HR 3648 RFS
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. 5. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLO-
CATED TO NONQUALIFIED USE NOT EX-
CLUDED FROM INCOME. 
(a) IN GENERAL.—Subsection (b) of section 121 of 
the Internal Revenue Code of 1986 (relating to limita-
tions) 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. 
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‘‘(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. 
‘‘(C) PERIOD
OF
NONQUALIFIED
USE.— 
For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘period 
of nonqualified use’ means any period 
(other than the portion of any period pre-
ceding January 1, 2008) during which the 
property is not used as the principal resi-
dence of the taxpayer or the taxpayer’s 
spouse or former spouse. 
‘‘(ii) EXCEPTIONS.—The term ‘period 
of nonqualified use’ does not include— 
‘‘(I) any portion of the 5-year pe-
riod described in subsection (a) which 
is after the last date that such prop-
erty is used as the principal residence 
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of the taxpayer or the taxpayer’s 
spouse, 
‘‘(II) any period (not to exceed 
an aggregate period of 10 years) dur-
ing which the taxpayer or the tax-
payer’s spouse is serving on qualified 
official extended duty (as defined in 
subsection (d)(9)(C)) described in 
clause (i), (ii), or (iii) of subsection 
(d)(9)(A), and 
‘‘(III) any other period of tem-
porary absence (not to exceed an ag-
gregate period of 2 years) due to 
change of employment, health condi-
tions, or such other unforeseen cir-
cumstances as may be specified by the 
Secretary. 
‘‘(D) COORDINATION
WITH
RECOGNITION 
OF GAIN ATTRIBUTABLE TO DEPRECIATION.— 
For purposes of this paragraph— 
‘‘(i) subparagraph (A) shall be applied 
after the application of subsection (d)(6), 
and 
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‘‘(ii) subparagraph (B) shall be ap-
plied without regard to any gain to which 
subsection (d)(6) applies.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to sales and exchanges after De-
cember 31, 2007. 
SEC. 6. 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 
amended by striking the percentage contained therein and 
inserting ‘‘116.75 percent’’. 
Passed the House of Representatives October 4, 
2007. 
Attest: 
LORRAINE C. MILLER, 
Clerk. 
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