[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 12 Placed on Calendar Senate (PCS)]
Calendar No. 587
110th CONGRESS
2d Session
S. 12
To promote home ownership, manufacturing, and economic growth.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 29, 2008
Mr. McConnell (for himself, Mr. Alexander, Mr. Allard, Mr. Bond, Mr.
Bunning, Mr. Cornyn, Mr. Craig, Mrs. Dole, Mr. Enzi, Mr. Grassley, Mr.
Gregg, Mrs. Hutchison, Mr. Inhofe, Mr. Isakson, Mr. Roberts, and Mr.
Hatch) introduced the following bill; which was read the first time
March 3, 2008
Read the second time and placed on the calendar
_______________________________________________________________________
A BILL
To promote home ownership, manufacturing, and economic growth.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Homeownership,
Manufacturing, and Economic Growth Act'' or the ``HOME Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--KEEPING TAXES LOW
Sec. 100. Amendment to 1986 Code.
Subtitle A--Extension of Expiring Provisions
Part I--Individual Tax Provisions
subpart a--provisions expiring in 2007
Sec. 101. Nonbusiness energy property.
Sec. 102. Election to include combat pay as earned income for purposes
of the earned income credit.
Sec. 103. Deduction for certain expenses of elementary and secondary
school teachers.
Sec. 104. Distributions from retirement plans to individuals called to
active duty.
Sec. 105. Modification of mortgage revenue bonds for veterans.
Sec. 106. Deduction for State and local sales taxes.
Sec. 107. Archer MSAs.
Sec. 108. Deduction of qualified tuition and related expenses.
Sec. 109. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 110. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
subpart b--provisions expiring in 2008
Sec. 111. Residential energy efficient property.
Part II--Business Tax Provisions
subpart a--provisions expiring in 2007
Sec. 121. Research activities.
Sec. 122. Indian employment credit.
Sec. 123. Railroad track maintenance.
Sec. 124. Production of fuel from a nonconventional source at certain
facilities.
Sec. 125. Energy efficient appliances.
Sec. 126. 15-year straight-line cost recovery for qualified leasehold
improvements and qualified restaurant
improvements.
Sec. 127. Seven-year cost recovery period for motorsports racing track
facility.
Sec. 128. Accelerated depreciation for business property on Indian
reservation.
Sec. 129. Qualified conservation contributions.
Sec. 130. Enhanced charitable deduction for contributions of food
inventory.
Sec. 131. Enhanced charitable deduction for contributions of book
inventory.
Sec. 132. Enhanced charitable deduction for corporate contributions of
computer equipment for educational
purposes.
Sec. 133. Expensing of environmental remediation costs.
Sec. 134. Deduction allowable with respect to income attributable to
domestic production activities in Puerto
Rico.
Sec. 135. Special rule for sales or dispositions to implement FERC or
State electric restructuring policy.
Sec. 136. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 137. Suspension of taxable income limit with respect to marginal
wells.
Sec. 138. Treatment of certain dividends of regulated investment
companies.
Sec. 139. Basis adjustment to stock of S corporations making charitable
contributions of property.
Sec. 140. Extension of qualified zone academy bonds.
Sec. 141. Tax incentives for investment in the District of Columbia.
Sec. 142. 0.2 percent FUTA surtax.
subpart b--provisions expiring in 2008
Sec. 146. Biodiesel and renewable diesel used as fuel.
Sec. 147. Electricity produced from certain renewable resources;
production of refined coal and Indian coal.
Sec. 148. New markets tax credit.
Sec. 149. Extension of new energy efficient home credit.
Sec. 150. Extension of mine rescue team training credit.
Sec. 151. Extension of energy credit.
Sec. 152. 5-year NOL carryback for certain electric utility companies.
Sec. 153. Extension of energy efficient commercial buildings deduction.
Sec. 154. Extension of election to expense advanced mine safety
equipment.
Sec. 155. Extension and modification of expensing rules for qualified
film and television productions.
Sec. 156. Subpart F exception for active financing income.
Sec. 157. Extension of look-thru rule for related controlled foreign
corporations.
