IB 

Union Calendar No. 377 

110TH CONGRESS 

2D SESSION H. R. 5720 

[Report No. 110–606] 

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 

APRIL 24, 2008 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on April 8, 2008] 

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, 

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1 SECTION 1. SHORT TITLE; ETC. 

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

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

4 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 

5 expressly provided, whenever in this Act an amendment or 

6 repeal is expressed in terms of an amendment to, or repeal 

7 of, a section or other provision, the reference shall be consid8 ered to be made to a section or other provision of the Inter9 nal Revenue Code of 1986. 

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

11 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. 

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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 

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 LOW6 INCOME HOUSING TAX CREDIT. 

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

8 at the end the following new subparagraph: 

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1 ‘‘(I) INCREASE IN STATE HOUSING CREDIT

2 CEILING FOR 2008 AND 2009.—In the case of cal3 endar years 2008 and 2009, the dollar amount 

4 in effect under subparagraph (C)(ii)(I) for such 

5 calendar year (after any increase under subpara6 graph (H)) shall be increased by $0.20.’’. 

7 SEC. 102. DETERMINATION OF CREDIT RATE. 

8 (a) ELIMINATION OF DISTINCTION BETWEEN NEW AND

9 EXISTING BUILDINGS; MINIMUM CREDIT RATE FOR NON10 FEDERALLY SUBSIDIZED BUILDINGS.— 

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

12 amended to read as follows: 

13 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of this 

14 section— 

15 ‘‘(1) IN GENERAL.—The term ‘applicable per16 centage’ means, with respect to any building, the ap17 propriate percentage prescribed by the Secretary for 

18 the earlier of— 

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

20 placed in service, or 

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

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

23 and the housing credit agency enter into an 

24 agreement with respect to such building 

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1 payer, and all successors in interest) as to 

2 the housing credit dollar amount to be allo3 cated to such building, or 

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

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

6 month in which the tax-exempt obligations 

7 are issued. 

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

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

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

11 shall be irrevocable. 

12 ‘‘(2) METHOD OF PRESCRIBING PERCENTAGES.— 

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the percentages prescribed by the Sec15 retary for any month shall be— 

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

17 is not federally subsidized for the taxable 

18 year, the greater of— 

19 ‘‘(I) the average percentage deter20 mined under subclause (II) for months 

21 in the preceding calendar year, or 

22 ‘‘(II) the percentage which will 

23 yield over a 10-year period amounts of 

24 credit under subsection (a) which have 

25 a present value equal to 70 percent of 

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1 the qualified basis of such building, 

2 and 

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

4 the percentage which will yield over a 10- 

5 year period amounts of credit under sub6 section (a) which have a present value equal 

7 to 30 percent of the qualified basis of such 

8 building. 

9 ‘‘(B) METHOD OF DISCOUNTING.—The 

10 present value under subparagraph (A) shall be 

11 determined— 

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

13 of the 10-year period referred to in subpara14 graph (A), 

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

16 72 percent of the average of the annual Fed17 eral mid-term rate and the annual Federal 

18 long-term rate applicable under section 

19 1274(d)(1) to the month applicable under 

20 subparagraph (A) and compounded annu21 ally, and 

22 ‘‘(iii) by assuming that the credit al23 lowable under this section for any year is 

24 received on the last day of such year. 

25 ‘‘(3) CROSS REFERENCES.— 

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1 ‘‘(A) For treatment of certain rehabilitation 

2 expenditures as separate buildings, see subsection 

3 (e). 

4 ‘‘(B) For determination of applicable per5 centage for increases in qualified basis after the 

6 1st year of the credit period, see subsection (f)(3). 

7 ‘‘(C) For authority of housing credit agency 

8 to limit applicable percentage and qualified 

9 basis which may be taken into account under 

10 this section with respect to any building, see sub11 section (h)(7).’’. 

12 (2) CONFORMING AMENDMENTS.— 

13 (A) Subparagraph (B) of section 42(e)(3) is 

14 amended by striking ‘‘subsection (b)(2)(B)(ii)’’ 

15 and inserting ‘‘subsection (b)(2)(A)(ii)’’. 

16 (B) Subparagraph (A) of section 42(i)(2) is 

17 amended by striking ‘‘new building’’ and insert18 ing ‘‘building’’. 

19 (b) MODIFICATIONS TO DEFINITION OF FEDERALLY

20 SUBSIDIZED BUILDING.— 

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

22 42(i)(2) is amended by striking ‘‘, or any below mar23 ket Federal loan,’’. 

24 (2) CONFORMING AMENDMENTS.— 

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1 (A) Subparagraph (B) of section 42(i)(2) is 

2 amended— 

3 (i) by striking ‘‘BALANCE OF LOAN OR’’ 

4 in the heading thereof, 

5 (ii) by striking ‘‘loan or’’ in the matter 

6 preceding clause (i), and 

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

8 and all that follows and inserting ‘‘sub9 section (d) the proceeds of such obligation.’’. 

10 (B) Subparagraph (C) of section 42(i)(2) is 

11 amended— 

12 (i) by striking ‘‘or below market Fed13 eral loan’’ in the matter preceding clause 

14 (i), 

15 (ii) in clause (i)— 

16 (I) by striking ‘‘or loan (when 

17 issued or made)’’ and inserting ‘‘(when 

18 issued)’’, and 

19 (II) by striking ‘‘the proceeds of 

20 such obligation or loan’’ and inserting 

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

22 (iii) by striking ‘‘, and such loan is re23 paid,’’ in clause (ii). 

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

2 amended by striking subparagraphs (D) and 

3 (E). 

4 (c) EFFECTIVE DATE.—The amendments made by this 

5 subsection shall apply to buildings placed in service after 

6 the date of the enactment of this Act. 

7 SEC. 103. MODIFICATIONS TO DEFINITION OF ELIGIBLE 

8 BASIS. 

9 (a) INCREASE IN CREDIT FOR CERTAIN STATE DES10 IGNATED BUILDINGS.—Subparagraph (C) of section 

11 42(d)(5) (relating to increase in credit for buildings in high 

12 cost areas), before redesignation under subsection (f), is 

13 amended by adding at the end the following new clause: 

14 ‘‘(v) BUILDINGS DESIGNATED BY

15 STATE HOUSING CREDIT AGENCY.—Any 

16 building which is designated by the State 

17 housing credit agency as requiring the in18 crease in credit under this subparagraph in 

19 order for such building to be financially fea20 sible as part of a qualified low-income hous21 ing project shall be treated for purposes of 

22 this subparagraph as located in a difficult 

23 development area which is designated for 

24 purposes of this subparagraph. The pre25 ceding sentence shall not apply to any 

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1 building if paragraph (1) of subsection (h) 

2 does not apply to any portion of the eligible 

3 basis of such building by reason of para4 graph (4) of such subsection.’’. 

5 (b) MODIFICATION TO REHABILITATION REQUIRE6 MENTS.— 

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

8 42(e)(3)(A) is amended— 

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

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

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

12 and inserting ‘‘$6,000’’. 

13 (2) INFLATION ADJUSTMENT.—Paragraph (3) of 

14 section 42(e) is amended by adding at the end the fol15 lowing new subparagraph: 

16 ‘‘(D) INFLATION ADJUSTMENT.—In the case 

17 of any expenditures which are treated under 

18 paragraph (4) as placed in service during any 

19 calendar year after 2009, the $6,000 amount in 

20 subparagraph (A)(ii)(II) shall be increased by 

21 an amount equal to— 

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

23 ‘‘(ii) the cost-of-living adjustment de24 termined under section 1(f)(3) for such cal25 endar year by substituting ‘calendar year 

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1 2008’ for ‘calendar year 1992’ in subpara2 graph (B) thereof. 

3 Any increase under the preceding sentence which 

4 is not a multiple of $100 shall be rounded to the 

5 nearest multiple of $100.’’. 

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

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

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

9 inserting ‘‘if the dollar amount in effect under sub10 section (e)(3)(A)(ii)(II) were two-thirds of such 

11 amount.’’. 

12 (c) INCREASE IN ALLOWABLE COMMUNITY SERVICE

13 FACILITY SPACE FOR SMALL PROJECTS.—Clause (ii) of sec14 tion 42(d)(4)(C) (relating to limitation) is amended by 

15 striking ‘‘10 percent of the eligible basis of the qualified low16 income housing project of which it is a part. For purposes 

17 of’’ and inserting ‘‘the sum of— 

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

19 eligible basis of the qualified low-in20 come housing project of which it is a 

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

22 plus 

23 ‘‘(II) 10 percent of so much of the 

24 eligible basis of such project as is not 

25 taken into account under subclause (I). 

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1 For purposes of’’. 

2 (d) CLARIFICATION OF TREATMENT OF FEDERAL

3 GRANTS.—Subparagraph (A) of section 42(d)(5) is amend4 ed to read as follows: 

5 ‘‘(A) FEDERAL GRANTS NOT TAKEN INTO

6 ACCOUNT IN DETERMINING ELIGIBLE BASIS.— 

7 The eligible basis of a building shall not include 

8 any costs financed with the proceeds of a Feder9 ally funded grant.’’. 

