SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Temporary Tax Relief Act of 2007’’. 
(b) REFERENCE.—Except as otherwise expressly pro-
vided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the In-
ternal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title, etc. 
TITLE I—AMT RELIEF 
Sec. 101. Extension of alternative minimum tax relief for nonrefundable per-
sonal credits. 
Sec. 102. Extension of increased alternative minimum tax exemption amount. 
Sec. 103. Increase of AMT refundable credit amount for individuals with long- 
term unused credits for prior year minimum tax liability, etc. 
TITLE II—ADDITIONAL INDIVIDUAL TAX RELIEF 
Sec. 201. Refundable child credit. 
Sec. 202. Additional standard deduction for real property taxes for non-
itemizers. 
TITLE III—ONE-YEAR EXTENDERS 
Subtitle A—Extenders Primarily Affecting Individuals 
Sec. 301. Deduction for State and local sales taxes. 
Sec. 302. Deduction of qualified tuition and related expenses. 
Sec. 303. Treatment of certain dividends of regulated investment companies. 
Sec. 304. Parity in the application of certain limits to mental health benefits. 
Sec. 305. Qualified conservation contributions. 
Sec. 306. Tax-free distributions from individual retirement plans for charitable 
purposes. 
Sec. 307. Deduction for certain expenses of elementary and secondary school 
teachers. 
Sec. 308. Election to include combat pay as earned income for purposes of 
earned income tax credit. 
Sec. 309. Modification of mortgage revenue bonds for veterans.
Sec. 310. Distributions from retirement plans to individuals called to active 
duty. 
Sec. 311. Stock in RIC for purposes of determining estates of nonresidents not 
citizens. 
Sec. 312. Qualified investment entities. 
Sec. 313. State legislators’ travel expenses away from home. 
Subtitle B—Extenders Primarily Affecting Businesses 
Sec. 321. Research credit. 
Sec. 322. Indian employment credit. 
Sec. 323. New markets tax credit. 
Sec. 324. Railroad track maintenance. 
Sec. 325. Fifteen-year straight-line cost recovery for qualified leasehold im-
provements and qualified restaurant property. 
Sec. 326. Seven-year cost recovery period for motorsports racing track facility. 
Sec. 327. Accelerated depreciation for business property on Indian reservation. 
Sec. 328. Expensing of environmental remediation costs. 
Sec. 329. Deduction allowable with respect to income attributable to domestic 
production activities in Puerto Rico. 
Sec. 330. Modification of tax treatment of certain payments to controlling ex-
empt organizations. 
Sec. 331. Extension and modification of credit to holders of qualified zone 
academy bonds. 
Sec. 332. Tax incentives for investment in the District of Columbia. 
Sec. 333. Extension of economic development credit for American Samoa. 
Sec. 334. Enhanced charitable deduction for contributions of food inventory. 
Sec. 335. Enhanced charitable deduction for contributions of book inventory to 
public schools. 
Sec. 336. Enhanced deduction for qualified computer contributions. 
Sec. 337. Basis adjustment to stock of S corporations making charitable con-
tributions of property. 
Sec. 338. Extension of work opportunity tax credit for Hurricane Katrina em-
ployees. 
Subtitle C—Other Extenders 
Sec. 341. Disclosure for combined employment tax reporting. 
Sec. 342. Disclosure of return information to apprise appropriate officials of 
terrorist activities. 
Sec. 343. Disclosure upon request of information relating to terrorist activities. 
Sec. 344. Disclosure of return information to carry out income contingent re-
payment of student loans. 
Sec. 345. Authority for undercover operations. 
Sec. 346. Increase in limit on cover over of rum excise tax to Puerto Rico and 
the Virgin Islands. 
Sec. 347. Disclosure of return information for certain veterans programs. 
TITLE IV—MORTGAGE FORGIVENESS DEBT RELIEF 
Sec. 401. Discharges of indebtedness on principal residence excluded from gross 
income. 
Sec. 402. Long-term extension of deduction for mortgage insurance premiums. 
Sec. 403. Alternative tests for qualifying as cooperative housing corporation. 
Sec. 404. Gain from sale of principal residence allocated to nonqualified use not 
excluded from income.