Part III--Excise Tax Provisions
subpart a--provisions expiring in 2007
Sec. 161. Increase in limit on cover over of rum excise tax to Puerto
Rico and the Virgin Islands.
Sec. 162. Parity in the application of certain limits to mental health
benefits.
Sec. 163. Extension of economic development credit for American Samoa.
subpart b--provisions expiring in 2008
Sec. 166. Special rule for qualified methanol or ethanol fuel from
coal.
Sec. 167. Biodiesel mixture credit and credit for fuels used for
nontaxable purposes.
Part IV--Tax Administration Provisions
subpart a--provisions expiring in 2007
Sec. 171. Disclosures to facilitate combined employment tax reporting.
Sec. 172. Disclosure of return information to apprise appropriate
officials of terrorist activities.
Sec. 173. Disclosure upon request of information relating to terrorist
activities.
Sec. 174. Disclosure of return information to carry out income
contingent repayment of student loans.
Sec. 175. Authority for undercover operations.
subpart b--provisions expiring in 2008
Sec. 176. Extension of reporting of interest of exempt organizations in
insurance contracts.
Sec. 177. Disclosures relating to certain programs administered by the
Department of Veterans Affairs.
Subtitle B--Alternative Minimum Tax Relief
Sec. 181. 2-year extension of increased alternative minimum tax
exemption amount.
Sec. 182. Extension of alternative minimum tax relief for nonrefundable
personal credits.
Subtitle C--Additional Tax Relief
Sec. 191. Permanent extension of 2001 and 2003 tax relief provisions.
Sec. 192. Maximum corporate income tax rate reduced to 25 percent.
Sec. 193. 3-year carryback of certain credits.
Sec. 194. Election to accelerate AMT and R and D credits in lieu of
bonus depreciation.
Sec. 195. Indexing of certain assets for purposes of determining gain
or loss.
Sec. 196. Deferral of gain on sale of certain principal residences.
Sec. 197. Amount excluded from sale of principal residence indexed for
inflation.
Sec. 198. Repeal of phasein for domestic production activities
deduction.
TITLE II--KEEPING AMERICA COMPETITIVE
Sec. 201. Sense of Congress regarding the legislative initiatives
required to strengthen and protect the well
being of our Nation's capital markets.
Sec. 202. Directing the Securities and Exchange Commission to convene a
public hearing on the impact of excessive
litigation.
Sec. 203. Directing the Commission to establish formal processes and
procedures for cost-benefit analyses of
proposed and existing rules and
regulations.
Sec. 204. Directing the Commission to define ``smaller public company''
to provide certainty to issuers.
Sec. 205. Mutual recognition.
Sec. 206. Supporting the Securities and Exchange Commission reform
efforts to speed the process of rulemaking
for self regulatory organizations.
Sec. 207. Eliminate the exemption from State regulation for certain
securities designated by national
securities exchanges.
Sec. 208. Directing the Commission to accelerate full conversion of
IFRS and United States GAAP.
Sec. 209. Promoting market access for financial services.
TITLE III--PROTECTING HOMEOWNERS
Sec. 301. Subprime refinancing loans through use of qualified mortgage
bonds.
Sec. 302. Expeditious distribution of funds already provided for
mortgage foreclosure counseling.
Sec. 303. Credit for purchase of homes in or near foreclosure.
Sec. 304. Enhanced mortgage loan disclosures.
Sec. 305. Carryback of certain net operating losses allowed for 5
years; temporary suspension of 90 percent
AMT limit.
TITLE IV--REDUCING THE LITIGATION TAX
Sec. 401 Limitation on punitive damages for small businesses.
Sec. 402. Reasonableness review of attorney's fees.
Sec. 403. Partial award of attorney's fees for unreasonable lawsuits.
Sec. 404. Mandatory sanctions for frivolous lawsuits.
Sec. 405. Bar on junk science in the courtroom.
TITLE I--KEEPING TAXES LOW
SEC. 100. AMENDMENT TO 1986 CODE.