10 (e) SIMPLIFICATION OF RELATED PARTY RULES.— 

11 Clause (iii) of section 42(d)(2)(D), before redesignation 

12 under subsection (f)(2), is amended— 

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

14 (2) by redesignating subclause (II) as clause (iii) 

15 and moving such clause two ems to the left, and 

16 (3) by striking the last sentence thereof. 

17 (f) REPEAL OF DEADWOOD.— 

18 (1) Clause (ii) of section 42(d)(2)(B) is amended 

19 by striking ‘‘the later of—’’ and all that follows and 

20 inserting ‘‘the date the building was last placed in 

21 service,’’. 

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

23 amended by striking clause (i) and by redesignating 

24 clauses (ii) and (iii) as clauses (i) and (ii), respec25 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 this 

5 subsection shall apply to buildings placed in service after 

6 the date of the enactment of this Act. 

7 SEC. 104. OTHER SIMPLIFICATION AND REFORM OF LOW-IN8 COME 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 10 

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

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

16 date which is 6 months after the date that the allocation 

17 was made or the close of the calendar year in which the 

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

19 is 1 year after the date that the allocation was made)’’. 

20 (c) REPEAL OF BONDING REQUIREMENT ON DISPOSI21 TION OF BUILDING.—Paragraph (6) of section 42(j) (relat22 ing to no recapture on disposition of building (or interest 

23 therein) where bond posted) is amended to read as follows: 

24 ‘‘(6) NO RECAPTURE ON DISPOSITION OF BUILD25 ING WHICH CONTINUES IN QUALIFIED USE.— 

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

2 under this subsection shall not apply solely by 

3 reason of the disposition of a building (or an in4 terest therein) if it is reasonably expected that 

5 such building will continue to be operated as a 

6 qualified low-income building for the remaining 

7 compliance period with respect to such building. 

8 ‘‘(B) STATUTE OF LIMITATIONS.—If a 

9 building (or an interest therein) is disposed of 

10 during any taxable year and there is any reduc11 tion in the qualified basis of such building which 

12 results in an increase in tax under this sub13 section for such taxable or any subsequent tax14 able year, then— 

15 ‘‘(i) the statutory period for the assess16 ment of any deficiency with respect to such 

17 increase in tax shall not expire before the 

18 expiration of 3 years from the date the Sec19 retary is notified by the taxpayer (in such 

20 manner as the Secretary may prescribe) of 

21 such reduction in qualified basis, and 

22 ‘‘(ii) such deficiency may be assessed 

23 before the expiration of such 3-year period 

24 notwithstanding the provisions of any other 

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1 law or rule of law which would otherwise 

2 prevent such assessment.’’. 

3 (d) ENERGY EFFICIENCY AND HISTORIC NATURE

4 TAKEN INTO ACCOUNT IN MAKING ALLOCATIONS.—Sub5 paragraph (C) of section 42(m)(1) (relating to plans for 

6 allocation of credit among projects) is amended by striking 

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

8 the end of clause (viii) and inserting a comma, and by add9 ing at the end the following new clauses: 

10 ‘‘(ix) the energy efficiency of the 

11 project, and 

12 ‘‘(x) the historic nature of the project.’’. 

13 (e) CONTINUED ELIGIBILITY FOR STUDENTS WHO RE14 CEIVED FOSTER CARE ASSISTANCE.—Clause (i) of section 

15 42(i)(3)(D) is amended by striking ‘‘or’’ at the end of sub16 clause (I), by redesignating subclause (II) as subclause 

17 (III), and by inserting after subclause (I) the following new 

18 subclause: 

19 ‘‘(II) a student who was pre20 viously under the care and placement 

21 responsibility of the State agency re22 sponsible for administering a plan 

23 under part B or part E of title IV of 

24 the Social Security Act, or’’. 

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1 (f) TREATMENT OF RURAL PROJECTS.—Section 42(i) 

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

3 adding at the end the following new paragraph: 

4 ‘‘(8) TREATMENT OF RURAL PROJECTS.—For 

5 purposes of this section, in the case of any project for 

6 residential rental property located in a rural area (as 

7 defined in section 520 of the Housing Act of 1949), 

8 any income limitation measured by reference to area 

9 median gross income shall be measured by reference 

10 to the greater of area median gross income or na11 tional non-metropolitan median income. The pre12 ceding sentence shall not apply with respect to any 

13 building if paragraph (1) of section 42(h) does not 

14 apply by reason of paragraph (4) thereof to any por15 tion of the credit determined under this section with 

16 respect to such building.’’. 

17 (g) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—Except as otherwise provided 

19 in this subsection, the amendments made by this sec20 tion shall apply to buildings placed in service after 

21 the date of the enactment of this Act. 

22 (2) REPEAL OF BONDING REQUIREMENT ON DIS23 POSITION OF BUILDING.—The amendment made by 

24 subsection (c) shall apply to— 

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1 (A) interests in buildings disposed after the 

2 date of the enactment of this Act, and 

3 (B) interests in buildings disposed of on or 

4 before such date if— 

5 (i) it is reasonably expected that such 

6 building will continue to be operated as a 

7 qualified low-income building (within the 

8 meaning of section 42 of the Internal Rev9 enue Code of 1986) for the remaining com10 pliance period (within the meaning of such 

11 section) with respect to such building, and 

12 (ii) the taxpayer elects the application 

13 of this subparagraph with respect to such 

14 disposition. 

15 Notwithstanding the preceding sentence, the amend16 ments made by subsection (c) shall not apply to any 

17 disposition after the date 5 years after the date of the 

18 enactment of this Act. 

19 (3) ENERGY EFFICIENCY AND HISTORIC NATURE

20 TAKEN INTO ACCOUNT IN MAKING ALLOCATIONS.—The 

21 amendments made by subsection (d) shall apply to al22 locations made after December 31, 2008. 

23 (4) CONTINUED ELIGIBILITY FOR STUDENTS WHO

24 RECEIVED FOSTER CARE ASSISTANCE.—The amend25 ments made by subsection (e) shall apply to determstockstill on PROD1PC66 with BILLS

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1 minations made after the date of the enactment of this 

2 Act. 

3 (5) TREATMENT OF RURAL PROJECTS.—The 

4 amendment made by subsection (f) shall apply to de5 terminations made after the date of the enactment of 

6 this Act. 

7 PART 2—MODIFICATIONS TO TAX-EXEMPT 

8 HOUSING BOND RULES 

9 SEC. 111. RECYCLING OF TAX-EXEMPT DEBT FOR FINANC10 ING RESIDENTIAL RENTAL PROJECTS. 

11 (a) IN GENERAL.—Subsection (i) of section 146 (relat12 ing to treatment of refunding issues) is amended by adding 

13 at the end the following new paragraph: 

14 ‘‘(6) TREATMENT OF CERTAIN RESIDENTIAL

15 RENTAL PROJECT BONDS AS REFUNDING BONDS IRRE16 SPECTIVE OF OBLIGOR.— 

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

18 period beginning on the date of a repayment of 

19 a loan financed by an issue 95 percent or more 

20 of the net proceeds of which are used to provide 

21 projects described in section 142(d), such repay22 ment is used to provide a new loan for any 

23 project so described, any bond which is issued to 

24 refinance such issue shall be treated as a refund25 ing issue to the extent the principal amount of 

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1 such refunding issue does not exceed the prin2 cipal amount of the bonds refunded. 

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

4 shall apply to only one refunding of the original 

5 issue and only if— 

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

7 later than 4 years after the date on which 

8 the original issue was issued, 

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

10 bond of the refunding issue is not later than 

11 34 years after the date on which the re12 funded bond was issued, and 

13 ‘‘(iii) the refunding issue is approved 

14 in accordance with section 147(f) before the 

15 issuance of the refunding issue.’’. 

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

17 section 42(h)(4)(A) is amended by inserting ‘‘or such fi18 nancing is refunded as described in section 146(i)(6)’’ before 

19 the period at the end. 

20 (c) EFFECTIVE DATE.—The amendments made by this 

21 section shall apply to repayments of loans received after the 

22 date of the enactment of this Act. 

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1 SEC. 112. COORDINATION OF CERTAIN RULES APPLICABLE 

2 TO LOW-INCOME HOUSING CREDIT AND 

3 QUALIFIED RESIDENTIAL RENTAL PROJECT 

4 EXEMPT FACILITY BONDS. 

5 (a) DETERMINATION OF NEXT AVAILABLE UNIT.— 

6 Paragraph (3) of section 142(d) (relating to current income 

7 determinations) is amended by adding at the end the fol8 lowing new subparagraph: 

9 ‘‘(C) EXCEPTION FOR PROJECTS WITH RE10 SPECT TO WHICH AFFORDABLE HOUSING CREDIT

11 IS ALLOWED.—In the case of a project with re12 spect to which credit is allowed under section 42, 

13 the second sentence of subparagraph (B) shall be 

14 applied by substituting ‘building (within the 

15 meaning of section 42)’ for ‘project’.’’. 

