‘‘(C)(i) as being a member of a family 
which ceased to be eligible for such assistance 
by reason of any limitation imposed by Federal 
or State law on the maximum period such as-
sistance is payable to a family, and 
‘‘(ii) as having a hiring date which is not 
more than 2 years after the date of such ces-
sation.’’. 
(3) INCREASED CREDIT FOR EMPLOYMENT OF 
LONG-TERM FAMILY ASSISTANCE RECIPIENTS.—Sec-
tion 51 is amended by inserting after subsection (d) 
the following new subsection: 
‘‘(e) CREDIT FOR SECOND-YEAR WAGES FOR EM-
PLOYMENT OF LONG-TERM FAMILY ASSISTANCE RECIPI-
ENTS.— 
‘‘(1) IN GENERAL.—With respect to the em-
ployment of a long-term family assistance recipi-
ent— 
‘‘(A) the amount of the work opportunity 
credit determined under this section for the tax-
able year shall include 50 percent of the quali-
fied second-year wages for such year, and 
‘‘(B) in lieu of applying subsection (b)(3), 
the amount of the qualified first-year wages, 
and the amount of qualified second-year wages, 
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which may be taken into account with respect 
to such a recipient shall not exceed $10,000 per 
year. 
‘‘(2) QUALIFIED
SECOND-YEAR
WAGES.—For 
purposes of this subsection, the term ‘qualified sec-
ond-year wages’ means qualified wages— 
‘‘(A) which are paid to a long-term family 
assistance recipient, and 
‘‘(B) which are attributable to service ren-
dered during the 1-year period beginning on the 
day after the last day of the 1-year period with 
respect to such recipient determined under sub-
section (b)(2). 
‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND 
RAILWAY LABOR.—If such recipient is an employee 
to whom subparagraph (A) or (B) of subsection 
(h)(1) applies, rules similar to the rules of such sub-
paragraphs shall apply except that— 
‘‘(A) such subparagraph (A) shall be ap-
plied by substituting ‘$10,000’ for ‘$6,000’, and 
‘‘(B) such subparagraph (B) shall be ap-
plied by substituting ‘$833.33’ for ‘$500’.’’. 
(4) REPEAL OF SEPARATE WELFARE-TO-WORK 
CREDIT.— 
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(A) IN GENERAL.—Section 51A is hereby 
repealed. 
(B) CLERICAL AMENDMENT.—The table of 
sections for subpart F of part IV of subchapter 
A of chapter 1 is amended by striking the item 
relating to section 51A. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to individuals who begin work for the 
employer after December 31, 2005. 
(2) CONSOLIDATION.—The amendments made 
by subsections (b), (c), (d), and (e) shall apply to in-
dividuals who begin work for the employer after De-
cember 31, 2006. 
SEC. 206. ELECTION TO INCLUDE COMBAT PAY AS EARNED 
INCOME FOR PURPOSES OF EARNED INCOME 
CREDIT. 
(a) IN GENERAL.—Section 32(c)(2)(B)(vi)(II) is 
amended by striking ‘‘2007’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
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SEC. 207. EXTENSION AND MODIFICATION OF QUALIFIED 
ZONE ACADEMY BONDS. 
(a) 
IN
GENERAL.—Paragraph 
(1) 
of 
section 
1397E(e) is amended by striking ‘‘and 2005’’ and insert-
ing ‘‘2005, 2006, and 2007’’. 
(b) SPECIAL RULES RELATING TO EXPENDITURES, 
ARBITRAGE, AND REPORTING.— 
(1) IN
GENERAL.—Section 1397E is amend-
ed— 
(A) in subsection (d)(1), by striking ‘‘and’’ 
at the end of subparagraph (C)(iii), by striking 
the period at the end of subparagraph (D) and 
inserting ‘‘, and’’, and by adding at the end the 
following new subparagraph: 
‘‘(E) the issue meets the requirements of 
subsections (f), (g), and (h).’’, and 
(B) by redesignating subsections (f), (g), 
(h), and (i) as subsection (i), (j), (k), and (l), 
respectively, and by inserting after subsection 
(e) the following new subsections: 
‘‘(f) SPECIAL
RULES
RELATING
TO
EXPENDI-
TURES.— 
‘‘(1) IN GENERAL.—An issue shall be treated as 
meeting the requirements of this subsection if, as of 
the date of issuance, the issuer reasonably expects— 
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‘‘(A) at least 95 percent of the proceeds 
from the sale of the issue are to be spent for 
1 or more qualified purposes with respect to 
qualified zone academies within the 5-year pe-
riod beginning on the date of issuance of the 
qualified zone academy bond, 
‘‘(B) a binding commitment with a third 
party to spend at least 10 percent of the pro-
ceeds from the sale of the issue will be incurred 
within the 6-month period beginning on the 
date of issuance of the qualified zone academy 
bond, and 
‘‘(C) such purposes will be completed with 
due diligence and the proceeds from the sale of 
the issue will be spent with due diligence. 
