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taxes and interest described in subsection (a) are
paid or incurred:
‘‘(i) 80 percent or more of the corpora-
tion’s gross income for such taxable year is
derived from tenant-stockholders.
‘‘(ii) At all times during such taxable
year, 80 percent or more of the total square
footage of the corporation’s property is used
or available for use by the tenant-stock-
holders for residential purposes or purposes
ancillary to such residential use.
‘‘(iii) 90 percent or more of the ex-
penditures of the corporation paid or in-
curred during such taxable year are paid or
incurred for the acquisition, construction,
management, maintenance, or care of the
corporation’s property for the benefit of the
tenant-stockholders.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years ending after the date
of the enactment of this Act.
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SEC. 5. EXCLUSION FROM INCOME FOR BENEFITS PRO-
VIDED TO VOLUNTEER FIREFIGHTERS AND
EMERGENCY MEDICAL RESPONDERS.
(a) IN GENERAL.—Part III of subchapter B of chapter
1 of the Internal Revenue Code of 1986 (relating to items
specifically excluded from gross income) is amended by in-
serting after section 139A the following new section:
‘‘SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIRE-
FIGHTERS AND EMERGENCY MEDICAL RE-
SPONDERS.
‘‘(a) IN GENERAL.—In the case of any member of a
qualified volunteer emergency response organization, gross
income shall not include—
‘‘(1) any qualified State and local tax benefit,
and
‘‘(2) any qualified payment.
‘‘(b) DENIAL OF DOUBLE BENEFITS.—In the case of
any member of a qualified volunteer emergency response
organization—
‘‘(1) the deduction under 164 shall be determined
with regard to any qualified State and local tax ben-
efit, and
‘‘(2) expenses paid or incurred by the taxpayer
in connection with the performance of services as such
a member shall be taken into account under section
170 only to the extent such expenses exceed the
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amount of any qualified payment excluded from gross
income under subsection (a).
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
STATE
AND
LOCAL
TAX
BEN-
EFIT.—The term ‘qualified state and local tax benefit’
means any reduction or rebate of a tax described in
paragraph (1), (2), or (3) of section 164(a) provided
by a State or political division thereof on account of
services performed as a member of a qualified volun-
teer emergency response organization.
‘‘(2) QUALIFIED PAYMENT.—
‘‘(A) IN
GENERAL.—The term ‘qualified
payment’ means any payment (whether reim-
bursement or otherwise) provided by a State or
political division thereof on account of the per-
formance of services as a member of a qualified
volunteer emergency response organization.
‘‘(B) APPLICABLE
DOLLAR
LIMITATION.—
The amount determined under subparagraph (A)
for any taxable year shall not exceed $30 multi-
plied by the number of months during such year
that the taxpayer performs such services.
‘‘(3) QUALIFIED
VOLUNTEER
EMERGENCY
RE-
SPONSE ORGANIZATION.—The term ‘qualified volun-
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teer emergency response organization’ means any vol-
unteer organization—
‘‘(A) which is organized and operated to
provide firefighting or emergency medical serv-
ices for persons in the State or political subdivi-
sion, as the case may be, and
‘‘(B) which is required (by written agree-
ment) by the State or political subdivision to
furnish firefighting or emergency medical serv-
ices in such State or political subdivision.
‘‘(d) TERMINATION.—This section shall not apply with
respect to taxable years beginning after December 31,
2010.’’.
(b) CLERICAL AMENDMENT.—The table of sections for
such part is amended by inserting after the item relating
to section 139A the following new item:
‘‘Sec. 139B. Benefits provided to volunteer firefighters and emergency medical re-
sponders.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2007.
SEC. 6. CLARIFICATION OF STUDENT HOUSING ELIGIBLE
FOR LOW-INCOME HOUSING CREDIT.
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section
42(i)(3)(D)(ii) of the Internal Revenue Code of 1986 (relat-
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ing to certain students not to disqualify unit) is amended
to read as follows:
‘‘(I) single parents and their chil-
dren and such parents are not depend-
ents (as defined in section 152, deter-
mined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof) of
another individual and such children
are not dependents (as so defined) of
another individual other than a parent
of such children, or.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to—
(1) housing credit amounts allocated before, on,
or after the date of the enactment of this Act, and
(2) buildings placed in service before, on, or after
such date to the extent paragraph (1) of section 42(h)
of the Internal Revenue Code of 1986 does not apply
to any building by reason of paragraph (4) thereof.
