176
paid or incurred for services performed while the 
individual’s principal place of abode is outside 
an empowerment zone, enterprise community, re-
newal community, or rural renewal county. 
‘‘(C) RURAL RENEWAL COUNTY.—For pur-
poses of this paragraph, the term ‘rural renewal 
county’ means any county which—
‘‘(i) is outside a metropolitan statis-
tical area (defined as such by the Office of 
Management and Budget), and 
‘‘(ii) during the 5-year periods 1990 
through 1994 and 1995 through 1999 had a 
net population loss.’’. 
(2) CONFORMING
AMENDMENT.—Subparagraph 
(D) of section 51(d)(1) is amended to read as follows: 
‘‘(D) a designated community resident,’’. 
(c) CLARIFICATION OF TREATMENT OF INDIVIDUALS 
UNDER INDIVIDUAL WORK PLANS.—Subparagraph (B) of 
section 51(d)(6) (relating to vocational rehabilitation refer-
ral) is amended by striking ‘‘or’’ at the end of clause (i), 
by striking the period at the end of clause (ii) and inserting 
‘‘, or’’, and by adding at the end the following new clause: 
‘‘(iii) an individual work plan devel-
oped and implemented by an employment 
network pursuant to subsection (g) of sec-
177
tion 1148 of the Social Security Act with 
respect to which the requirements of such 
subsection are met.’’. 
(d) TREATMENT OF DISABLED VETERANS UNDER THE 
WORK OPPORTUNITY TAX CREDIT.—
(1) DISABLED VETERANS TREATED AS MEMBERS 
OF TARGETED GROUP.—
(A) IN
GENERAL.—Subparagraph (A) of 
section 51(d)(3) (relating to qualified veteran) is 
amended by striking ‘‘agency as being a member 
of a family’’ and all that follows and inserting 
‘‘agency as—
‘‘(i) being a member of a family receiv-
ing assistance under a food stamp program 
under the Food Stamp Act of 1977 for at 
least a 3-month period ending during the 
12-month period ending on the hiring date, 
or 
‘‘(ii) entitled to compensation for a 
service-connected disability, and—
‘‘(I) having a hiring date which is 
not more that 1 year after having been 
discharged or released from active duty 
in the Armed Forces of the United 
States, or
178
‘‘(II) having aggregate periods of 
unemployment during the 1-year pe-
riod ending on the hiring date which 
equal or exceed 6 months.’’. 
(B) DEFINITIONS.—Paragraph (3) of sec-
tion 51(d) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) OTHER DEFINITIONS.—For purposes of 
subparagraph (A), the terms ‘compensation’ and 
‘service-connected’ have the meanings given such 
terms under section 101 of title 38, United 
States Code.’’. 
(2) INCREASE IN AMOUNT OF WAGES TAKEN INTO 
ACCOUNT FOR DISABLED VETERANS.—Paragraph (3) 
of section 51(b) is amended—
(A) by inserting ‘‘($12,000 per year in the 
case of any individual who is a qualified veteran 
by reason of subsection (d)(3)(A)(ii))’’ before the 
period at the end, and 
(B) by striking ‘‘ONLY FIRST $6,000 OF’’ in 
the heading and inserting ‘‘LIMITATION ON’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to individuals who begin work for the 
employer after the date of the enactment of this Act.
179
SEC. 8212. EXTENSION AND INCREASE OF EXPENSING FOR 
SMALL BUSINESS. 
(a) EXTENSION.—Subsections (b)(1), (b)(2), (b)(5), 
(c)(2), and (d)(1)(A)(ii) of section 179 (relating to election 
to expense certain depreciable business assets) are each 
amended by striking ‘‘2010’’ and inserting ‘‘2011’’. 