TITLE V—ADMINISTRATIVE PROVISIONS 
Sec. 501. Repeal of authority to enter into private debt collection contracts. 
Sec. 502. Delay of application of withholding requirement on certain govern-
mental payments for goods and services. 
Sec. 503. Clarification of entitlement of Virgin Islands residents to protections 
of limitations on assessment and collection of tax. 
Sec. 504. Revision of tax rules on expatriation. 
Sec. 505. Repeal of suspension of certain penalties and interest. 
Sec. 506. Unused merchandise drawback. 
TITLE VI—REVENUE PROVISIONS 
Subtitle A—Nonqualified Deferred Compensation From Certain Tax 
Indifferent Parties 
Sec. 601. Nonqualified deferred compensation from certain tax indifferent par-
ties. 
Subtitle B—Provisions Related to Certain Investment Partnerships 
Sec. 611. Income of partners for performing investment management services 
treated as ordinary income received for performance of serv-
ices. 
Sec. 612. Indebtedness incurred by a partnership in acquiring securities and 
commodities not treated as acquisition indebtedness for organi-
zations which are partners with limited liability. 
Sec. 613. Application to partnership interests and tax sharing agreements of 
rule treating certain gain on sales between related persons as 
ordinary income. 
Subtitle C—Other Provisions 
Sec. 621. Delay in application of worldwide allocation of interest. 
Sec. 622. Broker reporting of customer’s basis in securities transactions. 
Sec. 623. Modification of penalty for failure to file partnership returns. 
Sec. 624. Penalty for failure to file S corporation returns. 
Sec. 625. Time for payment of corporate estimated taxes. 
TITLE I—AMT RELIEF 
SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RE-
LIEF 
FOR 
NONREFUNDABLE 
PERSONAL 
CREDITS. 
(a) IN GENERAL.—Paragraph (2) of section 26(a) 
(relating to special rule for taxable years 2000 through 
2006) is amended—
(1) by striking ‘‘or 2006’’ and inserting ‘‘2006, 
or 2007’’, and 
(2) by striking ‘‘2006’’ in the heading thereof 
and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MIN-
IMUM TAX EXEMPTION AMOUNT. 
(a) IN GENERAL.—Paragraph (1) of section 55(d) 
(relating to exemption amount) is amended— 
(1) by striking ‘‘($62,550 in the case of taxable 
years beginning in 2006)’’ in subparagraph (A) and 
inserting ‘‘($66,250 in the case of taxable years be-
ginning in 2007)’’, and 
(2) by striking ‘‘($42,500 in the case of taxable 
years beginning in 2006)’’ in subparagraph (B) and 
inserting ‘‘($44,350 in the case of taxable years be-
ginning in 2007)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006.
SEC. 
103. 
INCREASE 
OF 
AMT 
REFUNDABLE 
CREDIT 
AMOUNT 
FOR 
INDIVIDUALS 
WITH 
LONG- 
TERM UNUSED CREDITS FOR PRIOR YEAR 
MINIMUM TAX LIABILITY, ETC. 
(a) IN GENERAL.—Paragraph (2) of section 53(e) of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(2) AMT REFUNDABLE
CREDIT
AMOUNT.— 
For purposes of paragraph (1), the term ‘AMT re-
fundable credit amount’ means, with respect to any 
taxable year, the amount (not in excess of the long- 
term unused minimum tax credit for such taxable 
year) equal to the greater of— 
‘‘(A) 50 percent of the long-term unused 
minimum tax credit for such taxable year, or 
‘‘(B) the amount (if any) of the AMT re-
fundable credit amount determined under this 
paragraph for the taxpayer’s preceding taxable 
year.’’. 
(b) TREATMENT OF CERTAIN UNDERPAYMENTS, IN-
TEREST, AND PENALTIES ATTRIBUTABLE TO THE TREAT-
MENT OF INCENTIVE STOCK OPTIONS.—Section 53 of 
such Code is amended by adding at the end the following 
new subsection:
‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to benefits for services furnished 
after December 31, 2007. 
SEC. 305. QUALIFIED CONSERVATION CONTRIBUTIONS. 