16 (b) STUDENTS.—Paragraph (2) of section 142(d) (re17 lating to definitions and special rules) is amended by add18 ing at the end the following new subparagraph: 

19 ‘‘(C) STUDENTS.—Rules similar to the rules 

20 of 42(i)(3)(D) shall apply for purposes of this 

21 subsection.’’. 

22 (c) SINGLE-ROOM OCCUPANCY UNITS.—Paragraph (2) 

23 of section 142(d) (relating to definitions and special rules), 

24 as amended by subsection (b), is further amended by adding 

25 at the end the following new subparagraph: 

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

2 unit shall not fail to be treated as a residential 

3 unit merely because such unit is a single-room 

4 occupancy unit (within the meaning of section 

5 42).’’. 

6 (d) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to determinations of the status of quali8 fied residential rental projects for periods beginning after 

9 the date of the enactment of this Act, with respect to bonds 

10 issued before, on, or after such date. 

11 PART 3—REFORMS RELATED TO THE LOW-IN12 COME HOUSING CREDIT AND TAX-EXEMPT 

13 HOUSING BONDS 

14 SEC. 121. HOLD HARMLESS FOR REDUCTIONS IN AREA ME15 DIAN GROSS INCOME. 

16 (a) IN GENERAL.—Paragraph (2) of section 142(d), as 

17 amended by section 112, is further amended by adding at 

18 the end the following new subparagraph: 

19 ‘‘(E) HOLD HARMLESS FOR REDUCTIONS IN

20 AREA MEDIAN GROSS INCOME.— 

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

22 of area median gross income under sub23 paragraph (B) with respect to any project 

24 for any calendar year after 2008 shall not 

25 be less than the area median gross income 

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1 determined under such subparagraph with 

2 respect to such project for the calendar year 

3 preceding the calendar year for which such 

4 determination is made. 

5 ‘‘(ii) SPECIAL RULE FOR CERTAIN CEN6 SUS CHANGES.—In the case of a HUD hold 

7 harmless impacted project, the area median 

8 gross income with respect to such project for 

9 any calendar year after 2008 (hereafter in 

10 this clause referred to as the current cal11 endar year) shall be the greater of the 

12 amount determined without regard to this 

13 clause or the sum of— 

14 ‘‘(I) the area median gross income 

15 determined under the HUD hold harm16 less policy with respect to such project 

17 for calendar year 2008, plus 

18 ‘‘(II) any increase in the area me19 dian gross income determined under 

20 subparagraph (B) (determined without 

21 regard to the HUD hold harmless pol22 icy and this subparagraph) with re23 spect to such project for the current 

24 calendar year over the area median 

25 gross income (as so determined) with 

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1 respect to such project for calendar 

2 year 2008. 

3 ‘‘(iii) HUD HOLD HARMLESS POL4 ICY.—The term ‘HUD hold harmless policy’ 

5 means the regulations under which a policy 

6 similar to the rules of clause (i) applied to 

7 prevent a change in the method of deter8 mining area median gross income from re9 sulting in a reduction in the area median 

10 gross income determined with respect to cer11 tain projects in calendar years 2007 and 

12 2008. 

13 ‘‘(iv) HUD HOLD HARMLESS IM14 PACTED PROJECT.—The term ‘HUD hold 

15 harmless impacted project’ means any 

16 project with respect to which area median 

17 gross income was determined under sub18 paragraph (B) for calendar year 2007 or 

19 2008 if such determination would have been 

20 less but for the HUD hold harmless policy.’’. 

21 (b) EFFECTIVE DATE.—The amendment made by this 

22 section shall apply to determinations of area median gross 

23 income for calendar years after 2008. 

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1 SEC. 122. EXCEPTION TO ANNUAL CURRENT INCOME DE2 TERMINATION REQUIREMENT WHERE DETER3 MINATION NOT RELEVANT. 

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

5 142(d)(3) is amended by adding at the end the following 

6 new sentence: ‘‘The preceding sentence shall not apply with 

7 respect to any project for any year if during such year no 

8 residential unit in the project is occupied by a new resident 

9 whose income exceeds the applicable income limit.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by this 

11 section shall apply to years ending after the date of the en12 actment of this Act. 

13 Subtitle B—Single Family Housing 

14 SEC. 131. FIRST-TIME HOMEBUYER CREDIT. 

15 (a) IN GENERAL.—Subpart C of part IV of subchapter 

16 A of chapter 1 is amended by redesignating section 36 as 

17 section 37 and by inserting after section 35 the following 

18 new section: 

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

20 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an indi21 vidual who is a first-time homebuyer of a principal resi22 dence in the United States during a taxable year, there shall 

23 be allowed as a credit against the tax imposed by this sub24 title for such taxable year an amount equal to 10 percent 

25 of the purchase price of the residence. 

26 ‘‘(b) LIMITATIONS.— 

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1 ‘‘(1) DOLLAR LIMITATION.— 

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

3 provided in this paragraph, the credit allowed 

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

5 ‘‘(B) MARRIED INDIVIDUALS FILING SEPA6 RATELY.—In the case of a married individual 

7 filing a separate return, subparagraph (A) shall 

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

9 ‘‘(C) OTHER INDIVIDUALS.—If two or more 

10 individuals who are not married purchase a 

11 principal residence, the amount of the credit al12 lowed under subsection (a) shall be allocated 

13 among such individuals in such manner as the 

14 Secretary may prescribe, except that the total 

15 amount of the credits allowed to all such individ16 uals shall not exceed $7,500. 

17 ‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED

18 GROSS INCOME.— 

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

20 as a credit under subsection (a) (determined 

21 without regard to this paragraph) for the taxable 

22 year shall be reduced (but not below zero) by the 

23 amount which bears the same ratio to the 

24 amount which is so allowable as— 

25 ‘‘(i) the excess (if any) of— 

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1 ‘‘(I) the taxpayer’s modified ad2 justed gross income for such taxable 

3 year, over 

4 ‘‘(II) $70,000 ($140,000 in the 

5 case of a joint return), bears to 

6 ‘‘(ii) $20,000. 

7 ‘‘(B) MODIFIED ADJUSTED GROSS IN8 COME.—For purposes of subparagraph (A), the 

9 term ‘modified adjusted gross income’ means the 

10 adjusted gross income of the taxpayer for the tax11 able year increased by any amount excluded 

12 from gross income under section 911, 931, or 

13 933. 

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

15 ‘‘(1) FIRST-TIME HOMEBUYER.—The term ‘first16 time homebuyer’ means any individual if such indi17 vidual (and if married, such individual’s spouse) had 

18 no present ownership interest in a principal residence 

19 during the 3-year period ending on the date of the 

20 purchase of the principal residence to which this sec21 tion applies. 

22 ‘‘(2) PRINCIPAL RESIDENCE.—The term ‘prin23 cipal residence’ has the same meaning as when used 

24 in section 121. 

25 ‘‘(3) PURCHASE.— 

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

2 means any acquisition, but only if— 

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

4 a person related to the person acquiring it, 

5 and 

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

7 hands of the person acquiring it is not de8 termined— 

9 ‘‘(I) in whole or in part by ref10 erence to the adjusted basis of such 

11 property in the hands of the person 

12 from whom acquired, or 

13 ‘‘(II) under section 1014(a) (relat14 ing to property acquired from a dece15 dent). 

16 ‘‘(B) CONSTRUCTION.—A residence which is 

17 constructed by the taxpayer shall be treated as 

18 purchased by the taxpayer on the date the tax19 payer first occupies such residence. 

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

21 price’ means the adjusted basis of the principal resi22 dence on the date such residence is purchased. 

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

24 treated as related to another person if the relationship 

25 between such persons would result in the disallowance 

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1 of losses under section 267 or 707(b) (but, in applying 

2 section 267(b) and (c) for purposes of this section, 

3 paragraph (4) of section 267(c) shall be treated as 

4 providing that the family of an individual shall in5 clude only his spouse, ancestors, and lineal descend6 ants). 

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

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

9 respect to the purchase of a residence if— 

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

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

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

13 for such taxable year or any prior taxable year, 

14 ‘‘(2) the residence is financed by the proceeds of 

15 a qualified mortgage issue the interest on which is ex16 empt from tax under section 103, 

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

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

19 such residence ceases to be the principal residence of 

20 the taxpayer (and, if married, the taxpayer’s spouse)) 

21 before the close of such taxable year. 

22 ‘‘(e) REPORTING.—If the Secretary requires informa23 tion reporting under section 6045 by a person described in 

24 subsection (e)(2) thereof to verify the eligibility of taxpayers 

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1 for the credit allowable by this section, the exception pro2 vided by section 6045(e) shall not apply. 

3 ‘‘(f) RECAPTURE OF CREDIT.— 

4 ‘‘(1) IN GENERAL.—Except as otherwise provided 

5 in this subsection, if a credit under subsection (a) is 

6 allowed to a taxpayer, the tax imposed by this chapter shall be increased by 62 7 ⁄3 percent of the amount 

8 of such credit for each taxable year in the recapture 

9 period. 