(b) INCREASE IN LIMITATIONS.—Subsection (b) of sec-
tion 179 is amended—
(1) by striking ‘‘$100,000 in the case of taxable 
years beginning after 2002’’ in paragraph (1) and in-
serting ‘‘$125,000 in the case of taxable years begin-
ning after 2006’’, and 
(2) by striking ‘‘$400,000 in the case of taxable 
years beginning after 2002’’ in paragraph (2) and in-
serting ‘‘$500,000 in the case of taxable years begin-
ning after 2006’’. 
(c) INFLATION ADJUSTMENT.—Subparagraph (A) of 
section 179(b)(5) is amended—
(1) by striking ‘‘2003’’ and inserting ‘‘2007’’, 
(2) by striking ‘‘$100,000 and $400,000’’ and in-
serting ‘‘$125,000 and $500,000’’, and 
(3) by striking ‘‘2002’’ in clause (ii) and insert-
ing ‘‘2006’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2006.
180
SEC. 8213. DETERMINATION OF CREDIT FOR CERTAIN 
TAXES PAID WITH RESPECT TO EMPLOYEE 
CASH TIPS. 
(a) IN
GENERAL.—Subparagraph (B) of section 
45B(b)(1) is amended by inserting ‘‘as in effect on January 
1, 2007, and’’ before ‘‘determined without regard to’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to tips received for services performed 
after December 31, 2006. 
SEC. 8214. 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 sections 45B 
and 51 of the Internal Revenue Code of 1986 in taxable
181
years beginning after December 31, 2006, and to carrybacks 
of such credits. 
SEC. 8215. FAMILY BUSINESS TAX SIMPLIFICATION. 
(a) IN GENERAL.—Section 761 (defining terms for 
purposes of partnerships) is amended by redesignating sub-
section (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 treated 
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 inter-
ests 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 con-
ducted by such spouse as a sole proprietor. 
‘‘(2) QUALIFIED JOINT VENTURE.—For purposes 
of paragraph (1), the term ‘qualified joint venture’
182
means any joint venture involving the conduct of a 
trade or business if—
‘‘(A) the only members of such joint venture 
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 determining 
net earnings from self-employment of such spouse.’’. 
(2) Subsection (a) of section 211 of the Social 
Security Act (defining net earnings from self-employ-
183
ment) 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 insert-
ing 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 Internal 
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 Decem-
ber 31, 2006. 
Subpart B—Gulf Opportunity Zone Tax Incentives 
SEC. 8221. EXTENSION OF INCREASED EXPENSING FOR 
QUALIFIED SECTION 179 GULF OPPORTUNITY 
ZONE PROPERTY. 
Paragraph (2) of section 1400N(e) (relating to quali-
fied section 179 Gulf Opportunity Zone property) is 
amended—
(1) by striking ‘‘this subsection, the term’’ and 
inserting: 
‘‘this subsection—
‘‘(A) IN GENERAL.—The term’’, and
184
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) EXTENSION
FOR
CERTAIN
PROP-
ERTY.—In the case of property substantially all 
of the use of which is in one or more specified 
portions of the GO Zone (as defined by sub-
section (d)(6)), such term shall include section 
179 property (as so defined) which is described 
in subsection (d)(2), determined—
‘‘(i) without regard to subsection 
(d)(6), and 
‘‘(ii) by substituting ‘2008’ for ‘2007’ 
in subparagraph (A)(v) thereof.’’. 
SEC. 8222. EXTENSION AND EXPANSION OF LOW-INCOME 
HOUSING CREDIT RULES FOR BUILDINGS IN 
THE GO ZONES. 
(a) TIME FOR MAKING LOW-INCOME HOUSING CREDIT 
ALLOCATIONS.—Subsection (c) of section 1400N (relating 
to low-income housing credit) is amended by redesignating 
paragraph (5) as paragraph (6) and by inserting after 
paragraph (4) the following new paragraph: 
‘‘(5) TIME FOR MAKING LOW-INCOME HOUSING 
CREDIT ALLOCATIONS.—Section 42(h)(1)(B) shall not 
apply to an allocation of housing credit dollar 
amount to a building located in the Gulf Opportunity
185
Zone, the Rita GO Zone, or the Wilma GO Zone, if 
such allocation is made in 2006, 2007, or 2008, and 
such building is placed in service before January 1, 
2011.’’. 