SEC. 7. APPLICATION OF JOINT RETURN LIMITATION FOR
CAPITAL 
GAINS 
EXCLUSION 
TO 
CERTAIN
POST-MARRIAGE SALES OF PRINCIPAL RESI-
DENCES BY SURVIVING SPOUSES.
(a) SALE WITHIN 2 YEARS OF SPOUSE’S DEATH.—
Section 121(b) of the Internal Revenue Code of 1986 (relat-
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ing to limitations) is amended by adding at the end the
following new paragraph:
‘‘(4) SPECIAL RULE FOR CERTAIN SALES BY SUR-
VIVING SPOUSES.—In the case of a sale or exchange
of property by an unmarried individual whose spouse
is deceased on the date of such sale, paragraph (1)
shall be applied by substituting ‘$500,000’ for
‘$250,000’ if such sale occurs not later than 2 years
after the date of death of such spouse and the require-
ments of paragraph (2)(A) were met immediately be-
fore such date of death.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to sales or exchanges after December 31,
2007.
SEC. 8. MODIFICATION OF PENALTY FOR FAILURE TO FILE
PARTNERSHIP RETURNS; LIMITATION ON DIS-
CLOSURE.
(a) EXTENSION
OF
TIME
LIMITATION.—Section
6698(a) of the Internal Revenue Code of 1986 (relating to
failure to file partnership returns) is amended by striking
‘‘5 months’’ and inserting ‘‘12 months’’.
(b) INCREASE IN PENALTY AMOUNT.—Paragraph (1)
of section 6698(b) of such Code is amended by striking
‘‘$50’’ and inserting ‘‘$85’’.
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SEC. 9. PENALTY FOR FAILURE TO FILE S CORPORATION
RETURNS.
(a) IN GENERAL.—Part I of subchapter B of chapter
68 of the Internal Revenue Code of 1986 (relating to assess-
able penalties) is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.
‘‘(a) GENERAL RULE.—In addition to the penalty im-
posed by section 7203 (relating to willful failure to file re-
turn, supply information, or pay tax), if any S corporation
required to file a return under section 6037 for any taxable
year—
‘‘(1) fails to file such return at the time pre-
scribed therefor (determined with regard to any exten-
sion of time for filing), or
‘‘(2) files a return which fails to show the infor-
mation required under section 6037,
such S corporation shall be liable for a penalty determined
under subsection (b) for each month (or fraction thereof)
during which such failure continues (but not to exceed 12
months), unless it is shown that such failure is due to rea-
sonable cause.
‘‘(b) AMOUNT PER MONTH.—For purposes of sub-
section (a), the amount determined under this subsection
for any month is the product of—
‘‘(1) $85, multiplied by
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‘‘(2) the number of persons who were share-
holders in the S corporation during any part of the
taxable year.
‘‘(c) ASSESSMENT OF PENALTY.—The penalty imposed
by subsection (a) shall be assessed against the S corpora-
tion.
‘‘(d) DEFICIENCY PROCEDURES NOT TO APPLY.—Sub-
chapter B of chapter 63 (relating to deficiency procedures
for income, estate, gift, and certain excise taxes) shall not
apply in respect of the assessment or collection of any pen-
alty imposed by subsection (a).’’.
(b) CLERICAL AMENDMENT.—The table of sections for
part I of subchapter B of chapter 68 of such Code is amend-
ed by adding at the end the following new item:
‘‘Sec. 6699. Failure to file S corporation return.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns required to be filed after the
date of the enactment of this Act.
SEC. 10. MODIFICATION OF REQUIRED INSTALLMENT OF
CORPORATE ESTIMATED TAXES WITH RE-
SPECT TO CERTAIN DATES.
The percentage under subparagraph (B) of section
401(1) of the Tax Increase Prevention and Reconciliation
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Act of 2005 in effect on the date of the enactment of this
Act is increased by 1.50 percentage points.
Attest:
Secretary.