Except as otherwise expressly provided, whenever in this title an
amendment 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 provision of the Internal Revenue Code of
1986.
Subtitle A--Extension of Expiring Provisions
PART I--INDIVIDUAL TAX PROVISIONS
Subpart A--Provisions Expiring in 2007
SEC. 101. NONBUSINESS ENERGY PROPERTY.
(a) Extension of Credit.--Section 25C(g) (relating to termination)
is amended by striking ``December 31, 2007'' and inserting ``December
31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 102. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES
OF THE EARNED INCOME 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, 2010''.
(b) Conforming Amendment.--Paragraph (4) of section 6428, as
amended by the Economic Stimulus Act of 2008, is amended to read as
follows:
``(4) Earned income.--The term `earned income' has the
meaning set forth in section 32(c)(2) except that such term
shall not include net earnings from self-employment which are
not taken into account in computing taxable income.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2007.
SEC. 103. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY
SCHOOL TEACHERS.
(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, 2008, or 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 104. 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 inserting ``January 1, 2010''.
(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. 105. MODIFICATION OF MORTGAGE REVENUE BONDS FOR VETERANS.
(a) Qualified Mortgage Bonds Used To Finance Residences for
Veterans Without Regard to First-Time Homebuyer Requirement.--
Subparagraph (D) of section 143(d)(2) (relating to exceptions) is
amended by inserting ``and after the date of the enactment of the HOME
Act and before January 1, 2010'' after ``January 1, 2008''.
(b) Effective Date.--The amendment made by this section shall apply
to bonds issued after the date of the enactment of this Act.
SEC. 106. DEDUCTION FOR STATE AND LOCAL SALES TAXES.
(a) In General.--Subparagraph (I) of section 164(b)(5) is amended
by striking ``January 1, 2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 107. ARCHER MSAS.
(a) In General.--Subsection (i) of section 220 (relating to
limitation on number of taxpayers having Archer MSAs) is amended--
(1) by striking ``2007'' each place it appears in
paragraphs (2) and (3)(B) and inserting ``2009'',
(2) by striking ``2007'' in the heading of paragraph (3)(B)
and inserting ``2009''.
(b) Conforming Amendments.--Subsection (j) of section 220 is
amended--
(1) by striking ``or 2006'' each place it appears in
paragraph (2) and inserting ``2006, 2007, or 2008'',
(2) by striking ``or 2006'' in the heading for paragraph
(2) and inserting ``2006, 2007, or 2008'', and
(3) by striking ``and 2006'' in paragraph (4) and inserting
``2006, 2007, and 2008''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2007.
SEC. 108. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.
(a) In General.--Subsection (e) of section 222 (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 109. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR
CHARITABLE PURPOSES.
(a) In General.--Subparagraph (F) of section 408(d)(8) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made in taxable years beginning after December 31,
2007.
SEC. 110. 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 ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to decedents dying after December 31, 2007.
Subpart B--Provisions Expiring in 2008
SEC. 111. RESIDENTIAL ENERGY EFFICIENT PROPERTY.
Subsection (g) of section 25D (relating to termination) is amended
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.
PART II--BUSINESS TAX PROVISIONS
Subpart A--Provisions Expiring in 2007
SEC. 121. RESEARCH ACTIVITIES.
(a) In General.--Section 41(h) (relating to termination) is amended
by striking ``December 31, 2007'' and inserting ``December 31, 2009''
in paragraph (1)(B).
(b) Effective Date.--The amendment made by this section shall apply
to amounts paid or incurred after December 31, 2007.
SEC. 122. INDIAN EMPLOYMENT CREDIT.
(a) In General.--Subsection (f) of section 45A (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 123. RAILROAD TRACK MAINTENANCE.
(a) In General.--Subsection (f) of section 45G (relating to
application of section) is amended by striking ``January 1, 2008'' and
inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred during taxable years beginning after
December 31, 2007.
SEC. 124. PRODUCTION OF FUEL FROM A NONCONVENTIONAL SOURCE AT CERTAIN
FACILITIES.
