SEC. 5. WAIVER OF INDIVIDUAL AND CORPORATE ALTER-
NATIVE MINIMUM TAX LIMITS ON WORK OP-
PORTUNITY CREDIT AND CREDIT FOR TAXES 
PAID WITH RESPECT TO EMPLOYEE CASH 
TIPS. 
(a) ALLOWANCE AGAINST ALTERNATIVE MINIMUM 
TAX.—Subparagraph (B) of section 38(c)(4) is amended 
by striking ‘‘and’’ at the end of clause (i), by inserting 
a comma at the end of clause (ii), and by adding at the 
end the following new clauses: 
‘‘(iii) the credit determined under sec-
tion 45B, and 
‘‘(iv) the credit determined under sec-
tion 51.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to credits determined under sec-
tions 45B and 51 of the Internal Revenue Code of 1986 
in taxable years beginning after December 31, 2006, and 
to carrybacks of such credits. 
SEC. 6. FAMILY BUSINESS TAX SIMPLIFICATION. 
(a) IN GENERAL.—Section 761 (defining terms for 
purposes of partnerships) is amended by redesignating 
subsection (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection: 
‘‘(f) QUALIFIED JOINT VENTURE.—
‘‘(1) IN GENERAL.—In the case of a qualified 
joint venture conducted by a husband and wife who 
file a joint return for the taxable year, for purposes 
of this title—
‘‘(A) such joint venture shall not be treat-
ed as a partnership, 
‘‘(B) all items of income, gain, loss, deduc-
tion, and credit shall be divided between the 
spouses in accordance with their respective in-
terests in the venture, and 
‘‘(C) each spouse shall take into account 
such spouse’s respective share of such items as 
if they were attributable to a trade or business 
conducted by such spouse as a sole proprietor. 
‘‘(2) QUALIFIED
JOINT
VENTURE.—For pur-
poses of paragraph (1), the term ‘qualified joint ven-
ture’ means any joint venture involving the conduct 
of a trade or business if—
‘‘(A) the only members of such joint ven-
ture are a husband and wife, 
‘‘(B) both spouses materially participate 
(within the meaning of section 469(h) without 
regard to paragraph (5) thereof) in such trade 
or business, and
‘‘(C) both spouses elect the application of 
this subsection.’’. 
(b) NET EARNINGS FROM SELF-EMPLOYMENT.—
(1) Subsection (a) of section 1402 (defining net 
earnings from self-employment) is amended by strik-
ing ‘‘, and’’ at the end of paragraph (15) and insert-
ing a semicolon, by striking the period at the end of 
paragraph (16) and inserting ‘‘; and’’, and by insert-
ing after paragraph (16) the following new para-
graph: 
‘‘(17) notwithstanding the preceding provisions 
of this subsection, each spouse’s share of income or 
loss from a qualified joint venture shall be taken 
into account as provided in section 761(f) in deter-
mining net earnings from self-employment of such 
spouse.’’. 
(2) Subsection (a) of section 211 of the Social 
Security Act (defining net earnings from self-em-
ployment) is amended by striking ‘‘and’’ at the end 
of paragraph (14), by striking the period at the end 
of paragraph (15) and inserting ‘‘; and’’, and by in-
serting after paragraph (15) the following new para-
graph: 
‘‘(16) Notwithstanding the preceding provisions 
of this subsection, each spouse’s share of income or
loss from a qualified joint venture shall be taken 
into account as provided in section 761(f) of the In-
ternal Revenue Code of 1986 in determining net 
earnings from self-employment of such spouse.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 7. DENIAL OF LOWEST CAPITAL GAINS RATE FOR CER-
TAIN DEPENDENTS. 
(a) IN GENERAL.—Subsection (h) of section 1 is 
amended by adding at the end the following new para-
graph: 
‘‘(12) CERTAIN
INDIVIDUALS
NOT
ELIGIBLE 
FOR LOWEST RATE.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual described in subparagraph (B)—
‘‘(i) the amount determined under 
paragraph (1)(A)(ii)(II) shall not be less 
than the amount of taxable income which 
would (without regard to this subsection) 
be taxed at a rate below 15 percent, and 
‘‘(ii) the sum of the amounts deter-
mined under subparagraphs (B) and (C) of 
paragraph (1) shall be an amount equal to 
the rate of tax specified in paragraph
(1)(C) multiplied by so much of the ad-
justed net capital gain (or, if less, taxable 
income) as exceeds the excess (if any) of—
‘‘(I) the amount of taxable in-
come which would (without regard to 
this subsection) be taxed at a rate 
below 15 percent, over 
‘‘(II) the taxable income reduced 
by the adjusted net capital gain. 
‘‘(B) INDIVIDUALS TO WHOM PARAGRAPH 
APPLIES.—
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, an individual is described 
in this subparagraph if—
‘‘(I) such individual meets the 
age requirements of section 152(c)(3) 
(determined without regard to sub-
paragraph (B) thereof), and 
‘‘(II) such individual’s earned in-
come (as defined in section 911(d)(2)) 
for the taxable year does not exceed 
one-half of such individual’s support 
(within the meaning of section 152) 
for such taxable year.