‘‘(2) EXTENSION
OF
PERIOD.—Upon submis-
sion of a request prior to the expiration of the period 
described in paragraph (1)(A), the Secretary may 
extend such period if the issuer establishes that the 
failure to satisfy the 5-year requirement is due to 
reasonable cause and the related purposes will con-
tinue to proceed with due diligence. 
‘‘(3) FAILURE TO SPEND REQUIRED AMOUNT 
OF BOND PROCEEDS WITHIN 5 YEARS.—To the ex-
tent that less than 95 percent of the proceeds of 
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such issue are expended by the close of the 5-year 
period beginning on the date of issuance (or if an 
extension has been obtained under paragraph (2), by 
the close of the extended period), the issuer shall re-
deem all of the nonqualified bonds within 90 days 
after the end of such period. For purposes of this 
paragraph, the amount of the nonqualified bonds re-
quired to be redeemed shall be determined in the 
same manner as under section 142. 
‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.— 
An issue shall be treated as meeting the requirements of 
this subsection if the issuer satisfies the arbitrage require-
ments of section 148 with respect to proceeds of the issue. 
‘‘(h) REPORTING.—Issuers of qualified academy zone 
bonds shall submit reports similar to the reports required 
under section 149(e).’’. 
(2) 
CONFORMING
AMENDMENTS.—Sections 
54(l)(3)(B) and 1400N(l)(7)(B)(ii) are each amend-
ed by striking ‘‘section 1397E(i)’’ and inserting 
‘‘section 1397E(l)’’. 
(c) EFFECTIVE DATES.— 
(1) EXTENSION.—The amendment made by 
subsection (a) shall apply to obligations issued after 
December 31, 2005. 
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(2) SPECIAL RULES.—The amendments made 
by subsection (b) shall apply to obligations issued 
after the date of the enactment of this Act pursuant 
to allocations of the national zone academy bond 
limitation for calendar years after 2005. 
SEC. 208. ABOVE-THE-LINE DEDUCTION FOR CERTAIN EX-
PENSES OF ELEMENTARY AND SECONDARY 
SCHOOL TEACHERS. 
(a) IN GENERAL.—Subparagraph (D) of section 
62(a)(2) is amended by striking ‘‘or 2005’’ and inserting 
‘‘2005, 2006, or 2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 209. EXTENSION AND EXPANSION OF EXPENSING OF 
BROWNFIELDS REMEDIATION COSTS. 
(a) EXTENSION.—Subsection (h) of section 198 is 
amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EXPANSION.—Section 198(d)(1) (defining haz-
ardous substance) is amended by striking ‘‘and’’ at the 
end of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ‘‘, and’’, and by 
adding at the end the following new subparagraph: 
‘‘(C) any petroleum product (as defined in 
section 4612(a)(3)).’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
after December 31, 2005. 
SEC. 210. TAX INCENTIVES FOR INVESTMENT IN THE DIS-
TRICT OF COLUMBIA. 
(a) DESIGNATION OF ZONE.— 
(1) IN
GENERAL.—Subsection (f) of section 
1400 is amended by striking ‘‘2005’’ both places it 
appears and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to periods beginning 
after December 31, 2005. 
(b) 
TAX-EXEMPT
ECONOMIC
DEVELOPMENT 
BONDS.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400A is amended by striking ‘‘2005’’ and inserting 
‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to bonds issued after 
December 31, 2005. 
(c) ZERO PERCENT CAPITAL GAINS RATE.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400B is amended by striking ‘‘2006’’ each place it 
appears and inserting ‘‘2008’’. 
(2) CONFORMING AMENDMENTS.— 
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(A) Section 1400B(e)(2) is amended— 
(i) by striking ‘‘2010’’ and inserting 
‘‘2012’’, and 
(ii) by striking ‘‘2010’’ in the heading 
thereof and inserting ‘‘2012’’. 
