‘‘SEC. 139B. INTEREST ON LOANS SECURED BY AGRICUL-
TURAL REAL PROPERTY. 
‘‘(a) EXCLUSION.—Gross income shall not include in-
terest received by a qualified lender on any qualified real 
estate loan. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED LENDER.—The term ‘qualified 
lender’ means any bank or savings association the 
deposits of which are insured under the Federal De-
posit Insurance Act (12 U.S.C. 1811 et seq.). 
‘‘(2) QUALIFIED
REAL
ESTATE
LOAN.—The 
term ‘qualified real estate loan’ means any loan se-
cured by agricultural real estate or by a leasehold 
mortgage (with a status as a lien) on agricultural 
real estate. For purposes of the preceding sentence, 
the determination of whether property securing such 
loan is agricultural real estate shall be made as of 
the time the interest income on such loan is accrued. 
‘‘(3) AGRICULTURAL REAL ESTATE.—The term 
‘agricultural real estate’ means— 
‘‘(A) real property used for the production 
of 1 or more agricultural products, and 
‘‘(B) any single family residence— 
‘‘(i) which is the principal residence 
(within the meaning of section 121) of its 
occupant, 
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‘‘(ii) which is located in a rural area 
(as determined by the Secretary of Agri-
culture), which is not within a Metropoli-
tan Statistical Area (as defined by the Of-
fice of Management and Budget) and 
which has a population (determined on the 
basis of the most recent decennial census 
for which data are available) of 2,500 or 
less, and 
‘‘(iii) which is purchased or improved 
with the proceeds of the qualified real es-
tate loan. 
‘‘(c) COORDINATION WITH SECTION 265.—Qualified 
real estate loans shall be treated as obligations described 
in section 265(a)(2) the interest on which is wholly exempt 
from the taxes imposed by this subtitle.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such part III is amended by inserting after the item 
relating to section 139A the following new item: 
‘‘Sec. 139B. Interest on loans secured by agricultural real property.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 303. UPDATE IN CAP ON QUALIFIED SMALL ISSUE 
BONDS. 
(a) IN GENERAL.—Clause (i) of section 144(a)(4)(A) 
of the Internal Revenue Code of 1986 (relating to general 
rule for $10,000,000 limit in certain cases) is amended 
by striking ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 
(b) ADJUSTMENT OF CAP FOR INFLATION.—Sub-
section (a) of section 144 of such Code (relating to quali-
fied small issue bond) is amended by redesignating para-
graph (12) as paragraph (13) and by inserting after para-
graph (11) the following new paragraph: 
‘‘(12) INFLATION ADJUSTMENT.—In the case of 
a calendar year after 2007, the $30,000,000 amount 
contained in paragraph (4)(A)(i) shall be increased 
by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2006’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
Any increase under the preceding sentence which is 
not a multiple of $100,000 shall be rounded to the 
next lowest multiple of $100,000.’’. 
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(c) CONFORMING AMENDMENT.—Paragraph (4) of 
section 144(a) of such Code is amended in the heading 
by striking ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
(1) obligations issued after the date of the en-
actment of this Act, and 
(2) capital expenditures made after such date 
with respect to obligations issued on or before such 
date. 
SEC. 304. LIMITED LIABILITY COMPANY TAX TREATMENT 
FOR FDIC-INSURED LIMITED LIABILITY COM-
PANIES. 
(a) IN GENERAL.—Paragraph (2) of section 7701(a) 
of the Internal Revenue Code of 1986 (defining partner-
ship and partner) is amended to read as follows: 
‘‘(2) PARTNER AND PARTNERSHIP.— 
‘‘(A) IN
GENERAL.—The term ‘partner-
ship’ includes a syndicate, group, pool, joint 
venture, or other unincorporated organization, 
through or by means of which any business, fi-
nancial operation, or venture is carried on, and 
which is not, within the meaning of this title, 
a trust or estate or a corporation; and the term 
‘partner’ includes a member in such a syn-
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