(a) In General.--Subsection (f)(1)(B) of section 45K (relating to
extension for certain facilities) is amended by striking ``January 1,
2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to fuels produced and sold after December 31, 2007.
SEC. 125. ENERGY EFFICIENT APPLIANCES.
(a) In General.--Subsection (b) of section 45M (relating to
applicable amount) is amended by striking ``calendar year 2006 or
2007'' each place it appears in paragraphs (1)(A)(i), (1)(B)(i),
(1)(C)(ii)(I), and (1)(C)(iii)(I), and inserting ``calendar year 2006,
2007, 2008, or 2009''.
(b) Restart of Credit Limitation.--Paragraph (1) of section 45M(e)
(relating to aggregate credit amount allowed) is amended by inserting
``beginning after December 31, 2007'' after ``for all prior taxable
years''.
(c) Effective Date.--The amendments made by this section shall
apply to appliances produced after December 31, 2007.
SEC. 126. 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD
IMPROVEMENTS AND QUALIFIED RESTAURANT IMPROVEMENTS.
(a) In General.--Clauses (iv) and (v) of section 168(e)(3)(E)
(relating to 15-year property) are each amended by striking ``January
1, 2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2007.
SEC. 127. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK
FACILITY.
(a) In General.--Subparagraph (D) of section 168(i)(15) (relating
to termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 128. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN
RESERVATION.
(a) In General.--Paragraph (8) of section 168(j) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 129. 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, 2009''.
(b) Contributions by Corporate Farmers and Ranchers.--Clause (iii)
of section 170(b)(2)(B) (relating to termination) is amended by
striking ``December 31, 2007'' and inserting ``December 31, 2009''.
(c) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2007.
SEC. 130. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS 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, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after December 31, 2007.
SEC. 131. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK
INVENTORY.
(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, 2009''.
(b) Clerical Amendment.--Clause (iii) of section 170(e)(3)(D)
(relating to certification by donee) is amended by inserting ``of
books'' after ``to any contribution''.
(c) Effective Date.--The amendments made by this section shall
apply to contributions made after December 31, 2007.
SEC. 132. ENHANCED CHARITABLE DEDUCTION FOR CORPORATE CONTRIBUTIONS OF
COMPUTER EQUIPMENT FOR EDUCATIONAL PURPOSES.
(a) In General.--Subparagraph (G) of section 170(e)(6) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after December 31, 2007.
SEC. 133. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.
(a) In General.--Subsection (h) of section 198 (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred after December 31, 2007.
SEC. 134. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO
DOMESTIC PRODUCTION 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 inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 135. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FERC OR
STATE ELECTRIC RESTRUCTURING POLICY.
(a) In General.--Paragraph (3) of section 451(i) (relating to
qualifying electric transmission transaction) is amended by striking
``January 1, 2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to transactions occurring after December 31, 2007.
SEC. 136. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO
CONTROLLING EXEMPT ORGANIZATIONS.
(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, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to payments received or accrued after December 31, 2007.
SEC. 137. SUSPENSION OF TAXABLE INCOME LIMIT WITH RESPECT TO MARGINAL
WELLS.
(a) In General.--Subparagraph (H) of section 613A(c)(6) (relating
to temporary suspension of taxable income limit with respect to
marginal production) is amended by striking ``January 1, 2008'' and
inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 138. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED INVESTMENT
COMPANIES.
(a) Interest-Related Dividends.--Subparagraph (C) of section
871(k)(1) (defining interest-related dividend) is amended by striking
``December 31, 2007'' and inserting ``December 31, 2009''.
(b) Short-Term Capital Gain Dividends.--Subparagraph (C) of section
871(k)(2) (defining short-term capital gain dividend) is amended by
striking ``December 31, 2007'' and inserting ``December 31, 2009''.
(c) Disposition of Investment in United States Real Property.--
Clause (ii) of section 897(h)(4)(A) (relating to termination) is
amended by striking ``December 31, 2007'' and inserting ``December 31,
2009''.
(d) Effective Date.--The amendments made by this section shall
apply to dividends with respect to taxable years of regulated
investment companies beginning after December 31, 2007.