(B) Section 1400B(g)(2) is amended by 
striking ‘‘2010’’ and inserting ‘‘2012’’. 
(C) Section 1400F(d) is amended by strik-
ing ‘‘2010’’ and inserting ‘‘2012’’. 
(3) EFFECTIVE DATES.— 
(A) EXTENSION.—The amendments made 
by paragraph (1) shall apply to acquisitions 
after December 31, 2005. 
(B) 
CONFORMING
AMENDMENTS.—The 
amendments made by paragraph (2) shall take 
effect on the date of the enactment of this Act. 
(d) FIRST-TIME HOMEBUYER CREDIT.— 
(1) IN
GENERAL.—Subsection (i) of section 
1400C is amended by striking ‘‘2006’’ and inserting 
‘‘2008’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to property purchased 
after December 31, 2005. 
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SEC. 211. INDIAN EMPLOYMENT TAX CREDIT. 
(a) IN GENERAL.—Section 45A(f) is amended by 
striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 212. ACCELERATED DEPRECIATION FOR BUSINESS 
PROPERTY ON INDIAN RESERVATIONS. 
(a) IN GENERAL.—Section 168(j)(8) is amended by 
striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2005. 
SEC. 213. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY 
FOR QUALIFIED LEASEHOLD IMPROVEMENTS 
AND QUALIFIED RESTAURANT PROPERTY. 
(a) IN GENERAL.—Clauses (iv) and (v) of section 
168(e)(3)(E) are each amended by striking ‘‘2006’’ and 
inserting ‘‘2008’’. 
(b) TREATMENT OF RESTAURANT PROPERTY TO IN-
CLUDE NEW CONSTRUCTION.—Paragraph (7) of section 
168(e) (relating to classification of property) is amended 
to read as follows: 
‘‘(7) QUALIFIED RESTAURANT PROPERTY.—The 
term ‘qualified restaurant property’ means any sec-
tion 1250 property which is a building or an im-
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provement to a building if more than 50 percent of 
the building’s square footage is devoted to prepara-
tion of, and seating for on-premises consumption of, 
prepared meals.’’. 
(c) EFFECTIVE DATES.— 
(1) SUBSECTION (a).—The amendments made 
by subsection (a) shall apply to property placed in 
service after December 31, 2005. 
(2) SUBSECTION (b).—The amendment made 
by subsection (b) shall apply to property placed in 
service after the date of the enactment of this Act. 
SEC. 214. COVER OVER OF TAX ON DISTILLED SPIRITS. 
(a) IN GENERAL.—Section 7652(f)(1) is amended by 
striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to articles brought into the 
United States after December 31, 2005. 
SEC. 215. PARITY IN APPLICATION OF CERTAIN LIMITS TO 
MENTAL HEALTH BENEFITS. 
(a) AMENDMENT TO THE INTERNAL REVENUE CODE 
OF 1986.—Section 9812(f)(3) is amended by striking 
‘‘2006’’ and inserting ‘‘2007’’. 
(b) AMENDMENT TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 712(f) of the 
Employee Retirement Income Security Act of 1974 (29 
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U.S.C. 1185a(f)) is amended by striking ‘‘2006’’ and in-
serting ‘‘2007’’. 
(c) AMENDMENT TO THE PUBLIC HEALTH SERVICE 
ACT.—Section 2705(f) of the Public Health Service Act 
(42 
U.S.C. 
300gg–5(f)) 
is 
amended 
by 
striking 
‘‘2006’’and inserting ‘‘2007’’. 
SEC. 216. CORPORATE DONATIONS OF SCIENTIFIC PROP-
ERTY USED FOR RESEARCH AND OF COM-
PUTER TECHNOLOGY AND EQUIPMENT. 
(a) EXTENSION OF COMPUTER TECHNOLOGY AND 
EQUIPMENT DONATION.— 
(1) IN
GENERAL.—Section 170(e)(6)(G) is 
amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to contributions made 
in taxable years beginning after December 31, 2005. 
(b) EXPANSION OF CHARITABLE CONTRIBUTION AL-
LOWED FOR SCIENTIFIC PROPERTY USED FOR RESEARCH 
AND
FOR COMPUTER TECHNOLOGY
AND EQUIPMENT 
USED FOR EDUCATIONAL PURPOSES.— 
(1) SCIENTIFIC
PROPERTY
USED
FOR
RE-
SEARCH.— 
(A) IN GENERAL.—Clause (ii) of section 
170(e)(4)(B) (defining qualified research con-
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tributions) is amended by inserting ‘‘or assem-
bled’’ after ‘‘constructed’’. 
