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ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal 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. 
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 
termination) 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— 
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‘‘(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 
‘qualified wages’ shall not include wages paid or 
incurred for services performed while the indi-
vidual’s principal place of abode is outside an 
empowerment zone, enterprise community, or 
renewal community.’’. 
(2) CONFORMING AMENDMENT.—Subparagraph 
(D) of section 51(d)(1) is amended to read as fol-
lows: 
‘‘(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 
referral) 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: 
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‘‘(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
MEM-
BERS 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 re-
ceiving assistance under a food stamp pro-
gram under the Food Stamp Act of 1977 
for at least a 3-month period ending dur-
ing the 12-month period ending on the hir-
ing 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 
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been discharged or released from ac-
tive 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 terms under section 101 of title 38, 
United States Code.’’. 
(2) INCREASE IN AMOUNT OF WAGES TAKEN 
INTO
ACCOUNT
FOR
DISABLED
VETERANS.—Para-
graph (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’’. 
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(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 
section 179 is amended— 
(1) by striking ‘‘$100,000 in the case of taxable 
years beginning after 2002’’ in paragraph (1) and 
inserting ‘‘$125,000 in the case of taxable years be-
ginning after 2006’’, and 
(2) by striking ‘‘$400,000 in the case of taxable 
years beginning after 2002’’ in paragraph (2) and 
inserting ‘‘$500,000 in the case of taxable years be-
ginning 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 
inserting ‘‘$125,000 and $500,000’’, and 
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(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 
December 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 Janu-
ary 1, 2007, and’’ before ‘‘determined without regard to’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to tips received for services per-
formed after December 31, 2006. 
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: 
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‘‘(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 sec-
tions 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 
subsection (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 treat-
ed 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 in-
terests in the venture, and 
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‘‘(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 
conducted by such spouse as a sole proprietor. 
‘‘(2) QUALIFIED
JOINT
VENTURE.—For pur-
poses of paragraph (1), the term ‘qualified joint ven-
ture’ means any joint venture involving the conduct 
of a trade or business if— 
‘‘(A) the only members of such joint ven-
ture 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: 
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‘‘(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 deter-
mining net earnings from self-employment of such 
spouse.’’. 
(2) Subsection (a) of section 211 of the Social 
Security Act (defining net earnings from self-em-
ployment) 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 in-
serting 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 In-
ternal 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 
December 31, 2006. 
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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 para-
graph: 
‘‘(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-
justed net capital gain (or, if less, taxable 
income) as exceeds the excess (if any) of— 
‘‘(I) the amount of taxable in-
come which would (without regard to 
this subsection) be taxed at a rate 
below 15 percent, over 
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‘‘(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) 
(determined without regard to sub-
paragraph (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— 
‘‘(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 treat-
ed as an individual described in this 
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subparagraph only if the taxpayer and 
the taxpayer’s spouse are described in 
clause (i) (determined after applica-
tion of subclause (I)).’’. 
(b) ALTERNATIVE MINIMUM TAX.—Section 55 is 
amended by adding at the end the following new sub-
section: 
‘‘(f) CERTAIN INDIVIDUALS NOT ELIGIBLE
FOR 
LOWEST RATE.—In the case of an individual described in 
section 1(h)(12)(B), no amount shall be determined under 
subsection (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-
paragraph (A) of paragraph (2) (as in ef-
fect after the application of section 303 of 
the Jobs and Growth Tax Relief Reconcili-
ation Act of 2003).’’. 
(d) EFFECTIVE DATE.— 
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2006. 
(2) SUNSET
OF
JGTRRA.—The amendment 
made by subsection (c) shall apply to taxable years 
beginning after the date specified in section 303 of 
the Jobs and Growth Tax Relief Reconciliation Act 
of 2003. 
SEC. 8. SUSPENSION OF CERTAIN PENALTIES AND INTER-
EST. 
(a) IN GENERAL.—Paragraphs (1)(A) and (3)(A) of 
section 6404(g) are each amended by striking ‘‘18-month 
period’’ and inserting ‘‘22-month period’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to notices provided by the Sec-
retary of the Treasury, or his delegate, after the date 
which is 6 months after the date of the enactment of this 
Act. 
SEC. 9. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
Subparagraph (B) of section 401(1) of the Tax In-
crease Prevention and Reconciliation Act of 2005 is 
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amended by striking ‘‘106.25 percent’’ and inserting 
‘‘112.75 percent’’. 
Passed the House of Representatives February 16, 
2007. 
Attest: 
LORRAINE C. MILLER, 
Clerk. 
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Calendar No. 58 
110TH CONGRESS 
1ST SESSION 
H. R. 976 
AN ACT 
To amend the Internal Revenue Code of 1986 to 
provide tax relief for small businesses, and for 
other purposes. 
FEBRUARY 26, 2007 
Read the second time and placed on the calendar 
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