SEC. 139. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING CHARITABLE
CONTRIBUTIONS 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, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made in taxable years beginning after December 31,
2007.
SEC. 140. EXTENSION OF QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Paragraph (1) of section 1397E(e) is amended by
striking ``and 2007'' and inserting ``2007, 2008, and 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to obligations issued after the date of the enactment of this Act.
SEC. 141. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA.
(a) Designation of DC Enterprise Zone.--Subsection (f) of section
1400 (relating to time for which designation applicable) is amended by
striking ``December 31, 2007'' each place it appears in paragraphs (1)
and (2) and inserting ``December 31, 2009''.
(b) Tax-Exempt DC Empowerment Zone Bonds.--Subsection (b) of
section 1400A (relating to period of applicability) is amended by
inserting ``, and after the date of the enactment of the HOME Act and
before December 31, 2009'' after ``December 31, 2007''.
(c) Acquisition Date for Eligibility for Zero-Percent Capital Gains
Rate for Investment in DC.--ubsection (b) of section 1400B (relating to
DC zone asset) is amended by striking ``January 1, 2008'' each place it
appears in paragraphs (2)(A)(i), (3)(A), (4)(A)(i), and (4)(B)(i)(I)
and inserting ``January 1, 2010''.
(d) Tax Credit for First-Time DC Homebuyers.--Subsection (i) of
section 1400C (relating to application of section) is amended by
striking ``January 1, 2008'' and inserting ``January 1, 2010''.
(e) Effective Date.--The amendments made by this section shall
apply to transactions after December 31, 2007.
SEC. 142. 0.2 PERCENT FUTA SURTAX.
(a) In General.--Section 3301 (relating to rate of tax) is
amended--
(1) by striking ``through 2007'' in paragraph (1) and
inserting ``through 2009'', and
(2) by striking ``calendar year 2008'' in paragraph (2) and
inserting ``calendar year 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to wages paid after December 31, 2007.
Subpart B--Provisions Expiring in 2008
SEC. 146. BIODIESEL AND RENEWABLE DIESEL USED AS FUEL.
Subsection (g) of section 40A (relating to termination) is amended
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 147. ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES;
PRODUCTION OF REFINED COAL AND INDIAN COAL.
Section 45(d) (relating to qualified facilities) is amended by
striking ``January 1, 2009'' each place it appears in paragraphs (1),
(2), (3), (4), (5), (6), (7), (8), (9), and (10) and inserting
``January 1, 2010''.
SEC. 148. 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. 149. EXTENSION OF NEW ENERGY EFFICIENT HOME CREDIT.
Subsection (g) of section 45L (relating to termination) is amended
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 150. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.
Section 45N(e) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 151. EXTENSION OF ENERGY CREDIT.
(a) Solar Energy Property.--Paragraphs (2)(A)(i)(II) and (3)(A)(ii)
of section 48(a) (relating to energy credit) are each amended by
striking ``January 1, 2009'' and inserting ``January 1, 2010''.
(b) Fuel Cell Property.--Subparagraph (E) of section 48(c)(1)
(relating to qualified fuel cell property) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
(c) Microturbine Property.--Subparagraph (E) of section 48(c)(2)
(relating to qualified microturbine property) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 152. 5-YEAR NOL CARRYBACK FOR CERTAIN ELECTRIC UTILITY COMPANIES.
Subparagraph (I)(i) of section 172(b)(1) (relating to transmission
property and pollution control investment) is amended--
(1) by striking ``January 1, 2009'' and inserting ``January
1, 2010'', and
(2) by striking ``January 1, 2006'' and inserting ``January
1, 2007''.
SEC. 153. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
Section 179D(h) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 154. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE SAFETY
EQUIPMENT.
Section 179E(g) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 155. EXTENSION AND MODIFICATION OF EXPENSING RULES FOR QUALIFIED
FILM AND TELEVISION PRODUCTIONS.
Section 181(f) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 156. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.