(B) CONFORMING
AMENDMENT.—Clause 
(iii) of section 170(e)(4)(B) is amended by in-
serting ‘‘or assembly’’ after ‘‘construction’’. 
(2) COMPUTER TECHNOLOGY AND EQUIPMENT 
FOR EDUCATIONAL PURPOSES.— 
(A) IN GENERAL.—Clause (ii) of section 
170(e)(6)(B) is amended by inserting ‘‘or as-
sembled’’ after ‘‘constructed’’ and ‘‘or assem-
bling’’ after ‘‘construction’’. 
(B) CONFORMING AMENDMENT.—Subpara-
graph (D) of section 170(e)(6) is amended by 
inserting ‘‘or assembled’’ after ‘‘constructed’’ 
and ‘‘or assembly’’ after ‘‘construction’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2005. 
SEC. 217. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec-
tion 220(i) are each amended by striking ‘‘2005’’ each 
place it appears in the text and headings and inserting 
‘‘2007’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) Paragraph (2) of section 220(j) is amend-
ed— 
(A) in the text by striking ‘‘or 2004’’ each 
place it appears and inserting ‘‘2004, 2005, or 
2006’’, and 
(B) in the heading by striking ‘‘OR 2004’’ 
and inserting ‘‘2004, 2005, OR 2006’’. 
(2) Subparagraph (A) of section 220(j)(4) is 
amended by striking ‘‘and 2004’’ and inserting 
‘‘2004, 2005, and 2006’’. 
(c) TIME FOR FILING REPORTS, ETC.— 
(1) The report required by section 220(j)(4) of 
the Internal Revenue Code of 1986 to be made on 
August 1, 2005, shall be treated as timely if made 
before the close of the 90-day period beginning on 
the date of the enactment of this Act. 
(2) The determination and publication required 
by section 220(j)(5) of such Code with respect to 
calendar year 2005 shall be treated as timely if 
made before the close of the 120-day period begin-
ning on the date of the enactment of this Act. If the 
determination under the preceding sentence is that 
2005 is a cut-off year under section 220(i) of such 
Code, the cut-off date under such section 220(i) 
shall be the last day of such 120-day period. 
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SEC. 218. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED 
FROM MARGINAL PROPERTIES. 
(a) IN GENERAL.—Section 613A(c)(6)(H) is amend-
ed by striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 219. AMERICAN SAMOA ECONOMIC DEVELOPMENT 
CREDIT. 
(a) IN GENERAL.—For purposes of section 30A of 
the Internal Revenue Code of 1986, a domestic corpora-
tion shall be treated as a qualified domestic corporation 
to which such section applies if such corporation— 
(1) is an existing credit claimant with respect 
to American Samoa, and 
(2) elected the application of section 936 of the 
Internal Revenue Code of 1986 for its last taxable 
year beginning before January 1, 2006. 
(b) SPECIAL RULES
FOR APPLICATION
OF SEC-
TION.—The following rules shall apply in applying section 
30A of the Internal Revenue Code of 1986 for purposes 
of this section: 
(1) AMOUNT OF CREDIT.—Notwithstanding sec-
tion 30A(a)(1) of such Code, the amount of the 
credit determined under section 30A(a)(1) of such 
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Code for any taxable year shall be the amount deter-
mined under section 30A(d) of such Code, except 
that section 30A(d) shall be applied without regard 
to paragraph (3) thereof. 
(2) SEPARATE APPLICATION.—In applying sec-
tion 30A(a)(3) of such Code in the case of a cor-
poration treated as a qualified domestic corporation 
by reason of this section, section 30A of such Code 
(and so much of section 936 of such Code as relates 
to such section 30A) shall be applied separately with 
respect to American Samoa. 
(3) FOREIGN TAX CREDIT ALLOWED.—Notwith-
standing section 30A(e) of such Code, the provisions 
of section 936(c) of such Code shall not apply with 
respect to the credit allowed by reason of this sec-
tion. 
(c) DEFINITIONS.—For purposes of this section, any 
term which is used in this section which is also used in 
section 30A or 936 of such Code shall have the same 
meaning given such term by such section 30A or 936. 