10 ‘‘(2) ACCELERATION OF RECAPTURE.—If a tax11 payer disposes of the principal residence with respect 

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

13 (or such residence ceases to be the principal residence 

14 of the taxpayer (and, if married, the taxpayer’s 

15 spouse)) before the end of the recapture period— 

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

17 taxable year of such disposition or cessation, 

18 shall be increased by the excess of the amount of 

19 the credit allowed over the amounts of tax im20 posed by paragraph (1) for preceding taxable 

21 years, and 

22 ‘‘(B) paragraph (1) shall not apply with re23 spect to such credit for such taxable year or any 

24 subsequent taxable year. 

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

2 the sale of the principal residence to a person who is 

3 not related to the taxpayer, the increase in tax deter4 mined under paragraph (2) shall not exceed the 

5 amount of gain (if any) on such sale. Solely for pur6 poses of the preceding sentence, the adjusted basis of 

7 such residence shall be reduced by the amount of the 

8 credit allowed under subsection (a) to the extent not 

9 previously recaptured under paragraph (1). 

10 ‘‘(4) EXCEPTIONS.— 

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

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

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

14 ‘‘(B) INVOLUNTARY CONVERSION.—Para15 graph (2) shall not apply in the case of a resi16 dence which is compulsorily or involuntarily 

17 converted (within the meaning of section 

18 1033(a)) if the taxpayer acquires a new prin19 cipal residence during the 2-year period begin20 ning on the date of the disposition or cessation 

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

22 shall apply to such new principal residence dur23 ing the recapture period in the same manner as 

24 if such new principal residence were the con25 verted residence. 

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1 ‘‘(C) TRANSFERS BETWEEN SPOUSES OR IN2 CIDENT TO DIVORCE.—In the case of a transfer 

3 of a residence to which section 1041(a) applies— 

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

5 such transfer, and 

6 ‘‘(ii) in the case of taxable years end7 ing after such transfer, paragraphs (1) and 

8 (2) shall apply to the transferee in the same 

9 manner as if such transferee were the trans10 feror (and shall not apply to the transferor). 

11 ‘‘(5) JOINT RETURNS.—In the case of a credit al12 lowed under subsection (a) with respect to a joint re13 turn, half of such credit shall be treated as having 

14 been allowed to each individual filing such return for 

15 purposes of this subsection. 

16 ‘‘(6) RECAPTURE PERIOD.—For purposes of this 

17 subsection, the term ‘recapture period’ means the 15 

18 taxable years beginning with the second taxable year 

19 following the taxable year in which the purchase of 

20 the principal residence for which a credit is allowed 

21 under subsection (a) was made. 

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

23 only apply to a principal residence purchased by the tax24 payer on or after April 9, 2008, and before April 1, 2009.’’. 

25 (b) CONFORMING AMENDMENTS.— 

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

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

3 period and inserting ‘‘, and’’ and the end of subpara4 graph (V), and by inserting after subparagraph (V) 

5 the following new subparagraph: 

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

7 homebuyer credit).’’. 

8 (2) Section 6211(b)(4)(A) is amended by striking 

9 ‘‘34,’’ and all that follows through ‘‘6428’’ and insert10 ing ‘‘34, 35, 36, 53(e), and 6428’’. 

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

12 Code, is amended by inserting ‘‘, 36,’’ after ‘‘section 

13 35’’. 

14 (4) The table of sections for subpart C of part IV 

15 of subchapter A of chapter 1 is amended by redesig16 nating the item relating to section 36 as an item re17 lating to section 37 and by inserting before such item 

18 the following new item: 

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

19 (c) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to residences purchased on or after April 

21 9, 2008, in taxable years ending on or after such date. 

22 SEC. 132. ADDITIONAL STANDARD DEDUCTION FOR REAL 

23 PROPERTY TAXES FOR NONITEMIZERS. 

24 (a) IN GENERAL.—Section 63(c)(1) (defining standard 

25 deduction) is amended by striking ‘‘and’’ at the end of submstockstill on PROD1PC66 with BILLS

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1 paragraph (A), by striking the period at the end of subpara2 graph (B) and inserting ‘‘, and’’, and by adding at the end 

3 the following new subparagraph: 

4 ‘‘(C) in the case of any taxable year begin5 ning in 2008, the real property tax deduction.’’. 

6 (b) DEFINITION.—Section 63(c) is amended by adding 

7 at the end the following new paragraph: 

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

9 purposes of paragraph (1), the real property tax de10 duction is the lesser of— 

11 ‘‘(A) the amount allowable as a deduction 

12 under this chapter for State and local taxes de13 scribed in section 164(a)(1), or 

14 ‘‘(B) $350 ($700 in the case of a joint re15 turn). 

16 Any taxes taken into account under section 62(a) 

17 shall not be taken into account under this para18 graph.’’. 

19 (c) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to taxable years beginning after Decem21 ber 31, 2007. 

22 Subtitle C—General Provisions 

23 SEC. 141. TEMPORARY LIBERALIZATION OF TAX-EXEMPT 

24 HOUSING BOND RULES. 

25 (a) TEMPORARY INCREASE IN VOLUME CAP.— 

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1 (1) IN GENERAL.—Subsection (d) of section 146 

2 is amended by adding at the end the following new 

3 paragraph: 

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

5 BONDS FOR 2008.— 

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

7 calendar year 2008, the State ceiling for each 

8 State shall be increased by an amount equal to 

9 $10,000,000,000 multiplied by a fraction— 

10 ‘‘(i) the numerator of which is the pop11 ulation of such State, and 

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

13 total population of all States. 

14 ‘‘(B) SET ASIDE.— 

15 ‘‘(i) IN GENERAL.—Any amount of the 

16 State ceiling for any State which is attrib17 utable to an increase under this paragraph 

18 shall be allocated solely for one or more 

19 qualified housing issues. 

20 ‘‘(ii) QUALIFIED HOUSING ISSUE.—For 

21 purposes of this paragraph, the term ‘quali22 fied housing issue’ means— 

23 ‘‘(I) an issue described in section 

24 142(a)(7) (relating to qualified resi25 dential rental projects), or 

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1 ‘‘(II) a qualified mortgage issue 

2 (determined by substituting ‘12-month 

3 period’ for ‘42-month period’ each 

4 place it appears in section 

5 143(a)(2)(D)(i)).’’. 

6 (2) CARRYFORWARD OF UNUSED LIMITATIONS.— 

7 Subsection (f) of section 146 is amended by adding at 

8 the end the following new paragraph: 

9 ‘‘(6) SPECIAL RULES FOR INCREASED VOLUME

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

11 attributable to the increase under subsection (d)(5) 

12 may be used— 

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

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

15 or 

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

17 2010.’’. 

18 (b) TEMPORARY RULE FOR USE OF QUALIFIED MORT19 GAGE BONDS PROCEEDS FOR SUBPRIME REFINANCING

20 LOANS.— 

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

22 other definitions and special rules) is amended by 

23 adding at the end the following new paragraph: 

24 ‘‘(12) SPECIAL RULES FOR SUBPRIME

25 REFINANCINGS.— 

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1 ‘‘(A) IN GENERAL.—Notwithstanding the re2 quirements of subsection (i)(1), the proceeds of a 

3 qualified mortgage issue may be used to refi4 nance a mortgage on a residence which was 

5 originally financed by the mortgagor through a 

6 qualified subprime loan. 

7 ‘‘(B) SPECIAL RULES.—In applying sub8 paragraph (A) to any refinancing— 

9 ‘‘(i) subsection (a)(2)(D)(i) shall be ap10 plied by substituting ‘12-month period’ for 

11 ‘42-month period’ each place it appears, 

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

13 requirement) shall not apply, and 

14 ‘‘(iii) subsection (e) (relating to pur15 chase price requirement) shall be applied by 

16 using the market value of the residence at 

17 the time of refinancing in lieu of the acqui18 sition cost. 

19 ‘‘(C) QUALIFIED SUBPRIME LOAN.—The 

20 term ‘qualified subprime loan’ means an adjust21 able rate single-family residential mortgage loan 

22 made after December 31, 2001, and before Janu23 ary 1, 2008, that the bond issuer determines 

24 would be reasonably likely to cause financial 

25 hardship to the borrower if not refinanced. 

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1 ‘‘(D) TERMINATION.—This paragraph shall 

2 not apply to any bonds issued after December 

3 31, 2010.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to bonds issued after the date of the en6 actment of this Act. 