(a) 
IN
GENERAL.—Clause 
(vi) 
of 
section 
170(b)(1)(E) (relating to termination) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made in taxable 
years beginning after December 31, 2007. 
SEC. 306. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE-
TIREMENT PLANS FOR CHARITABLE PUR-
POSES. 
(a) IN GENERAL.—Subparagraph (F) of section 
408(d)(8) (relating to termination) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions made in taxable 
years beginning after December 31, 2007.
SEC. 307. DEDUCTION FOR CERTAIN EXPENSES OF ELE-
MENTARY AND SECONDARY SCHOOL TEACH-
ERS. 
(a) IN GENERAL.—Subparagraph (D) of section 
62(a)(2) (relating to certain expenses of elementary and 
secondary school teachers) is amended by striking ‘‘or 
2007’’ and inserting ‘‘2007, or 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 308. ELECTION TO INCLUDE COMBAT PAY AS EARNED 
INCOME FOR PURPOSES OF EARNED INCOME 
TAX CREDIT. 
(a) 
IN
GENERAL.—Subclause 
(II) 
of 
section 
32(c)(2)(B)(vi) (defining earned income) is amended by 
striking ‘‘January 1, 2008’’ and inserting ‘‘January 1, 
2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after De-
cember 31, 2007. 
SEC. 309. MODIFICATION OF MORTGAGE REVENUE BONDS 
FOR VETERANS. 
(a) QUALIFIED MORTGAGE BONDS USED TO FI-
NANCE RESIDENCES FOR VETERANS WITHOUT REGARD 
TO FIRST-TIME HOMEBUYER REQUIREMENT.—Subpara-
graph (D) of section 143(d)(2) (relating to exceptions) is
amended by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to bonds issued after December 
31, 2007. 
SEC. 310. DISTRIBUTIONS FROM RETIREMENT PLANS TO 
INDIVIDUALS CALLED TO ACTIVE DUTY. 
(a) IN GENERAL.—Clause (iv) of section 72(t)(2)(G) 
is amended by striking ‘‘December 31, 2007’’ and insert-
ing ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to individuals ordered or called to 
active duty on or after December 31, 2007. 
SEC. 311. STOCK IN RIC FOR PURPOSES OF DETERMINING 
ESTATES OF NONRESIDENTS NOT CITIZENS. 
(a) IN GENERAL.—Paragraph (3) of section 2105(d) 
(relating to stock in a RIC) is amended by striking ‘‘De-
cember 31, 2007’’ and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to decedents dying after December 
31, 2007. 
SEC. 312. QUALIFIED INVESTMENT ENTITIES. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
897(h)(4)(A) (relating to termination) is amended by
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on January 1, 2008. 
SEC. 313. STATE LEGISLATORS’ TRAVEL EXPENSES AWAY 
FROM HOME. 
(a) IN GENERAL.—Paragraph (2) of section 162(h) 
(relating to legislative days) is amended by adding at the 
end the following flush sentence: ‘‘In the case of taxable 
years beginning in 2008, a legislature shall be treated for 
purposes of this paragraph as in session on any day in 
which it is formally called into session without regard to 
whether legislation was considered on such day.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2007. 
Subtitle B—Extenders Primarily 
Affecting Businesses 
SEC. 321. RESEARCH CREDIT. 
(a) IN GENERAL.—Subparagraph (B) of section 
41(h)(1) (relating to termination) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) CONFORMING AMENDMENT.—Subparagraph (D) 
of section 45C(b)(1) (relating to qualified clinical testing
expenses) is amended by striking ‘‘December 31, 2007’’ 
and inserting ‘‘December 31, 2008’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2007. 
SEC. 322. INDIAN EMPLOYMENT CREDIT. 
(a) IN GENERAL.—Subsection (f) of section 45A (re-
lating to termination) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 323. NEW MARKETS TAX CREDIT. 
Subparagraph (D) of section 45D(f)(1) (relating to 
national limitation on amount of investments designated) 
is amended by striking ‘‘and 2008’’ and inserting ‘‘2008, 
and 2009’’. 
SEC. 324. RAILROAD TRACK MAINTENANCE. 