(a) Exempt Insurance Income.--Paragraph (10) of section 953(e)
(relating to application) is amended--
(1) by striking ``January 1, 2009'' and inserting ``January
1, 2010'', and
(2) by striking ``December 31, 2008'' and inserting
``December 31, 2009''.
(b) Exception to Treatment as Foreign Personal Holding Company
Income.--Paragraph (9) of section 954(h) (relating to application) is
amended by striking ``January 1, 2009'' and inserting ``January 1,
2010''.
SEC. 157. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN
CORPORATIONS.
Subparagraph (B) of section 954(c)(6) (relating to application) is
amended by striking ``January 1, 2009'' and inserting ``January 1,
2010''.
PART III--EXCISE TAX PROVISIONS
Subpart A--Provisions Expiring in 2007
SEC. 161. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX TO PUERTO
RICO AND THE VIRGIN ISLANDS.
(a) In General.--Paragraph (1) of section 7652(f) is amended by
inserting ``, and after the date of the enactment of the HOME Act and
before January 1, 2010'' after ``January 1, 2008''.
(b) Effective Date.--The amendment made by this section shall apply
to distilled spirits brought into the United States after the date of
the enactment of this Act.
SEC. 162. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS.
(a) In General.--Subsection (f) of section 9812 (relating to
application of section) is amended--
(1) by striking ``and'' at the end of paragraph (2),
(2) by striking the period at the end of paragraph (3) and
inserting ``, and before the date of the enactment of the HOME
Act'', and
(3) by adding at the end the following new paragraph:
``(4) after December 31, 2009.''.
(b) Amendment to the Employee Retirement Income Security Act of
1974.--Section 712(f) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1185a(f)) is amended by inserting ``, and before the
date of the enactment of the HOME Act, and after December 31, 2009''
after ``December 31, 2007''.
(c) Amendment to the Public Health Service Act.--Section 2705(f) of
the Public Health Service Act (42 U.S.C. 300gg-5(f)) is amended by
inserting ``, and before the date of the enactment of the HOME Act, and
after December 31, 2009'' after ``December 31, 2006''.
(d) Effective Date.--The amendments made by this section shall
apply to benefits for services furnished on or after the date of the
enactment of this Act.
SEC. 163. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT 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 inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
Subpart B--Provisions Expiring in 2008
SEC. 166. SPECIAL RULE FOR QUALIFIED METHANOL OR ETHANOL FUEL FROM
COAL.
Subparagraph (D) of section 4041(b)(2) (relating to termination) is
amended by striking ``January 1, 2009'' and inserting ``January 1,
2010''.
SEC. 167. BIODIESEL MIXTURE CREDIT AND CREDIT FOR FUELS USED FOR
NONTAXABLE PURPOSES.
(a) Biodiesel Mixtures.--Paragraph (6) of section 6426(c) (relating
to termination) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2009''.
(b) Biodiesel Used for Nontaxable Purposes.--Paragraph (5)(B) of
section 6427(e) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
PART IV--TAX ADMINISTRATION PROVISIONS
Subpart A--Provisions Expiring in 2007
SEC. 171. DISCLOSURES TO FACILITATE COMBINED EMPLOYMENT TAX REPORTING.
(a) In General.--Subparagraph (B) of section 6103(d)(5) (relating
to termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendments made by this subsection shall
apply to disclosures after the date of the enactment of this Act.
SEC. 172. DISCLOSURE OF RETURN INFORMATION TO APPRISE APPROPRIATE
OFFICIALS OF TERRORIST 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, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to disclosures after the date of the enactment of this Act.
SEC. 173. 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 striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to disclosures after the date of the enactment of this Act.
SEC. 174. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT INCOME
CONTINGENT REPAYMENT OF STUDENT LOANS.
(a) In General.--Subparagraph (D) of section 6103(l)(13) (relating
to termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to disclosures after the date of the enactment of this Act.
SEC. 175. 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, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to operations conducted after the date of the enactment of this
Act.
Subpart B--Provisions Expiring in 2008
SEC. 176. EXTENSION OF REPORTING OF INTEREST OF EXEMPT ORGANIZATIONS IN
INSURANCE CONTRACTS.