7 SEC. 142. REPEAL OF ALTERNATIVE MINIMUM TAX LIMITA8 TIONS ON TAX-EXEMPT HOUSING BONDS, 

9 LOW-INCOME HOUSING TAX CREDIT, AND RE10 HABILITATION CREDIT. 

11 (a) TAX-EXEMPT INTEREST ON CERTAIN HOUSING

12 BONDS EXEMPTED FROM ALTERNATIVE MINIMUM TAX.— 

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

14 57(a)(5) (relating to specified private activity bonds) 

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

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

17 after clause (ii) the following new clause: 

18 ‘‘(iii) EXCEPTION FOR CERTAIN HOUS19 ING BONDS.—For purposes of clause (i), the 

20 term ‘private activity bond’ shall not in21 clude any bond issued after the date of the 

22 enactment of this clause if such bond is— 

23 ‘‘(I) an exempt facility bond 

24 issued as part of an issue 95 percent or 

25 more of the net proceeds of which are 

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1 to be used to provide qualified residen2 tial rental projects (as defined in sec3 tion 142(d)), 

4 ‘‘(II) a qualified mortgage bond 

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

6 ‘‘(III) a qualified veterans’ mort7 gage bond (as defined in section 

8 143(b)). 

9 The preceding sentence shall not apply to 

10 any refunding bond unless such preceding 

11 sentence applied to the refunded bond (or in 

12 the case of a series of refundings, the origi13 nal bond).’’. 

14 (2) NO ADJUSTMENT TO ADJUSTED CURRENT

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

16 amended by adding at the end the following new 

17 clause: 

18 ‘‘(iii) TAX EXEMPT INTEREST ON CER19 TAIN HOUSING BONDS.—Clause (i) shall not 

20 apply in the case of any interest on a bond 

21 to which section 57(a)(5)(C)(iii) applies.’’. 

22 (b) ALLOWANCE OF LOW-INCOME HOUSING CREDIT

23 AGAINST ALTERNATIVE MINIMUM TAX.—Subparagraph (B) 

24 of section 38(c)(4) (relating to specified credits) is amended 

25 by redesignating clauses (ii) through (iv) as clauses (iii) 

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1 through (v) and inserting after clause (i) the following new 

2 clause: 

3 ‘‘(ii) the credit determined under sec4 tion 42 to the extent attributable to build5 ings placed in service after December 31, 

6 2007,’’. 

7 (c) ALLOWANCE OF REHABILITATION CREDIT AGAINST

8 ALTERNATIVE MINIMUM TAX.—Subparagraph (B) of sec9 tion 38(c)(4), as amended by subsection (b), is amended by 

10 striking ‘‘and’’ at the end of clause (iv), by redesignating 

11 clause (v) as clause (vi), and by inserting after clause (iv) 

12 the following new clause: 

13 ‘‘(v) the credit determined under sec14 tion 47 to the extent attributable to quali15 fied rehabilitation expenditures properly 

16 taken into account for periods after Decem17 ber 31, 2007, and’’. 

18 (d) EFFECTIVE DATE.— 

19 (1) HOUSING BONDS.—The amendments made 

20 by subsection (a) shall apply to bonds issued after the 

21 date of the enactment of this Act. 

22 (2) LOW INCOME HOUSING CREDIT.—The amend23 ments made by subsection (b) shall apply to credits 

24 determined under section 42 of the Internal Revenue 

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1 Code of 1986 to the extent attributable to buildings 

2 placed in service after December 31, 2007. 

3 (3) REHABILITATION CREDIT.—The amendments 

4 made by subsection (c) shall apply to credits deter5 mined under section 47 of the Internal Revenue Code 

6 of 1986 to the extent attributable to qualified rehabili7 tation expenditures properly taken into account for 

8 periods after December 31, 2007. 

9 SEC. 143. BONDS GUARANTEED BY FEDERAL HOME LOAN 

10 BANKS ELIGIBLE FOR TREATMENT AS TAX-EX11 EMPT BONDS. 

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

13 149(b)(3) (relating to exceptions for certain insurance pro14 grams) is amended by striking ‘‘or’’ at the end of clause 

15 (ii), by striking the period at the end of clause (iii) and 

16 inserting ‘‘, or’’ and by adding at the end the following new 

17 clause: 

18 ‘‘(iv) any guarantee by a Federal home 

19 loan bank made in connection with the 

20 original issuance of a bond during the pe21 riod beginning on the date of the enactment 

22 of this Act and ending on December 31, 

23 2010 (or a renewal or extension of a guar24 antee so made).’’. 

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1 (b) SAFETY AND SOUNDNESS REQUIREMENTS.—Para2 graph (3) of section 149(b) is amended by adding at the 

3 end the following new subparagraph: 

4 ‘‘(E) SAFETY AND SOUNDNESS REQUIRE5 MENTS FOR FEDERAL HOME LOAN BANKS.— 

6 Clause (iv) of subparagraph (A) shall not apply 

7 to any guarantee by a Federal home loan bank 

8 unless such bank meets safety and soundness col9 lateral requirements for such guarantees which 

10 are at least as stringent as such requirements 

11 which apply under regulations applicable to such 

12 guarantees by Federal home loan banks as in ef13 fect on April 9, 2008.’’. 

14 (c) EFFECTIVE DATE.—The amendments made by this 

15 section shall apply to guarantees made after the date of the 

16 enactment of this Act. 

17 SEC. 144. MODIFICATION OF RULES PERTAINING TO FIRPTA 

18 NONFOREIGN AFFIDAVITS. 

19 (a) IN GENERAL.—Subsection (b) of section 1445 (re20 lating to exemptions) is amended by adding at the end the 

21 following: 

22 ‘‘(9) ALTERNATIVE PROCEDURE FOR FURNISHING

23 NONFOREIGN AFFIDAVIT.—For purposes of para24 graphs (2) and (7)— 

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1 ‘‘(A) IN GENERAL.—Paragraph (2) shall be 

2 treated as applying to a transaction if, in con3 nection with a disposition of a United States 

4 real property interest— 

5 ‘‘(i) the affidavit specified in para6 graph (2) is furnished to a qualified sub7 stitute, and 

8 ‘‘(ii) the qualified substitute furnishes 

9 a statement to the transferee stating, under 

10 penalty of perjury, that the qualified sub11 stitute has such affidavit in his possession. 

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

13 prescribe such regulations as may be necessary 

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

15 (b) QUALIFIED SUBSTITUTE.—Subsection (f) of section 

16 1445 (relating to definitions) is amended by adding at the 

17 end the following new paragraph: 

18 ‘‘(6) QUALIFIED SUBSTITUTE.—The term ‘quali19 fied substitute’ means, with respect to a disposition of 

20 a United States real property interest— 

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

22 title company) responsible for closing the trans23 action, other than the transferor’s agent, and 

24 ‘‘(B) the transferee’s agent.’’. 

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1 (c) EXEMPTION NOT TO APPLY IF KNOWLEDGE OR

2 NOTICE THAT AFFIDAVIT OR STATEMENT IS FALSE.— 

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

4 1445(b) (relating to special rules for paragraphs (2) 

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

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

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

8 be) shall not apply to any disposition— 

9 ‘‘(A) if— 

10 ‘‘(i) the transferee or qualified sub11 stitute has actual knowledge that the affi12 davit referred to in such paragraph, or the 

13 statement referred to in paragraph 

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

15 ‘‘(ii) the transferee or qualified sub16 stitute receives a notice (as described in sub17 section (d)) from a transferor’s agent, trans18 feree’s agent, or qualified substitute that 

19 such affidavit or statement is false, or 

20 ‘‘(B) if the Secretary by regulations requires 

21 the transferee or qualified substitute to furnish a 

22 copy of such affidavit or statement to the Sec23 retary and the transferee or qualified substitute 

24 fails to furnish a copy of such affidavit or statemstockstill on PROD1PC66 with BILLS

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1 ment to the Secretary at such time and in such 

2 manner as required by such regulations.’’. 

3 (2) LIABILITY.— 

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

5 1445(d) (relating to notice of false affidavit; for6 eign corporations) is amended to read as follows: 

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

8 CORPORATIONS.—If— 

9 ‘‘(A) the transferor furnishes the transferee 

10 or qualified substitute an affidavit described in 

11 paragraph (2) of subsection (b) or a domestic 

12 corporation furnishes the transferee an affidavit 

13 described in paragraph (3) of subsection (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) furnished 

20 by a corporation, such corporation is a 

21 foreign corporation, or 

22 ‘‘(ii) any transferee’s agent or qualified 

23 substitute, such agent or substitute has ac24 tual knowledge that such affidavit is 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 sub21 stitute derives from the transaction.’’. 

22 (C) CONFORMING AMENDMENT.—The head23 ing for section 1445(d) is amended by striking 

24 ‘‘OR TRANSFEREE’S AGENTS’’ and inserting ‘‘, 

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1 TRANSFEREE’S AGENTS, OR QUALIFIED SUB2 STITUTES’’. 

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

4 section shall apply to dispositions of United States real 

5 property interests after the date of the enactment of this 

6 Act. 

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

8 USE PROPERTY FOR PURPOSES OF THE RE9 HABILITATION CREDIT. 

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

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

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

13 substituted for ‘35 percent’ in paragraph (1)(B)(iii) there14 of’’. 

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

16 section shall apply to expenditures properly taken into ac17 count for periods after December 31, 2007. 

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1 TITLE II—REFORMS RELATED TO 

2 REAL ESTATE INVESTMENT 

3 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; and 

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

21 determined by the Secretary; and’’. 