(a) IN GENERAL.—Subsection (f) of section 45G (re-
lating to application of section) is amended by striking 
‘‘January 1, 2008’’ and inserting ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures paid or incurred 
during taxable years beginning after December 31, 2007.
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2007. 
SEC. 328. EXPENSING OF ENVIRONMENTAL REMEDIATION 
COSTS. 
(a) IN GENERAL.—Subsection (h) of section 198 (re-
lating to termination) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenditures paid or incurred 
after December 31, 2007. 
SEC. 329. DEDUCTION ALLOWABLE WITH RESPECT TO IN-
COME ATTRIBUTABLE TO DOMESTIC PRO-
DUCTION ACTIVITIES IN PUERTO RICO. 
(a) IN GENERAL.—Subparagraph (C) of section 
199(d)(8) (relating to termination) is amended— 
(1) by striking ‘‘first 2 taxable years’’ and in-
serting ‘‘first 3 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007.
SEC. 330. MODIFICATION OF TAX TREATMENT OF CERTAIN 
PAYMENTS TO CONTROLLING EXEMPT ORGA-
NIZATIONS. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
512(b)(13)(E) (relating to termination) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments received or accrued 
after December 31, 2007. 
SEC. 331. EXTENSION AND MODIFICATION OF CREDIT TO 
HOLDERS OF QUALIFIED ZONE ACADEMY 
BONDS. 
(a) IN GENERAL.—Subsection (e) of section 1397E 
(relating to limitation on amount of bonds designated) is 
amended by striking ‘‘1998, 1999, 2000, 2001, 2002, 
2003, 2004, 2005, 2006, and 2007’’ and inserting ‘‘each 
of calendar years 1998 through 2008’’. 
(b) MODIFICATION OF ARBITRAGE RULES.— 
(1) IN
GENERAL.—Subsection (g) of section 
1397E (relating to special rules relating to arbi-
trage) is amended to read as follows: 
‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.— 
‘‘(1) IN GENERAL.—An issue shall be treated as 
meeting the requirements of this subsection if the
issuer satisfies the requirements of section 148 with 
respect to the proceeds of the issue. 
‘‘(2) SPECIAL RULE FOR INVESTMENTS DURING 
EXPENDITURE PERIOD.—An issue shall not be treat-
ed as failing to meet the requirements of paragraph 
(1) by reason of any investment of available project 
proceeds during the 5-year period described in sub-
section (f)(1)(A) (including any extension of such 
period under subsection (f)(2)). 
‘‘(3) SPECIAL RULE FOR RESERVE FUNDS.—An 
issue shall not be treated as failing to meet the re-
quirements of paragraph (1) by reason of any fund 
which is expected to be used to repay such issue if— 
‘‘(A) such fund is funded at a rate not 
more rapid than equal annual installments, 
‘‘(B) such fund is funded in a manner that 
such fund will not exceed the amount necessary 
to repay the issue if invested at the maximum 
rate permitted under subparagraph (C), and 
‘‘(C) the yield on such fund is not greater 
than the discount rate determined under sub-
section (d)(3) with respect to the issue.’’. 
(2) APPLICATION OF AVAILABLE PROJECT PRO-
CEEDS
TO
OTHER
REQUIREMENTS.—Subsections 
(d)(1)(A), (d)(2)(A), (f)(1)(A), (f)(1)(B), (f)(1)(C),
and (f)(3) of section 1397E are each amended by 
striking ‘‘proceeds’’ and inserting ‘‘available project 
proceeds’’. 
(3) 
AVAILABLE
PROJECT
PROCEEDS
DE-
FINED.—Subsection (i) of section 1397E (relating to 
definitions) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) AVAILABLE
PROJECT
PROCEEDS.—The 
term ‘available project proceeds’ means— 
‘‘(A) the excess of— 
‘‘(i) the proceeds from the sale of an 
issue, over 
‘‘(ii) the issuance costs financed by 
the issue (to the extent that such costs do 
not exceed 2 percent of such proceeds), 
and 
‘‘(B) the proceeds from any investment of 
the excess described in subparagraph (A).’’. 