(b) EXTENSION OF PERIOD FOR TREATING GO ZONES 
AS DIFFICULT DEVELOPMENT AREAS.—
(1) IN GENERAL.—Subparagraph (A) of section 
1400N(c)(3) is amended by striking ‘‘2006, 2007, or 
2008’’ and inserting ‘‘the period beginning on Janu-
ary 1, 2006, and ending on December 31, 2010’’. 
(2) CONFORMING
AMENDMENT.—Clause (ii) of 
section 1400N(c)(3)(B) is amended by striking ‘‘such 
period’’ and inserting ‘‘the period described in sub-
paragraph (A)’’. 
(c) COMMUNITY DEVELOPMENT BLOCK GRANTS NOT 
TAKEN INTO ACCOUNT IN DETERMINING IF BUILDINGS ARE 
FEDERALLY SUBSIDIZED.—Subsection (c) of section 1400N 
(relating to low-income housing credit), as amended by this 
Act, is amended by redesignating paragraph (6) as para-
graph (7) and by inserting after paragraph (5) the fol-
lowing new paragraph: 
‘‘(6) COMMUNITY DEVELOPMENT BLOCK GRANTS 
NOT
TAKEN
INTO
ACCOUNT
IN
DETERMINING
IF 
BUILDINGS ARE FEDERALLY SUBSIDIZED.—For pur-
pose of applying section 42(i)(2)(D) to any building
186
which is placed in service in the Gulf Opportunity 
Zone, the Rita GO Zone, or the Wilma GO Zone dur-
ing the period beginning on January 1, 2006, and 
ending on December 31, 2010, a loan shall not be 
treated as a below market Federal loan solely by rea-
son of any assistance provided under section 106, 
107, or 108 of the Housing and Community Develop-
ment Act of 1974 by reason of section 122 of such Act 
or any provision of the Department of Defense Appro-
priations Act, 2006, or the Emergency Supplemental 
Appropriations Act for Defense, the Global War on 
Terror, and Hurricane Recovery, 2006.’’. 
SEC. 8223. SPECIAL TAX-EXEMPT BOND FINANCING RULE 
FOR REPAIRS AND RECONSTRUCTIONS OF 
RESIDENCES IN THE GO ZONES. 
Subsection (a) of section 1400N (relating to tax-exempt 
bond financing) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(7) SPECIAL RULE FOR REPAIRS AND RECON-
STRUCTIONS.—
‘‘(A) IN GENERAL.—For purposes of section 
143 and this subsection, any qualified GO Zone 
repair or reconstruction shall be treated as a 
qualified rehabilitation.
187
‘‘(B) QUALIFIED GO ZONE REPAIR OR RE-
CONSTRUCTION.—For purposes of subparagraph 
(A), the term ‘qualified GO Zone repair or re-
construction’ means any repair of damage 
caused by Hurricane Katrina, Hurricane Rita, 
or Hurricane Wilma to a building located in the 
Gulf Opportunity Zone, the Rita GO Zone, or 
the Wilma GO Zone (or reconstruction of such 
building in the case of damage constituting de-
struction) if the expenditures for such repair or 
reconstruction are 25 percent or more of the 
mortgagor’s adjusted basis in the residence. For 
purposes of the preceding sentence, the mortga-
gor’s adjusted basis shall be determined as of the 
completion of the repair or reconstruction or, if 
later, the date on which the mortgagor acquires 
the residence. 
‘‘(C) TERMINATION.—This paragraph shall 
apply only to owner-financing provided after the 
date of the enactment of this paragraph and be-
fore January 1, 2011.’’.