22 (b) RULES REGARDING FOREIGN CURRENCY TRANS23 ACTIONS.—Section 856 (defining real estate investment 

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

25 subsection: 

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1 ‘‘(n) RULES REGARDING FOREIGN CURRENCY TRANS2 ACTIONS.—With respect to any taxable year— 

3 ‘‘(1) REAL ESTATE FOREIGN EXCHANGE

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

5 ‘real estate foreign exchange gains’ means— 

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

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

8 ‘‘(i) any item described in subsection 

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

10 thereof), 

11 ‘‘(ii) the acquisition or ownership of 

12 obligations secured by mortgages on real 

13 property or on interests in real property 

14 (other than foreign currency gains attrib15 utable to any item described in clause (i)), 

16 or 

17 ‘‘(iii) becoming or being the obligor 

18 under obligations secured by mortgages on 

19 real property or on interests in real prop20 erty (other than foreign currency gains at21 tributable to any item described in clause 

22 (i)), 

23 ‘‘(B) gains described in section 987 attrib24 utable to a qualified business unit (as defined by 

25 section 989) of the real estate investment trust, 

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1 but only if such qualified business unit meets the 

2 requirements under— 

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

4 to subparagraph (J) thereof) for the taxable 

5 year, and 

6 ‘‘(ii) subsection (c)(4)(A) at the close of 

7 each quarter that the real estate investment 

8 trust has directly or indirectly held the 

9 qualified business unit, and 

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

11 determined by the Secretary. 

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

13 purposes of subsection (c)(2)(I), the term ‘passive for14 eign exchange gains’ means— 

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

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

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

18 subparagraph (A) and which are attributable to 

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

20 than in subparagraph (I) thereof), and 

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

22 determined by the Secretary.’’. 

23 (c) ADDITION TO REIT HEDGING RULE.—Subpara24 graph (G) of section 856(c)(5) is amended to read as fol25 lows: 

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1 ‘‘(G) TREATMENT OF CERTAIN HEDGING IN2 STRUMENTS.—Except to the extent as determined 

3 by the Secretary— 

4 ‘‘(i) any income of a real estate invest5 ment trust from a hedging transaction (as 

6 defined in clause (ii) or (iii) of section 

7 1221(b)(2)(A)) which is clearly identified 

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

9 gain from the sale or disposition of such a 

10 transaction, shall not constitute gross in11 come under paragraphs (2) and (3) to the 

12 extent that the transaction hedges any in13 debtedness incurred or to be incurred by the 

14 trust to acquire or carry real estate assets, 

15 and 

16 ‘‘(ii) any income of a real estate in17 vestment trust from a transaction entered 

18 into by the trust primarily to manage risk 

19 of currency fluctuations with respect to any 

20 item described in paragraph (2) or (3), in21 cluding gain from the termination of such 

22 a transaction, shall not constitute gross in23 come under paragraphs (2) and (3), but 

24 only if such transaction is clearly identified 

25 as such before the close of the day on which 

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1 it was acquired, originated, or entered into 

2 (or such other time as the Secretary may 

3 prescribe).’’. 

4 (d) AUTHORITY TO EXCLUDE ITEMS OF INCOME FROM

5 REIT INCOME TESTS.—Section 856(c)(5) is amended by 

6 adding at the end the following new subparagraph: 

7 ‘‘(H) SECRETARIAL AUTHORITY TO EX8 CLUDE OTHER ITEMS OF INCOME.—The Sec9 retary is authorized to determine whether any 

10 item of income or gain which does not otherwise 

11 qualify under paragraph (2) or (3) may be con12 sidered as not constituting gross income solely 

13 for purposes of this part.’’. 

14 SEC. 202. REVISIONS TO REIT ASSET TESTS. 

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

16 sentence in the matter following section 

17 856(c)(4)(B)(iii)(III) is amended by inserting ‘‘(including 

18 a discrepancy caused solely by the change in the foreign 

19 currency exchange rate used to value a foreign asset)’’ after 

20 ‘‘such requirements’’. 

21 (b) CLARIFICATION OF PERMISSIBLE ASSET CAT22 EGORY.—Section 856(c)(5), as amended by section 201(d), 

23 is amended by adding at the end the following new subpara24 graph: 

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1 ‘‘(I) CASH.—The term ‘cash’ includes for2 eign currency if the real estate investment trust 

3 or its qualified business unit (as defined in sec4 tion 989) uses such foreign currency as its func5 tional currency (as defined in section 985(b)).’’. 

6 SEC. 203. CONFORMING FOREIGN CURRENCY REVISIONS. 

7 (a) NET INCOME FROM FORECLOSURE PROPERTY.— 

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

9 follows: 

10 ‘‘(i) gain (including any foreign cur11 rency gain, as defined in section 988(b)(1)) 

12 from the sale or other disposition of fore13 closure property described in section 

14 1221(a)(1) and the gross income for the tax15 able year derived from foreclosure property 

16 (as defined in section 856(e)), but only to 

17 the extent such gross income is not described 

18 in (or, in the case of foreign currency gain, 

19 not attributable to gross income described 

20 in) section 856(c)(3) other than subpara21 graph (F) thereof, over’’. 

22 (b) NET INCOME FROM PROHIBITED TRANS23 ACTIONS.—Clause (i) of section 857(b)(6)(B) is amended to 

24 read as follows: 

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

2 prohibited transactions’ means the excess of 

3 the gain (including any foreign currency 

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

5 prohibited transactions over the deductions 

6 (including any foreign currency loss, as de7 fined in section 988(b)(2)) allowed by this 

8 chapter which are directly connected with 

9 prohibited transactions;’’. 

10 Subtitle B—Taxable REIT 

11 Subsidiaries 

12 SEC. 211. CONFORMING TAXABLE REIT SUBSIDIARY ASSET 

13 TEST. 

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

15 percent’’ and inserting ‘‘25 percent’’. 

16 Subtitle C—Dealer Sales 

17 SEC. 221. HOLDING PERIOD UNDER SAFE HARBOR. 

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

19 transactions) is amended— 

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

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

22 (2) by striking ‘‘4-year period’’ in subpara23 graphs (C)(ii), (D)(ii), and (D)(iii) and inserting ‘‘2- 

24 year period’’, and 

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1 (3) by striking ‘‘real estate asset’’and all that fol2 lows through ‘‘if’’ in the matter preceding clause (i) 

3 of subparagraphs (C) and (D), respectively, and in4 serting ‘‘real estate asset (as defined in section 

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

6 1221(a)(1) if’’. 

7 SEC. 222. DETERMINING VALUE OF SALES UNDER SAFE 

8 HARBOR. 

9 Section 857(b)(6) is amended— 

10 (1) by striking the semicolon at the end of sub11 paragraph (C)(iii) and inserting ‘‘, or (III) the fair 

12 market value of property (other than sales of fore13 closure property or sales to which section 1033 ap14 plies) sold during the taxable year does not exceed 10 

15 percent of the fair market value of all of the assets of 

16 the trust as of the beginning of the taxable year;’’, and 

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

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

19 such subparagraph the following new subclause: 

20 ‘‘(III) the fair market value of prop21 erty (other than sales of foreclosure property 

22 or sales to which section 1033 applies) sold 

23 during the taxable year does not exceed 10 

24 percent of the fair market value of all of the 

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1 assets of the trust as of the beginning of the 

2 taxable year,’’. 

3 Subtitle D—Health Care REITs 

4 SEC. 231. CONFORMITY FOR HEALTH CARE FACILITIES. 

5 (a) RELATED PARTY RENTALS.—Subparagraph (B) of 

6 section 856(d)(8) (relating to special rule for taxable REIT 

7 subsidiaries) is amended to read as follows: 

8 ‘‘(B) EXCEPTION FOR CERTAIN LODGING FA9 CILITIES AND HEALTH CARE PROPERTY.—The 

10 requirements of this subparagraph are met with 

11 respect to an interest in real property which is 

12 a qualified lodging facility or a qualified health 

13 care property (as defined in subsection 

14 (e)(6)(D)(i)) leased by the trust to a taxable 

15 REIT subsidiary of the trust if the property is 

16 operated on behalf of such subsidiary by a person 

17 who is an eligible independent contractor. For 

18 purposes of this section, a taxable REIT sub19 sidiary is not considered to be operating or man20 aging a qualified health care property or quali21 fied lodging facility solely because it directly or 

22 indirectly possesses a license, permit or similar 

23 instrument enabling it to do so.’’. 