(d) APPLICATION
OF SECTION.—Notwithstanding 
section 30A(h) or section 936(j) of such Code, this section 
(and so much of section 30A and section 936 of such Code 
as relates to this section) shall apply to the first two tax-
able years of a corporation to which subsection (a) applies 
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which begin after December 31, 2005, and before January 
1, 2008. 
SEC. 220. RESTRUCTURING OF NEW YORK LIBERTY ZONE 
TAX CREDITS. 
(a) IN GENERAL.—Part I of subchapter Y of chapter 
1 is amended by redesignating section 1400L as 1400K 
and by adding at the end the following new section: 
‘‘SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS. 
‘‘(a) IN GENERAL.—In the case of a New York Lib-
erty Zone governmental unit, there shall be allowed as a 
credit against any taxes imposed for any payroll period 
by section 3402 for which such governmental unit is liable 
under section 3403 an amount equal to so much of the 
portion of the qualifying project expenditure amount allo-
cated under subsection (b)(3) to such governmental unit 
for the calendar year as is allocated by such governmental 
unit to such period under subsection (b)(4). 
‘‘(b) 
QUALIFYING
PROJECT
EXPENDITURE 
AMOUNT.—For purposes of this section— 
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualifying 
project expenditure amount’ means, with respect to 
any calendar year, the sum of— 
‘‘(A) the total expenditures paid or in-
curred during such calendar year by all New 
York Liberty Zone governmental units and the 
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Port Authority of New York and New Jersey 
for any portion of qualifying projects located 
wholly within the City of New York, New York, 
and 
‘‘(B) any such expenditures— 
‘‘(i) paid or incurred in any preceding 
calendar year which begins after the date 
of enactment of this section, and 
‘‘(ii) not previously allocated under 
paragraph (3). 
‘‘(2) QUALIFYING PROJECT.—The term ‘quali-
fying project’ means any transportation infrastruc-
ture project, including highways, mass transit sys-
tems, railroads, airports, ports, and waterways, in or 
connecting with the New York Liberty Zone (as de-
fined in section 1400K(h)), which is designated as a 
qualifying project under this section jointly by the 
Governor of the State of New York and the Mayor 
of the City of New York, New York. 
‘‘(3) GENERAL ALLOCATION.— 
‘‘(A) IN GENERAL.—The Governor of the 
State of New York and the Mayor of the City 
of New York, New York, shall jointly allocate to 
each New York Liberty Zone governmental unit 
the portion of the qualifying project expenditure 
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amount which may be taken into account by 
such governmental unit under subsection (a) for 
any calendar year in the credit period. 
‘‘(B) AGGREGATE LIMIT.—The aggregate 
amount which may be allocated under subpara-
graph (A) for all calendar years in the credit 
period shall not exceed $1,750,000,000. 
‘‘(C) ANNUAL LIMIT.— 
‘‘(i) IN
GENERAL.—The aggregate 
amount which may be allocated under sub-
paragraph (A) for any calendar year in the 
credit period shall not exceed the sum of— 
‘‘(I) the applicable limit, plus 
‘‘(II) the aggregate amount au-
thorized to be allocated under this 
paragraph for all preceding calendar 
years in the credit period which was 
not so allocated. 
‘‘(ii) APPLICABLE
LIMIT.—For pur-
poses of clause (i), the applicable limit for 
any calendar year is— 
‘‘(I) in the case of calendar years 
2007 through 2016, $100,000,000, 
‘‘(II) in the case of calendar year 
2017 or 2018, $200,000,000, 
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‘‘(III) in the case of calendar 
year 2019, $150,000,000, 
‘‘(IV) in the case of calendar 
year 2020 or 2021, $100,000,000, 
and 
‘‘(V) in the case of any calendar 
year after 2021, zero. 
‘‘(D) UNALLOCATED AMOUNTS AT END OF 
CREDIT PERIOD.—If, as of the close of the cred-
it period, the amount under subparagraph (B) 
exceeds the aggregate amount allocated under 
subparagraph (A) for all calendar years in the 
credit period, the Governor of the State of New 
York and the Mayor of the City of New York, 
New York, may jointly allocate to New York 
Liberty Zone governmental units for any cal-
endar year in the 5-year period following the 
credit period an amount equal to— 
‘‘(i) the lesser of— 
‘‘(I) such excess, or 
‘‘(II) the qualifying project ex-
penditure amount for such calendar 
year, reduced by 
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‘‘(ii) the aggregate amount allocated 
under this subparagraph for all preceding 
calendar years. 
