IB 
Union Calendar No. 5 
110TH CONGRESS 
1ST SESSION 
H. R. 976 
[Report No. 110–14 ] 
To amend the Internal Revenue Code of 1986 to provide tax relief for 
small businesses, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 9, 2007 
Mr. RANGEL (for himself and Mr. MCCRERY) introduced the following bill; 
which was referred to the Committee on Ways and Means 
FEBRUARY 15, 2007 
Additional sponsors: Mr. STARK, Mr. LEVIN, Mr. MCDERMOTT, Mr. LEWIS 
of Georgia, Mr. NEAL of Massachusetts, Mr. MCNULTY, Mr. TANNER, 
Mr. BECERRA, Mr. DOGGETT, Mr. POMEROY, Mrs. JONES of Ohio, Mr. 
THOMPSON of California, Mr. LARSON of Connecticut, Mr. EMANUEL, 
Mr. BLUMENAUER, Mr. KIND, Mr. PASCRELL, Ms. BERKLEY, Mr. CROW-
LEY, Mr. VAN HOLLEN, Mr. MEEK of Florida, Ms. SCHWARTZ, Mr. 
DAVIS of Alabama, Mr. SPRATT, Ms. VELA´ZQUEZ, Ms. BEAN, Mr. HILL, 
Mr. SHULER, Mr. CRAMER, Mr. MELANCON, Mr. BOSWELL, Mr. 
SALAZAR, Mr. LINCOLN DAVIS of Tennessee, Mr. BARROW, Mr. MATHE-
SON, Mr. MICHAUD, Mr. ELLSWORTH, Mr. MOORE of Kansas, Mr. MAR-
SHALL, Mr. DONNELLY, Mr. BOYD of Florida, Mr. CARDOZA, Mr. 
MAHONEY of Florida, Mr. ARCURI, Ms. GIFFORDS, Mr. ROSS, Ms. 
HERSETH, Mr. COSTA, Mrs. GILLIBRAND, Mr. BISHOP of Georgia, Mr. 
BACA, Mr. ENGLISH of Pennsylvania, Mr. HULSHOF, Mr. SAM JOHNSON 
of Texas, Mr. LEWIS of Kentucky, Mr. RAMSTAD, Mr. TIBERI, Mr. 
WELLER of Illinois, Mr. BRADY of Texas, Mr. PORTER, Mr. LINDER, Mr. 
REYNOLDS, Mr. SCHIFF, Mr. WELCH of Vermont, Mr. MCKEON, Mr. 
PATRICK MURPHY of Pennsylvania, Mr. ISRAEL, Mr. SKELTON, Mrs. 
BOYDA of Kansas, Mr. HERGER, and Mr. HALL of New York 
FEBRUARY 15, 2007 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
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[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 9, 2007] 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
tax relief for small businesses, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small Business Tax Relief Act of 2007’’. 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise 
expressly provided, 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 Inter-
nal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of this 
Act is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
Sec. 2. Extension and modification of work opportunity tax credit. 
Sec. 3. Extension and increase of expensing for small business. 
Sec. 4. Determination of credit for certain taxes paid with respect to employee 
cash tips. 
Sec. 5. Waiver of individual and corporate alternative minimum tax limits on 
work opportunity credit and credit for taxes paid with respect 
to employee cash tips. 
Sec. 6. Family business tax simplification. 
Sec. 7. Denial of lowest capital gains rate for certain dependents. 
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Sec. 8. Suspension of certain penalties and interest. 
Sec. 9. Time for payment of corporate estimated taxes. 
SEC. 2. EXTENSION AND MODIFICATION OF WORK OPPOR-
TUNITY TAX CREDIT. 
(a) EXTENSION.—Section 51(c)(4)(B) (relating to ter-
mination) is amended by striking ‘‘2007’’ and inserting 
‘‘2008’’. 
(b) INCREASE IN MAXIMUM AGE FOR DESIGNATED 
COMMUNITY RESIDENTS.— 
(1) IN
GENERAL.—Paragraph (5) of section 
51(d) is amended to read as follows: 
‘‘(5) DESIGNATED COMMUNITY RESIDENTS.— 
‘‘(A) IN
GENERAL.—The term ‘designated 
community resident’ means any individual who 
is certified by the designated local agency— 
‘‘(i) as having attained age 18 but not 
age 40 on the hiring date, and 
‘‘(ii) as having his principal place of 
abode within an empowerment zone, enter-
prise community, or renewal community. 