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1 (b) ELIGIBLE INDEPENDENT CONTRACTOR.—Subpara2 graphs (A) and (B) of section 856(d)(9) (relating to eligible 

3 independent contractor) are amended to read as follows: 

4 ‘‘(A) IN GENERAL.—The term ‘eligible inde5 pendent contractor’ means, with respect to any 

6 qualified lodging facility or qualified health care 

7 property (as defined in subsection (e)(6)(D)(i)), 

8 any independent contractor if, at the time such 

9 contractor enters into a management agreement 

10 or other similar service contract with the taxable 

11 REIT subsidiary to operate such qualified lodg12 ing facility or qualified health care property, 

13 such contractor (or any related person) is ac14 tively engaged in the trade or business of oper15 ating qualified lodging facilities or qualified 

16 health care properties, respectively, for any per17 son who is not a related person with respect to 

18 the real estate investment trust or the taxable 

19 REIT subsidiary. 

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

21 of this paragraph and paragraph (8)(B), a per22 son shall not fail to be treated as an independent 

23 contractor with respect to any qualified lodging 

24 facility or qualified health care property (as so 

25 defined) by reason of the following: 

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1 ‘‘(i) The taxable REIT subsidiary 

2 bears the expenses for the operation of such 

3 qualified lodging facility or qualified health 

4 care property pursuant to the management 

5 agreement or other similar service contract. 

6 ‘‘(ii) The taxable REIT subsidiary re7 ceives the revenues from the operation of 

8 such qualified lodging facility or qualified 

9 health care property, net of expenses for 

10 such operation and fees payable to the oper11 ator pursuant to such agreement or con12 tract. 

13 ‘‘(iii) The real estate investment trust 

14 receives income from such person with re15 spect to another property that is attrib16 utable to a lease of such other property to 

17 such person that was in effect as of the later 

18 of— 

19 ‘‘(I) January 1, 1999, or 

20 ‘‘(II) the earliest date that any 

21 taxable REIT subsidiary of such trust 

22 entered into a management agreement 

23 or other similar service contract with 

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1 fied lodging facility or qualified health 

2 care property.’’. 

3 (c) TAXABLE REIT SUBSIDIARIES.—The last sentence 

4 of section 856(l)(3) is amended— 

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

6 ‘‘a lodging facility’’, and 

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

8 ‘‘such lodging facility’’. 

9 Subtitle E—Effective Dates 

10 SEC. 241. EFFECTIVE DATES. 

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

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

13 to taxable years beginning after the date of the enactment 

14 of this Act. 

15 (b) REIT INCOME TESTS.— 

16 (1) The amendment made by section 201(a) and 

17 (b) shall apply to gains and items of income recog18 nized after the date of the enactment of this Act. 

19 (2) The amendment made by section 201(c) shall 

20 apply to transactions entered into after the date of the 

21 enactment of this Act. 

22 (3) The amendment made by section 201(d) shall 

23 apply after the date of the enactment of this Act. 

24 (c) CONFORMING FOREIGN CURRENCY REVISIONS.— 

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

2 apply to gains recognized after the date of the enact3 ment of this Act. 

4 (2) The amendment made by section 203(b) shall 

5 apply to gains and deductions recognized after the 

6 date of the enactment of this Act. 

7 (d) DEALER SALES.—The amendments made by sub8 title C shall apply to sales made after the date of the enact9 ment of this Act. 

10 TITLE III—REVENUE 

11 PROVISIONS 

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

13 SECURITIES TRANSACTIONS. 

14 (a) IN GENERAL.— 

15 (1) BROKER REPORTING FOR SECURITIES TRANS16 ACTIONS.—Section 6045 (relating to returns of bro17 kers) is amended by adding at the end the following 

18 new subsection: 

19 ‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE

20 CASE OF SECURITIES TRANSACTIONS, ETC.— 

21 ‘‘(1) IN GENERAL.—If a broker is otherwise re22 quired to make a return under subsection (a) with re23 spect to the gross proceeds of the sale of a covered se24 curity, the broker shall include in such return the in25 formation described in paragraph (2). 

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1 ‘‘(2) ADDITIONAL INFORMATION REQUIRED.— 

2 ‘‘(A) IN GENERAL.—The information re3 quired under paragraph (1) to be shown on a re4 turn with respect to a covered security of a cus5 tomer shall include the customer’s adjusted basis 

6 in such security and whether any gain or loss 

7 with respect to such security is long-term or 

8 short-term (within the meaning of section 1222). 

9 ‘‘(B) DETERMINATION OF ADJUSTED

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

11 ‘‘(i) IN GENERAL.—The customer’s ad12 justed basis shall be determined— 

13 ‘‘(I) in the case of any security 

14 (other than any stock for which an av15 erage basis method is permissible 

16 under section 1012), in accordance 

17 with the first-in first-out method unless 

18 the customer notifies the broker by 

19 means of making an adequate identi20 fication of the stock sold or transferred, 

21 and 

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

23 which an average basis method is per24 missible under section 1012, in accord25 ance with the broker’s default method 

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1 unless the customer notifies the broker 

2 that he elects another acceptable meth3 od under section 1012 with respect to 

4 the account in which such stock is held. 

5 ‘‘(ii) EXCEPTION FOR WASH SALES.— 

6 Except as otherwise provided by the Sec7 retary, the customer’s adjusted basis shall be 

8 determined without regard to section 1091 

9 (relating to loss from wash sales of stock or 

10 securities) unless the transactions occur in 

11 the same account with respect to identical 

12 securities. 

13 ‘‘(3) COVERED SECURITY.—For purposes of this 

14 subsection— 

15 ‘‘(A) IN GENERAL.—The term ‘covered secu16 rity’ means any specified security acquired on or 

17 after the applicable date if such security— 

18 ‘‘(i) was acquired through a trans19 action in the account in which such security 

20 is held, or 

21 ‘‘(ii) was transferred to such account 

22 from an account in which such security was 

23 a covered security, but only if the broker re24 ceived a statement under section 6045A 

25 with respect to the transfer. 

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1 ‘‘(B) SPECIFIED SECURITY.—The term 

2 ‘specified security’ means— 

3 ‘‘(i) any share of stock in a corpora4 tion, 

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

6 other evidence of indebtedness, 

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

8 derivative with respect to such commodity, 

9 if the Secretary determines that adjusted 

10 basis reporting is appropriate for purposes 

11 of this subsection, and 

12 ‘‘(iv) any other financial instrument 

13 with respect to which the Secretary deter14 mines that adjusted basis reporting is ap15 propriate for purposes of this subsection. 

16 ‘‘(C) APPLICABLE DATE.—The term ‘appli17 cable date’ means— 

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

19 any specified security which is stock in a 

20 corporation (other than any stock described 

21 in clause (ii)), 

22 ‘‘(ii) January 1, 2011, in the case of 

23 any stock for which an average basis meth24 od is permissible under section 1012, and 

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1 ‘‘(iii) January 1, 2012, or such later 

2 date determined by the Secretary in the case 

3 of any other specified security. 

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

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

6 S corporation (other than a financial institution) 

7 after December 31, 2011, such S corporation shall be 

8 treated in the same manner as a partnership for pur9 poses of this section. 

10 ‘‘(5) SPECIAL RULES FOR SHORT SALES.—In the 

11 case of a short sale, reporting under this section shall 

12 be made for the year in which such sale is closed.’’. 

13 (2) BROKER INFORMATION REQUIRED WITH RE14 SPECT TO OPTIONS.—Section 6045, as amended by 

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

16 following new subsection: 

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

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

19 this section, if a covered security is acquired or dis20 posed of pursuant to the exercise of an option that 

21 was granted or acquired in the same account as the 

22 covered security, the amount received with respect to 

23 the grant or paid with respect to the acquisition of 

24 such option shall be treated as an adjustment to gross 

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1 proceeds or as an adjustment to basis, as the case 

2 may be. 

3 ‘‘(2) LAPSE OR CLOSING TRANSACTION.—In the 

4 case of the lapse (or closing transaction (as defined in 

5 section 1234(b)(2)(A))) of an option on a specified se6 curity or the exercise of a cash-settled option on a 

7 specified security, reporting under subsections (a) and 

8 (g) with respect to such option shall be made for the 

9 calendar year which includes the date of such lapse, 

10 closing transaction, or exercise. 

11 ‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs 

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

13 granted or acquired before January 1, 2012. 

14 ‘‘(4) DEFINITIONS.—For purposes of this sub15 section, the terms ‘covered security’ and ‘specified se16 curity’ shall have the meanings given such terms in 

17 subsection (g)(3).’’. 

18 (3) EXTENSION OF PERIOD FOR STATEMENTS

19 SENT TO CUSTOMERS.— 

20 (A) IN GENERAL.—Subsection (b) of section 

21 6045 is amended by striking ‘‘January 31’’ and 

22 inserting ‘‘February 15’’. 

23 (B) STATEMENTS RELATED TO SUBSTITUTE

24 PAYMENTS.—Subsection (d) of section 6045 is 

25 amended— 

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

2 (ii) by inserting after ‘‘other item.’’ the 

3 following new sentence: ‘‘The written state4 ment required under the preceding sentence 

5 shall be furnished on or before February 15 

6 of the year following the calendar year in 

7 which the payment was made.’’. 

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

9 of section 6045 is amended by adding at the end 

10 the following: ‘‘In the case of a consolidated re11 porting statement (as defined in regulations) 

12 with respect to any account, any statement 

13 which would otherwise be required to be fur14 nished on or before January 31 of a calendar 

15 year with respect to any item reportable to the 

16 taxpayer shall instead be required to be fur17 nished on or before February 15 of such calendar 

18 year if furnished with such consolidated report19 ing statement.’’. 