‘‘(4) ALLOCATION
TO
PAYROLL
PERIODS.— 
Each New York Liberty Zone governmental unit 
which has been allocated a portion of the qualifying 
project expenditure amount under paragraph (3) for 
a calendar year may allocate such portion to payroll 
periods beginning in such calendar year as such gov-
ernmental unit determines appropriate. 
‘‘(c) CARRYOVER OF UNUSED ALLOCATIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if the amount allocated under subsection 
(b)(3) to a New York Liberty Zone governmental 
unit for any calendar year exceeds the aggregate 
taxes imposed by section 3402 for which such gov-
ernmental unit is liable under section 3403 for peri-
ods beginning in such year, such excess shall be car-
ried to the succeeding calendar year and added to 
the allocation of such governmental unit for such 
succeeding calendar year. No amount may be carried 
under the preceding sentence to a calendar year 
after 2026. 
‘‘(2) REALLOCATION.—If a New York Liberty 
Zone governmental unit does not use an amount al-
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located to it under subsection (b)(3) within the time 
prescribed by the Governor of the State of New York 
and the Mayor of the City of New York, New York, 
then such amount shall after such time be treated 
for purposes of subsection (b)(3) in the same man-
ner as if it had never been allocated. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) CREDIT PERIOD.—The term ‘credit period’ 
means the 15-year period beginning on January 1, 
2007. 
‘‘(2) NEW
YORK
LIBERTY
ZONE
GOVERN-
MENTAL UNIT.—The term ‘New York Liberty Zone 
governmental unit’ means— 
‘‘(A) the State of New York, 
‘‘(B) the City of New York, New York, and 
‘‘(C) any agency or instrumentality of such 
State or City. 
‘‘(3) TREATMENT OF FUNDS.—Any expenditure 
for a qualifying project taken into account for pur-
poses of the credit under this section shall be consid-
ered State and local funds for the purpose of any 
Federal program. 
‘‘(4) TREATMENT
OF
CREDIT
AMOUNTS
FOR 
PURPOSES OF WITHHOLDING TAXES.—For purposes 
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of this title, a New York Liberty Zone governmental 
unit shall be treated as having paid to the Secretary, 
on the day on which wages are paid to employees, 
an amount equal to the amount of the credit allowed 
to such entity under subsection (a) with respect to 
such wages, but only if such governmental unit de-
ducts and withholds wages for such payroll period 
under section 3401 (relating to wage withholding). 
‘‘(e) REPORTING.—The Governor of the State of New 
York and the Mayor of the City of New York, New York, 
shall jointly submit to the Secretary an annual report— 
‘‘(1) which certifies— 
‘‘(A) the qualifying project expenditure 
amount for the calendar year, and 
‘‘(B) the amount allocated to each New 
York Liberty Zone governmental unit under 
subsection (b)(3) for the calendar year, and 
‘‘(2) includes such other information as the 
Secretary may require to carry out this section. 
‘‘(f) GUIDANCE.—The Secretary may prescribe such 
guidance as may be necessary or appropriate to ensure 
compliance with the purposes of this section. 
‘‘(g) TERMINATION.—No credit shall be allowed 
under subsection (a) for any calender year after 2026.’’. 
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(b) TERMINATION OF CERTAIN NEW YORK LIBERTY 
ZONE BENEFITS.— 
(1) SPECIAL
ALLOWANCE
AND
EXPENSING.— 
Section 1400K(b)(2)(A)(v), as redesignated by sub-
section (a), is amended by striking ‘‘the termination 
date’’ and inserting ‘‘the date of the enactment of 
the Estate Tax and Extension of Tax Relief Act of 
2006 or the termination date if pursuant to a bind-
ing contract in effect on such enactment date’’. 
(2) LEASEHOLD.—Section 1400K(c)(2)(B), as 
so redesignated, is amended by striking ‘‘before Jan-
uary 1, 2007’’ and inserting ‘‘on or before the date 
of the enactment of the Estate Tax and Extension 
of Tax Relief Act of 2006 or before January 1, 
2007, if pursuant to a binding contract in effect on 
such enactment date’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(3)(B) is amended by striking 
‘‘section 
1400L(a)’’ 
and 
inserting 
‘‘section 
1400K(a)’’. 