‘‘(B) INDIVIDUAL MUST CONTINUE TO RE-
SIDE IN ZONE OR COMMUNITY.—In the case of a 
designated community resident, the term ‘quali-
fied wages’ shall not include wages paid or in-
curred for services performed while the individ-
ual’s principal place of abode is outside an em-
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powerment zone, enterprise community, or re-
newal community.’’. 
(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-
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 
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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 
‘‘(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 
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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. 
SEC. 3. 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-
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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. 
SEC. 4. 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. 
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SEC. 5. 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 
years beginning after December 31, 2006, and to carrybacks 
of such credits. 
SEC. 6. 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.— 
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‘‘(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’ 
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 
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‘‘(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-
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 
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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. 
SEC. 7. DENIAL OF LOWEST CAPITAL GAINS RATE FOR CER-
TAIN DEPENDENTS. 
(a) IN GENERAL.—Subsection (h) of section 1 is 
amended by adding at the end the following new paragraph: 
‘‘(12) CERTAIN INDIVIDUALS NOT ELIGIBLE FOR 
LOWEST RATE.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual described in subparagraph (B)— 
‘‘(i) the amount determined under 
paragraph (1)(A)(ii)(II) shall not be less 
than the amount of taxable income which 
would (without regard to this subsection) be 
taxed at a rate below 15 percent, and 
‘‘(ii) the sum of the amounts deter-
mined under subparagraphs (B) and (C) of 
paragraph (1) shall be an amount equal to 
the rate of tax specified in paragraph 
(1)(C) multiplied by so much of the ad-
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justed net capital gain (or, if less, taxable 
income) as exceeds the excess (if any) of— 
‘‘(I) the amount of taxable income 
which would (without regard to this 
subsection) be taxed at a rate below 15 
percent, over 
‘‘(II) the taxable income reduced 
by the adjusted net capital gain. 
‘‘(B) INDIVIDUALS
TO
WHOM
PARAGRAPH 
APPLIES.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, an individual is described 
in this subparagraph if— 
‘‘(I) such individual meets the age 
requirements of section 152(c)(3) (de-
termined without regard to subpara-
graph (B) thereof), and 
‘‘(II) such individual’s earned in-
come (as defined in section 911(d)(2)) 
for the taxable year does not exceed 
one-half of such individual’s support 
(within the meaning of section 152) for 
such taxable year. 
‘‘(ii) SPECIAL RULES FOR JOINT RE-
TURNS.—In the case of a joint return— 
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‘‘(I) the taxpayer and the tax-
payer’s spouse shall be treated as a 
single individual for purposes of ap-
plying subclause (II) of clause (i), and 
‘‘(II) the taxpayer shall be treated 
as an individual described in this sub-
paragraph only if the taxpayer and the 
taxpayer’s spouse are described in 
clause (i) (determined after application 
of subclause (I)).’’. 
(b) ALTERNATIVE
MINIMUM
TAX.—Section 55 is 
amended by adding at the end the following new subsection: 
‘‘(f) CERTAIN INDIVIDUALS NOT ELIGIBLE FOR LOW-
EST RATE.—In the case of an individual described in sec-
tion 1(h)(12)(B), no amount shall be determined under sub-
section (b)(3)(B).’’. 
(c) COORDINATION WITH SUNSET OF PROVISIONS OF 
THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT 
OF 2003.—Subparagraph (A) of section 1(h)(12), as added 
by this section, is amended by striking ‘‘and’’ at the end 
of clause (i), by striking the period at the end of clause 
(ii) and inserting ‘‘, and’’, and by adding at the end the 
following new clause: 
‘‘(iii) no amount of qualified 5-year 
gain shall be taken into account under sub-
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Union Calendar No. 5 
110TH CONGRESS 
1ST SESSION 
H. R. 976 
[Report No. 110–14 ] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
provide tax relief for small businesses, and for 
other purposes. 
FEBRUARY 15, 2007 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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