapter A of 

22 chapter 61 is amended by inserting after the item 

23 relating to section 6045 the following new item: 

‘‘Sec. 6045A. Information required in connection with transfers of covered securities to brokers.’’. 


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1 (d) ADDITIONAL ISSUER INFORMATION TO AID BRO2 KERS.— 

3 (1) IN GENERAL.—Subpart B of part III of 

4 subchapter A of chapter 61 of the Internal Revenue 

5 Code of 1986, as amended by subsection (b), is 

6 amended by inserting after section 6045A the fol7 lowing new section: 

8 ‘‘SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING 

9 BASIS OF SPECIFIED SECURITIES. 

10 ‘‘(a) IN GENERAL.—According to the forms or regu11 lations prescribed by the Secretary, any issuer of a speci12 fied security shall make a return setting forth— 

13 ‘‘(1) a description of any organizational action 

14 which affects the basis of such specified security of 

15 such issuer, 

16 ‘‘(2) the quantitative effect on the basis of such 

17 specified security resulting from such action, and 

18 ‘‘(3) such other information as the Secretary 

19 may prescribe. 

20 ‘‘(b) TIME FOR FILING RETURN.—Any return re21 quired by subsection (a) shall be filed not later than the 

22 earlier of— 

23 ‘‘(1) 45 days after the date of the action de24 scribed in subsection (a), or 


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1 ‘‘(2) January 15 of the year following the cal2 endar year during which such action occurred. 

3 ‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS

4 OF SPECIFIED SECURITIES OR THEIR NOMINEES.—Ac5 cording to the forms or regulations prescribed by the Sec6 retary, every person required to make a return under sub7 section (a) with respect to a specified security shall furnish 

8 to the nominee with respect to the specified security (or 

9 certificate holder if there is no nominee) a written state10 ment showing— 

11 ‘‘(1) the name, address, and phone number of 

12 the information contact of the person required to 

13 make such return, 

14 ‘‘(2) the information required to be shown on 

15 such return with respect to such security, and 

16 ‘‘(3) such other information as the Secretary 

17 may prescribe. 

18 The written statement required under the preceding sen19 tence shall be furnished to the holder on or before January 

20 15 of the year following the calendar year during which 

21 the action described in subsection (a) occurred. 

22 ‘‘(d) SPECIFIED SECURITY.—For purposes of this 

23 section, the term ‘specified security’ has the meaning given 

24 such term by section 6045(g)(3)(B). No return shall be 

25 required under this section with respect to actions deVerDate Aug 31 2005 03:40 Apr 09, 2008 Jkt 069200 PO 00000 Frm 00072 Fmt 6652 Sfmt 6201 E:\BILLS\H5720.IH H5720

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1 scribed in subsection (a) with respect to a specified secu2 rity which occur before the applicable date (as defined in 

3 section 6045(g)(3)(C)) with respect to such security. 

4 ‘‘(e) PUBLIC REPORTING IN LIEU OF RETURN.—The 

5 Secretary may waive the requirements under subsections 

6 (a) and (c) with respect to a specified security, if the per7 son required to make the return under subsection (a) 

8 makes publicly available, in such form and manner as the 

9 Secretary determines necessary to carry out the purposes 

10 of this section— 

11 ‘‘(1) the name, address, phone number, and 

12 email address of the information contact of such 

13 person, and 

14 ‘‘(2) the information described in paragraphs 

15 (1), (2), and (3) of subsection (a).’’. 

16 (2) ASSESSABLE PENALTIES.— 

17 (A) Subparagraph (B) of section 

18 6724(d)(1) of such Code (defining information 

19 return) is amended by redesignating clauses (iv) 

20 through (xix) as clauses (v) through (xx), re21 spectively, and by inserting after clause (iii) the 

22 following new clause: 

23 ‘‘(iv) section 6045B(a) (relating to re24 turns relating to actions affecting basis of 

25 specified securities),’’. 


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1 (B) Paragraph (2) of section 6724(d) of 

2 such Code (defining payee statement), as 

3 amended by subsection (c)(2), is amended by 

4 redesignating subparagraphs (J) through (DD) 

5 as subparagraphs (K) through (EE), respec6 tively, and by inserting after subparagraph (I) 

7 the following new subparagraph: 

8 ‘‘(J) subsections (c) and (e) of section 

9 6045B (relating to returns relating to actions 

10 affecting basis of specified securities).’’. 

11 (3) CLERICAL AMENDMENT.—The table of sec12 tions for subpart B of part III of subchapter A of 

13 chapter 61 of such Code, as amended by subsection 

14 (b)(3), is amended by inserting after the item relat15 ing to section 6045A the following new item: 

‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securities.’’. 

16 (e) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the amendments made by 

19 this section shall take effect on January 1, 2010. 

20 (2) EXTENSION OF PERIOD FOR STATEMENTS

21 SENT TO CUSTOMERS.—The amendments made by 

22 subsection (a)(3) shall apply to statements required 

23 to be furnished after December 31, 2008. 


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1 SEC. 302. DELAY IN APPLICATION OF WORLDWIDE ALLOCA2 TION OF INTEREST. 

3 (a) IN GENERAL.—Paragraphs (5)(D) and (6) of sec4 tion 864(f) are each amended by striking ‘‘December 31, 

5 2008’’ and inserting ‘‘December 31, 2009’’. 

6 (b) TRANSITIONAL RULE.—Subsection (f) of section 

7 864 is amended by adding at the end the following new 

8 paragraph: 

9 ‘‘(7) TRANSITION.—In the case of the first tax10 able year to which this subsection applies, the in11 crease (if any) in the amount of the interest expense 

12 allocable to sources within the United States by rea13 son of the application of this subsection shall be 90 

14 percent of the amount of such increase determined 

15 without regard to this paragraph.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2008. 

19 SEC. 303. TIME FOR PAYMENT OF CORPORATE ESTIMATED 

20 TAXES. 

21 (a) REPEAL OF ADJUSTMENT FOR 2012.—Subpara22 graph (B) of section 401(1) of the Tax Increase Preven23 tion and Reconciliation Act of 2005 is amended by striking 

24 the percentage contained therein and inserting ‘‘100 per25 cent’’. 


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1 (b) MODIFICATION OF ADJUSTMENT FOR 2013.— 

2 The percentage under subparagraph (C) of section 401(1) 

3 of the Tax Increase Prevention and Reconciliation Act of 

4 2005 in effect on the date of the enactment of this Act 

5 is increased by 13 percentage points. 

Æ 


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