(2) Section 168(k)(2)(D)(ii) is amended by 
striking 
‘‘section 
1400L(c)(2)’’ 
and 
inserting 
‘‘1400K(c)(2)’’. 
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(3) The table of sections for part I of sub-
chapter Y of chapter 1 is amended by striking 
‘‘1400L’’ and inserting ‘‘1400K’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to periods beginning after December 31, 
2006. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall take effect as if included in 
section 301 of the Job Creation and Worker Assist-
ance Act of 2002. 
SEC. 221. EXTENSION OF BONUS DEPRECIATION FOR CER-
TAIN QUALIFIED GULF OPPORTUNITY ZONE 
PROPERTY. 
(a) IN GENERAL.—Subsection (d) of section 1400N 
is amended by adding at the end the following new para-
graph: 
‘‘(6) EXTENSION FOR CERTAIN PROPERTY.— 
‘‘(A) IN
GENERAL.—In the case of any 
specified Gulf Opportunity Zone extension prop-
erty, paragraph (2)(A) shall be applied without 
regard to clause (v) thereof. 
‘‘(B) SPECIFIED GULF OPPORTUNITY ZONE 
EXTENSION PROPERTY.—For purposes of this 
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paragraph, the term ‘specified Gulf Opportunity 
Zone extension property’ means property— 
‘‘(i) substantially all of the use of 
which is in one or more specified portions 
of the GO Zone, and 
‘‘(ii) which is— 
‘‘(I) nonresidential real property 
or residential rental property which is 
placed in service by the taxpayer on or 
before December 31, 2009, or 
‘‘(II) in the case of a taxpayer 
who places a building described in 
subclause (I) in service on or before 
December 31, 2009, property de-
scribed in section 168(k)(2)(A)(i) if 
substantially all of the use of such 
property is in such building and such 
property is placed in service by the 
taxpayer not later than 90 days after 
such building is placed in service. 
‘‘(C) SPECIFIED
PORTIONS
OF
THE
GO 
ZONE.—For purposes of this paragraph, the 
term ‘specified portions of the GO Zone’ means 
those portions of the GO Zone which are in any 
county or parish which is identified by the Sec-
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retary as being a county or parish in which hur-
ricanes occurring during 2005 damaged (in the 
aggregate) more than 40 percent of the housing 
units in such county or parish which were occu-
pied (determined according to the 2000 Cen-
sus).’’. 
(b) EXTENSION NOT APPLICABLE TO INCREASED 
SECTION 179 EXPENSING.—Paragraph (2) of section 
1400N(e) is amended by inserting ‘‘without regard to sub-
section (d)(6)’’ after ‘‘subsection (d)(2)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in section 101 
of the Gulf Opportunity Zone Act of 2005. 
SEC. 222. AUTHORITY FOR UNDERCOVER OPERATIONS. 
Paragraph (6) of section 7608(c) (relating to applica-
tion of section) is amended by striking ‘‘2007’’ both places 
it appears and inserting ‘‘2008’’. 
SEC. 223. DISCLOSURES OF CERTAIN TAX RETURN INFOR-
MATION. 
(a) DISCLOSURES TO FACILITATE COMBINED EM-
PLOYMENT TAX REPORTING.— 
(1) IN GENERAL.—Subparagraph (B) of section 
6103(d)(5) (relating to termination) is amended by 
striking ‘‘2006’’ and inserting ‘‘2007’’. 
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(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to disclosures after De-
cember 31, 2006. 
(b) DISCLOSURES RELATING TO TERRORIST ACTIVI-
TIES.— 
(1) IN
GENERAL.—Clause (iv) of section 
6103(i)(3)(C) and subparagraph (E) of section 
6103(i)(7) are each amended by striking ‘‘2006’’ 
and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to disclosures after De-
cember 31, 2006. 
(c) DISCLOSURES RELATING TO STUDENT LOANS.— 
(1) IN GENERAL.—Subparagraph (D) of section 
6103(l)(13) (relating to termination) is amended by 
striking ‘‘2006’’ and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to requests made after 
December 31, 2006. 
Subtitle B—Other Provisions 
SEC. 231. DEDUCTION ALLOWABLE WITH RESPECT TO IN-
COME ATTRIBUTABLE TO DOMESTIC PRO-
DUCTION ACTIVITIES IN PUERTO RICO. 
(a) IN GENERAL.—Subsection (d) of section 199 (re-
lating to definitions and special rules) is amended by re-
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