114
term permitted under this paragraph for bonds 
issued during the following calendar month. Such 
maximum term shall be the term which the Sec-
retary estimates will result in the present value of 
the obligation to repay the principal on the bond 
being equal to 50 percent of the face amount of such 
bond. Such present value shall be determined with-
out regard to the requirements of paragraph (3) and 
using as a discount rate the average annual interest 
rate of tax-exempt obligations having a term of 10 
years or more which are issued during the month. If 
the term as so determined is not a multiple of a 
whole year, such term shall be rounded to the next 
highest whole year. 
‘‘(3) RATABLE PRINCIPAL AMORTIZATION RE-
QUIRED.—A bond shall not be treated as a rural 
renaissance bond unless it is part of an issue which 
provides for an equal amount of principal to be paid 
by the qualified issuer during each calendar year 
that the issue is outstanding. 
‘‘(f) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) NATIONAL LIMITATION.—There is a rural 
renaissance bond limitation of $200,000,000.
115
‘‘(2) ALLOCATION
BY
SECRETARY.—The Sec-
retary shall allocate the amount described in para-
graph (1) among qualified projects in such manner 
as the Secretary determines appropriate. 
‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 
income includes the amount of the credit allowed to the 
taxpayer under this section (determined without regard to 
subsection (c)) and the amount so included shall be treat-
ed as interest income. 
‘‘(h) 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 qualified issuer reasonably 
expects—
‘‘(A) at least 95 percent of the proceeds 
from the sale of the issue are to be spent for 
1 or more qualified projects within the 5-year 
period beginning on the date of issuance of the 
rural renaissance 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 rural renaissance bond
116
or, in the case of a rural renaissance bond, the 
proceeds of which are to be loaned to 2 or more 
borrowers, such binding commitment will be in-
curred within the 6-month period beginning on 
the date of the loan of such proceeds to a bor-
rower, and 
‘‘(C) such projects 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 qualified issuer establishes 
that the failure to satisfy the 5-year requirement is 
due to reasonable cause and the related projects will 
continue 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 
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 qualified issuer 
shall redeem all of the nonqualified bonds within 90 
days after the end of such period. For purposes of
117
this paragraph, the amount of the nonqualified 
bonds required to be redeemed shall be determined 
in the same manner as under section 142. 
‘‘(i) SPECIAL RULES RELATING TO ARBITRAGE.—A 
bond which is part of an issue shall not be treated as a 
rural renaissance bond unless, with respect to the issue 
of which the bond is a part, the qualified issuer satisfies 
the arbitrage requirements of section 148 with respect to 
proceeds of the issue. 
‘‘(j) QUALIFIED ISSUER.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—The term ‘qualified issuer’ 
means any not-for-profit cooperative lender which 
has as of the date of the enactment of this section 
received a guarantee under section 306 of the Rural 
Electrification Act and which meets the requirement 
of paragraph (2). 
‘‘(2) USER FEE REQUIREMENT.—The require-
ment of this paragraph is met if the issuer of any 
rural renaissance bond makes grants for qualified 
projects as defined under subsection (d)(2) on a 
semi-annual basis every year that such bond is out-
standing in an annual amount equal to one-half of 
the rate on United States Treasury Bills of the same 
maturity multiplied by the outstanding principal bal-
118
ance of rural renaissance bonds issued by such 
issuer. 
‘‘(k) SPECIAL RULES RELATING TO POOL BONDS.—
No portion of a pooled financing bond may be allocable 
to a loan unless the borrower has entered into a written 
loan commitment for such portion prior to the issue date 
of such issue. 
‘‘(l) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(2) POOLED
FINANCING
BOND.—The term 
‘pooled financing bond’ shall have the meaning given 
such term by section 149(f)(4)(A). 
‘‘(3) RURAL
AREA.—The term ‘rural area’ 
means any area other than—
‘‘(A) a city or town which has a population 
of greater than 50,000 inhabitants, or 
‘‘(B) the urbanized area contiguous and 
adjacent to such a city or town. 
‘‘(4) PARTNERSHIP; 
S
CORPORATION; 
AND 
OTHER PASS-THRU ENTITIES.—
‘‘(A) IN
GENERAL.—Under regulations 
prescribed by the Secretary, in the case of a 
partnership, trust, S corporation, or other pass-
119
thru entity, rules similar to the rules of section 
41(g) shall apply with respect to the credit al-
lowable under subsection (a). 
‘‘(B) NO BASIS ADJUSTMENT.—In the case 
of a bond held by a partnership or an S cor-
poration, rules similar to the rules under sec-
tion 1397E(l) shall apply. 
‘‘(5) BONDS
HELD
BY
REGULATED
INVEST-
MENT COMPANIES.—If any rural renaissance bond is 
held by a regulated investment company, the credit 
determined under subsection (a) shall be allowed to 
shareholders of such company under procedures pre-
scribed by the Secretary. 
‘‘(6) REPORTING.—Issuers of rural renaissance 
bonds shall submit reports similar to the reports re-
quired under section 149(e).’’. 
(b) REPORTING.—Subsection (d) of section 6049 (re-
lating to returns regarding payments of interest) is 
amended by adding at the end the following new para-
graph: 
‘‘(9) REPORTING OF CREDIT ON RURAL RENAIS-
SANCE BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts 
includible in gross income under section 54A(f)
120
and such amounts shall be treated as paid on 
the credit allowance date (as defined in section 
54A(b)(4)). 
‘‘(B) 
REPORTING
TO
CORPORATIONS, 
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in 
subparagraph (A), subsection (b)(4) shall be 
applied without regard to subparagraphs (A), 
(H), (I), (J), (K), and (L)(i) of such subsection. 
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are 
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations 
which require more frequent or more detailed 
reporting.’’. 
(c) CONFORMING AMENDMENTS.—
(1) The table of sections for subpart H of part 
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item:
‘‘Sec. 54A. Credit to holders of rural renaissance bonds.’’.
(2) Section 54(c)(2) is amended by inserting ‘‘, 
section 54A,’’ after ‘‘subpart C’’. 
(3) Section 1400N(l)(3)(B) is amended by in-
serting ‘‘, section 54A,’’ after ‘‘subpart C’’. 
(d) ISSUANCE OF REGULATIONS.—The Secretary of 
Treasury shall issue regulations required under section
121
54A of the Internal Revenue Code of 1986 (as added by 
this section) not later than 120 days after the date of the 
enactment of this Act. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act and before January 1, 2010. 
SEC. 254. RESTORATION OF DEDUCTION FOR TRAVEL EX-
PENSES OF SPOUSE, ETC. ACCOMPANYING 
TAXPAYER ON BUSINESS TRAVEL. 
(a) IN GENERAL.—Subsection (m) of section 274 (re-
lating to additional limitations on travel expenses) is 
amended by adding at the end the following new para-
graph: 
‘‘(4) TERMINATION.—Paragraph (3) shall not 
apply to any expense paid or incurred after the date 
of the enactment of this paragraph and before Janu-
ary 1, 2008.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
SEC. 255. TECHNICAL CORRECTIONS. 
(a) TECHNICAL CORRECTION RELATING TO LOOK-
THROUGH TREATMENT
OF PAYMENTS BETWEEN RE-
LATED CONTROLLED FOREIGN CORPORATIONS UNDER 
THE FOREIGN PERSONAL HOLDING COMPANY RULES.—