(c) EFFECTIVE DATE.— 
(1) EXTENSION.—The amendment made by 
subsection (a) shall apply to obligations issued after 
December 31, 2007. 
(2) MODIFICATION
OF
ARBITRAGE
RULES.— 
The amendments made by subsection (b) shall apply
to obligations issued after the date of the enactment 
of this Act. 
SEC. 332. 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 ‘‘2007’’ both places it 
appears and inserting ‘‘2008’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to periods beginning 
after December 31, 2007. 
(b) 
TAX-EXEMPT
ECONOMIC
DEVELOPMENT 
BONDS.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400A is amended by striking ‘‘2007’’ and inserting 
‘‘2008’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to bonds issued after 
December 31, 2007. 
(c) ZERO PERCENT CAPITAL GAINS RATE.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400B is amended by striking ‘‘2008’’ each place it 
appears and inserting ‘‘2009’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1400B(e)(2) is amended—
(i) by striking ‘‘2012’’ and inserting 
‘‘2013’’, and 
(ii) by striking ‘‘2012’’ in the heading 
thereof and inserting ‘‘2013’’. 
(B) Section 1400B(g)(2) is amended by 
striking ‘‘2012’’ and inserting ‘‘2013’’. 
(C) Section 1400F(d) is amended by strik-
ing ‘‘2012’’ and inserting ‘‘2013’’. 
(3) EFFECTIVE DATES.— 
(A) EXTENSION.—The amendments made 
by paragraph (1) shall apply to acquisitions 
after December 31, 2007. 
(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 ‘‘2008’’ and inserting 
‘‘2009’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to property purchased 
after December 31, 2007.
SEC. 333. EXTENSION OF ECONOMIC DEVELOPMENT CRED-
IT FOR AMERICAN SAMOA. 
(a) IN GENERAL.—Subsection (d) of section 119 of 
division A of the Tax Relief and Health Care Act of 2006 
is amended— 
(1) by striking ‘‘first two taxable years’’ and in-
serting ‘‘first 3 taxable years’’, and 
(2) by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 334. ENHANCED CHARITABLE DEDUCTION FOR CON-
TRIBUTIONS OF FOOD INVENTORY. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
170(e)(3)(C) (relating to termination) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after De-
cember 31, 2007. 
SEC. 335. ENHANCED CHARITABLE DEDUCTION FOR CON-
TRIBUTIONS OF BOOK INVENTORY TO PUB-
LIC SCHOOLS. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
170(e)(3)(D) (relating to termination) is amended by
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after De-
cember 31, 2007. 
SEC. 336. ENHANCED DEDUCTION FOR QUALIFIED COM-
PUTER CONTRIBUTIONS. 
(a) IN GENERAL.—Subparagraph (G) of section 
170(e)(6) (relating to termination) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made during tax-
able years beginning after December 31, 2007. 
SEC. 337. BASIS ADJUSTMENT TO STOCK OF S CORPORA-
TIONS 
MAKING 
CHARITABLE 
CONTRIBU-
TIONS OF PROPERTY. 
(a) IN GENERAL.—The last sentence of section 
1367(a)(2) (relating to decreases in basis) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) TECHNICAL AMENDMENT RELATED TO SECTION 
1203 OF THE PENSION PROTECTION ACT OF 2006.—Sub-
section (d) of section 1366 is amended by adding at the 
end the following new paragraph:
‘‘(4) APPLICATION OF LIMITATION ON CHARI-
TABLE CONTRIBUTIONS.—In the case of any chari-
table contribution of property to which the second 
sentence of section 1367(a)(2) applies, paragraph 
(1) shall not apply to the extent of the excess (if 
any) of— 
‘‘(A) the shareholder’s pro rata share of 
such contribution, over 
‘‘(B) the shareholder’s pro rata share of 
the adjusted basis of such property.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to contributions made in taxable years 
beginning after December 31, 2007. 
(2) TECHNICAL AMENDMENT.—The amendment 
made by subsection (b) shall take effect as if in-
cluded in the provision of the Pension Protection Act 
of 2006 to which it relates. 
SEC. 338. EXTENSION OF WORK OPPORTUNITY TAX CREDIT 
FOR HURRICANE KATRINA EMPLOYEES. 