20 (b) DETERMINATION OF BASIS OF CERTAIN SECURI21 TIES ON ACCOUNT BY ACCOUNT OR AVERAGE BASIS METH22 OD.—Section 1012 (relating to basis of property–cost) is 

23 amended— 

24 (1) by striking ‘‘The basis of property’’ and in25 serting the following: 

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

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

3 inserting the following: 

4 ‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ESTATE

5 TAXES.—The cost of real property’’, and 

6 (3) by adding at the end the following new sub7 sections: 

8 ‘‘(c) DETERMINATIONS BY ACCOUNT.— 

9 ‘‘(1) IN GENERAL.—In the case of the sale, ex10 change, or other disposition of a specified security on 

11 or after the applicable date, the conventions pre12 scribed by regulations under this section shall be ap13 plied on an account by account basis. 

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

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

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

17 fund acquired before January 1, 2011, shall be 

18 treated as a separate account from any such 

19 stock acquired on or after such date. 

20 ‘‘(B) ELECTION BY OPEN-END FUND FOR

21 TREATMENT AS SINGLE ACCOUNT.—If an open22 end fund elects to have this subparagraph apply 

23 with respect to one or more of its stockholders— 

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

2 with respect to any stock in such fund held 

3 by such stockholders, and 

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

5 held by such stockholders shall be treated as 

6 covered securities described in section 

7 6045(g)(3) without regard to the date of the 

8 acquisition of such stock. 

9 A rule similar to the rule of the preceding sen10 tence shall apply with respect to a broker holding 

11 stock in an open-end fund as a nominee. 

12 ‘‘(3) DEFINITIONS.—For purposes of this sec13 tion— 

14 ‘‘(A) OPEN-END FUND.—The term ‘open-end 

15 fund’ means a regulated investment company (as 

16 defined in section 851) which is offering for sale 

17 or has outstanding any redeemable security of 

18 which it is the issuer. Any stock which is traded 

19 on an established securities exchange shall not be 

20 treated as stock in an open-end fund. 

21 ‘‘(B) SPECIFIED SECURITY; APPLICABLE

22 DATE.—The terms ‘specified security’ and ‘appli23 cable date’ shall have the meaning given such 

24 terms in section 6045(g). 

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1 ‘‘(d) AVERAGE BASIS FOR STOCK ACQUIRED PURSU2 ANT TO A DIVIDEND REINVESTMENT PLAN.— 

3 ‘‘(1) IN GENERAL.—In the case of any stock ac4 quired after December 31, 2010, in connection with a 

5 dividend reinvestment plan, the basis of such stock 

6 while held as part of such plan shall be determined 

7 using one of the methods which may be used for deter8 mining the basis of stock in an open-end fund. 

9 ‘‘(2) TREATMENT AFTER TRANSFER.—In the case 

10 of the transfer to another account of stock to which 

11 paragraph (1) applies, such stock shall have a cost 

12 basis in such other account equal to its basis in the 

13 dividend reinvestment plan immediately before such 

14 transfer (properly adjusted for any fees or other 

15 charges taken into account in connection with such 

16 transfer). 

17 ‘‘(3) SEPARATE ACCOUNTS; ELECTION FOR

18 TREATMENT AS SINGLE ACCOUNT.—Rules similar to 

19 the rules of subsection (c)(2) shall apply for purposes 

20 of this subsection. 

21 ‘‘(4) DIVIDEND REINVESTMENT PLAN.—For pur22 poses of this subsection— 

23 ‘‘(A) IN GENERAL.—The term ‘dividend re24 investment plan’ means any arrangement under 

25 which dividends on any stock are reinvested in 

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1 stock identical to the stock with respect to which 

2 the dividends are paid. 

3 ‘‘(B) INITIAL STOCK ACQUISITION TREATED

4 AS ACQUIRED IN CONNECTION WITH PLAN.— 

5 Stock shall be treated as acquired in connection 

6 with a dividend reinvestment plan if such stock 

7 is acquired pursuant to such plan or if the divi8 dends paid on such stock are subject to such 

9 plan.’’. 

10 (c) INFORMATION BY TRANSFERORS TO AID BRO11 KERS.— 

12 (1) IN GENERAL.—Subpart B of part III of sub13 chapter A of chapter 61 is amended by inserting after 

14 section 6045 the following new section: 

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

16 WITH TRANSFERS OF COVERED SECURITIES 

17 TO BROKERS. 

18 ‘‘(a) FURNISHING OF INFORMATION.—Every applica19 ble person which transfers to a broker (as defined in section 

20 6045(c)(1)) a security which is a covered security (as de21 fined in section 6045(g)(3)) in the hands of such applicable 

22 person shall furnish to such broker a written statement in 

23 such manner and setting forth such information as the Sec24 retary may by regulations prescribe for purposes of enamstockstill on PROD1PC66 with BILLS

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1 bling such broker to meet the requirements of section 

2 6045(g). 

3 ‘‘(b) APPLICABLE PERSON.—For purposes of sub4 section (a), the term ‘applicable person’ means— 

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

6 6045(c)(1)), and 

7 ‘‘(2) any other person as provided by the Sec8 retary in regulations. 

9 ‘‘(c) TIME FOR FURNISHING STATEMENT.—Except as 

10 otherwise provided by the Secretary, any statement required 

11 by subsection (a) shall be furnished not later than 15 days 

12 after the date of the transfer described in such subsection.’’. 

13 (2) ASSESSABLE PENALTIES.—Paragraph (2) of 

14 section 6724(d) (defining payee statement) is amend15 ed by redesignating subparagraphs (I) through (CC) 

16 as subparagraphs (J) through (DD), respectively, and 

17 by inserting after subparagraph (H) the following 

18 new subparagraph: 

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

20 required in connection with transfers of covered 

21 securities to brokers),’’. 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for subpart B of part III of subchapter A of 

24 chapter 61 is amended by inserting after the item re25 lating to section 6045 the following new item: 

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

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

3 (1) IN GENERAL.—Subpart B of part III of sub4 chapter A of chapter 61, as amended by subsection 

5 (b), is amended by inserting after section 6045A the 

6 following new section: 

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

8 BASIS OF SPECIFIED SECURITIES. 

9 ‘‘(a) IN GENERAL.—According to the forms or regula10 tions prescribed by the Secretary, any issuer of a specified 

11 security shall make a return setting forth— 

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

13 which affects the basis of such specified security of 

14 such issuer, 

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

16 specified security resulting from such action, and 

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

18 may prescribe. 

19 ‘‘(b) TIME FOR FILING RETURN.—Any return required 

20 by subsection (a) shall be filed not later than the earlier 

21 of— 

22 ‘‘(1) 45 days after the date of the action de23 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 OF

4 SPECIFIED SECURITIES OR THEIR NOMINEES.—According 

5 to the forms or regulations prescribed by the Secretary, 

6 every person required to make a return under subsection 

7 (a) with respect to a specified security shall furnish to the 

8 nominee with respect to the specified security (or certificate 

9 holder if there is no nominee) a written statement show10 ing— 

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

12 information contact of the person required to make 

13 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 sec23 tion, the term ‘specified security’ has the meaning given 

24 such term by section 6045(g)(3)(B). No return shall be re25 quired under this section with respect to actions described 

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1 in subsection (a) with respect to a specified security which 

2 occur before the applicable date (as defined in section 

3 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 person 

7 required to make the return under subsection (a) makes 

8 publicly available, in such form and manner as the Sec9 retary determines necessary to carry out the purposes of this 

10 section— 

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

12 email address of the information contact of such per13 son, 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 6724(d)(1) 

18 of such Code (defining information return) is 

19 amended by redesignating clause (iv) and each of 

20 the clauses which follow as clauses (v) through 

21 (xxii), respectively, and by inserting after clause 

22 (iii) the 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 amend3 ed by subsection (c)(2), is amended by redesig4 nating subparagraphs (J) through (DD) as sub5 paragraphs (K) through (EE), respectively, and 

6 by inserting after subparagraph (I) the following 

7 new subparagraph: 

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

9 6045B (relating to returns relating to actions af10 fecting 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 relating 

15 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 provided 

18 in this subsection, the amendments made by this sec19 tion 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 to 

23 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 78 

14 percent of the amount of such increase determined 

15 without regard to this paragraph.’’. 

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

17 section shall apply to taxable years beginning after Decem18 ber 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 Prevention 

23 and Reconciliation Act of 2005 is amended by striking the 

24 percentage contained therein and inserting ‘‘100 percent’’. 

25 (b) MODIFICATION OF ADJUSTMENT FOR 2013.—The 

26 percentage under subparagraph (C) of section 401(1) of the 

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1 Tax Increase Prevention and Reconciliation Act of 2005 in 

2 effect on the date of the enactment of this Act is increased 

3 by 13 percentage points. 

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Union Calendar No. 377 

110TH CONGRESS 

2D SESSION H. R. 5720 

[Report No. 110

–606] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

provide assistance for housing. 

APRIL 24, 2008 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 

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