(a) IN GENERAL.—Paragraph (1) of section 201(b) 
of the Katrina Emergency Tax Relief Act of 2005 is 
amended by striking ‘‘2-year’’ and inserting ‘‘3-year’’.
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individuals hired after August 
27, 2007. 
Subtitle C—Other Extenders 
SEC. 341. DISCLOSURE FOR COMBINED EMPLOYMENT TAX 
REPORTING. 
(a) IN GENERAL.—Subparagraph (B) of section 
6103(d)(5) (relating to termination) is amended by strik-
ing ‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to disclosures after December 31, 
2007. 
SEC. 342. DISCLOSURE OF RETURN INFORMATION TO AP-
PRISE APPROPRIATE OFFICIALS OF TER-
RORIST ACTIVITIES. 
(a) 
IN
GENERAL.—Clause 
(iv) 
of 
section 
6103(i)(3)(C) (relating to termination) is amended by 
striking ‘‘December 31, 2007’’ and inserting ‘‘December 
31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to disclosures after December 31, 
2007.
SEC. 343. DISCLOSURE UPON REQUEST OF INFORMATION 
RELATING TO TERRORIST ACTIVITIES. 
(a) IN GENERAL.—Subparagraph (E) of section 
6103(i)(7) (relating to termination) is amended by strik-
ing ‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to disclosures after December 31, 
2007. 
SEC. 344. DISCLOSURE OF RETURN INFORMATION TO 
CARRY OUT INCOME CONTINGENT REPAY-
MENT OF STUDENT LOANS. 
(a) IN GENERAL.—Subparagraph (D) of section 
6103(l)(13) (relating to termination) is amended by strik-
ing ‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to requests made after December 
31, 2007. 
SEC. 345. AUTHORITY FOR UNDERCOVER OPERATIONS. 
(a) IN GENERAL.—Paragraph (6) of section 7608(c) 
(relating to application of section) is amended by striking 
‘‘January 1, 2008’’ each place it appears and inserting 
‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on January 1, 2008.
SEC. 346. INCREASE IN LIMIT ON COVER OVER OF RUM EX-
CISE TAX TO PUERTO RICO AND THE VIRGIN 
ISLANDS. 
(a) IN GENERAL.—Paragraph (1) of section 7652(f) 
is amended by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2009’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distilled spirits brought into the 
United States after December 31, 2007. 
SEC. 347. DISCLOSURE OF RETURN INFORMATION FOR 
CERTAIN VETERANS PROGRAMS. 
(a) IN GENERAL.—The last sentence of paragraph 
(7) of section 6103(l) is amended by striking ‘‘September 
30, 2008’’ and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to requests made after Sep-
tember 30, 2008. 
TITLE IV—MORTGAGE 
FORGIVENESS DEBT RELIEF 
SEC. 401. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL 
RESIDENCE EXCLUDED FROM GROSS IN-
COME. 
(a) IN GENERAL.—Paragraph (1) of section 108(a) 
is amended by striking ‘‘or’’ at the end of subparagraph 
(C), by striking the period at the end of subparagraph (D)
and inserting ‘‘, or’’, and by inserting after subparagraph 
(D) the following new subparagraph: 
‘‘(E) the indebtedness discharged is quali-
fied principal residence indebtedness.’’. 
(b) SPECIAL RULES RELATING TO QUALIFIED PRIN-
CIPAL
RESIDENCE
INDEBTEDNESS.—Section 108 is 
amended by adding at the end the following new sub-
section: 
‘‘(h) SPECIAL RULES RELATING
TO QUALIFIED 
PRINCIPAL RESIDENCE INDEBTEDNESS.— 
‘‘(1) BASIS REDUCTION.—The amount excluded 
from gross income by reason of subsection (a)(1)(E) 
shall be applied to reduce (but not below zero) the 
basis of the principal residence of the taxpayer. 
‘‘(2) QUALIFIED
PRINCIPAL
RESIDENCE
IN-
DEBTEDNESS.—For purposes of this section, the 
term ‘qualified principal residence indebtedness’ 
means acquisition indebtedness (within the meaning 
of section 163(h)(3)(B), applied by substituting 
‘$2,000,000 
($1,000,000’ 
for 
‘$1,000,000 
($500,000’ in clause (ii) thereof) with respect to the 
principal residence of the taxpayer. 
‘‘(3) EXCEPTION
FOR
CERTAIN
DISCHARGES 
NOT RELATED TO TAXPAYER’S FINANCIAL CONDI-
TION.—Subsection (a)(1)(E) shall not apply to the
discharge of a loan if the discharge is on account of 
services performed for the lender or any other factor 
not directly related to a decline in the value of the 
residence or to the financial condition of the tax-
payer. 
‘‘(4) ORDERING
RULE.—If any loan is dis-
charged, in whole or in part, and only a portion of 
such loan is qualified principal residence indebted-
ness, subsection (a)(1)(E) shall apply only to so 
much of the amount discharged as exceeds the 
amount of the loan (as determined immediately be-
fore such discharge) which is not qualified principal 
residence indebtedness. 
‘‘(5) PRINCIPAL RESIDENCE.—For purposes of 
this subsection, the term ‘principal residence’ has 
the same meaning as when used in section 121.’’. 
(c) COORDINATION.— 
(1) Subparagraph (A) of section 108(a)(2) is 
amended by striking ‘‘and (D)’’ and inserting ‘‘(D), 
and (E)’’. 
(2) Paragraph (2) of section 108(a) is amended 
by adding at the end the following new subpara-
graph: 
‘‘(C) PRINCIPAL
RESIDENCE
EXCLUSION 
TAKES PRECEDENCE OVER INSOLVENCY EXCLU-
SION
UNLESS
ELECTED
OTHERWISE.—Para-
graph (1)(B) shall not apply to a discharge to 
which paragraph (1)(E) applies unless the tax-
payer elects to apply paragraph (1)(B) in lieu 
of paragraph (1)(E).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to discharges of indebtedness on 
or after January 1, 2007. 
SEC. 402. LONG-TERM EXTENSION OF DEDUCTION FOR 
MORTGAGE INSURANCE PREMIUMS. 
(a) IN GENERAL.—Subparagraph (E) of section 
163(h)(3) (relating to mortgage insurance premiums 
treated as interest) is amended by striking clauses (iii) 
and (iv) and inserting the following new clause: 
‘‘(iii) APPLICATION.—Clause (i) shall 
not apply with respect to any mortgage in-
surance contract issued before January 1, 
2007, or after December 31, 2014.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to contracts issued after Decem-
ber 31, 2006.
SEC. 403. ALTERNATIVE TESTS FOR QUALIFYING AS COOP-
ERATIVE HOUSING CORPORATION. 
(a) IN GENERAL.—Subparagraph (D) of section 
216(b)(1) (defining cooperative housing corporation) is 
amended to read as follows: 
‘‘(D) meeting 1 or more of the following 
requirements for the taxable year in which the 
taxes and interest described in subsection (a) 
are paid or incurred: 
‘‘(i) 80 percent or more of the cor-
poration’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 prop-
erty is used or available for use by the ten-
ant-stockholders 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, construc-
tion, 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. 
SEC. 404. GAIN FROM SALE OF PRINCIPAL RESIDENCE AL-
LOCATED TO NONQUALIFIED USE NOT EX-
CLUDED FROM INCOME. 
(a) IN GENERAL.—Subsection (b) of section 121 (re-
lating to limitations) is amended by adding at the end the 
following new paragraph: 
‘‘(4) EXCLUSION OF GAIN ALLOCATED TO NON-
QUALIFIED USE.— 
‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to so much of the gain from the sale 
or exchange of property as is allocated to peri-
ods of nonqualified use. 
‘‘(B) GAIN
ALLOCATED
TO
PERIODS
OF 
NONQUALIFIED USE.—For purposes of subpara-
graph (A), gain shall be allocated to periods of 
nonqualified use based on the ratio which— 
‘‘(i) the aggregate periods of non-
qualified use during the period such prop-
erty was owned by the taxpayer, bears to 
‘‘(ii) the period such property was 
owned by the taxpayer.