Section 6050V(e) (relating to termination) is amended by striking
``the date which is 2 years after the date of the enactment of this
section'' and inserting ``December 31, 2009''.
SEC. 177. DISCLOSURES RELATING TO CERTAIN PROGRAMS ADMINISTERED BY THE
DEPARTMENT OF VETERANS AFFAIRS.
(a) In General.--Section 6103(l)(7)(D) (relating to programs to
which rule applies) is amended by striking ``September 30, 2008'' and
inserting ``December 31, 2009''.
(b) Technical Amendment.--Section 6103(l)(7)(D)(viii)(III) is
amended by striking ``sections 1710(a)(1)(I), 1710(a)(2), 1710(b), and
1712(a)(2)(B)'' and inserting ``sections 1710(a)(2)(G), 1710(a)(3), and
1710(b)''.
Subtitle B--Alternative Minimum Tax Relief
SEC. 181. 2-YEAR EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX
EXEMPTION AMOUNT.
(a) In General.--Section 55(d)(1) is amended--
(1) by striking ``$66,250'' and all that follows through
``2007'' in subparagraph (A) and inserting ``the joint return
amount in the case of taxable years beginning in 2008 and
2009'', and
(2) by striking ``$44,350'' and all that follows through
``2007'' in subparagraph (B) and inserting ``the unmarried
individual return amount in the case of taxable years beginning
in 2008 and 2009''.
(b) Joint Return Amount; Unmarried Individual Return Amount.--
Section 55(d) is amended by adding at the end the following new
paragraph:
``(4) Joint return amount; unmarried individual return
amount.--
``(A) Joint return amount.--For purposes of
paragraph (1)(A), the joint return amount shall be--
``(i) $69,950 for taxable years beginning
in 2008, and
``(ii) $73,250 for taxable year beginning
in 2009.
``(B) Unmarried individual return amount.--For
purposes of paragraph (1)(B), the unmarried individual
return amount shall be--
``(i) $46,200 for taxable years beginning
in 2008, and
``(ii) $47,850 for taxable year beginning
in 2009.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 182. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR NONREFUNDABLE
PERSONAL CREDITS.
(a) In General.--Paragraph (2) of section 26(a) is amended--
(1) by striking ``or 2007'' and inserting ``2007, 2008, or
2009'', and
(2) by striking ``2007'' in the heading thereof and
inserting ``2009''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
Subtitle C--Additional Tax Relief
SEC. 191. PERMANENT EXTENSION OF 2001 AND 2003 TAX RELIEF PROVISIONS.
(a) Economic Growth and Tax Relief Reconciliation Act of 2001.--
Title IX of the Economic Growth and Tax Relief Reconciliation Act of
2001 (relating to compliance with Congressional Budget Act) is
repealed.
(b) Jobs and Growth Tax Relief Reconciliation Act of 2003.--Title
III of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is
amended by striking section 303.
SEC. 192. MAXIMUM CORPORATE INCOME TAX RATE REDUCED TO 25 PERCENT.
(a) In General.--Paragraph (1) of section 11(b) (relating to amount
of tax on corporations) is amended to read as follows:
``(1) In general.--The amount of the tax imposed by
subsection (a) shall be the sum of--
``(A) 15 percent of so much of the taxable income
as does not exceed $50,000, and
``(B) 25 percent of so much of the taxable income
as exceeds $50,000.''.
(b) Personal Service Corporations.--Paragraph (2) of section 11(b)
is amended by striking ``35 percent'' and inserting ``25 percent''.
(c) Conforming Amendments.--Paragraphs (1) and (2) of section
1445(e) are each amended by striking ``35 percent'' and inserting ``25
percent''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008, except that
the amendments made by subsection (c) shall take effect on January 1,
2009.
SEC. 193. 3-YEAR CARRYBACK OF CERTAIN CREDITS.
(a) General Business Credit.--Subsection (a) of section 39 is
amended by adding at the end the following new paragraph:
``(4) Special rule for 2007, 2008, and 2009.--In the case
of an excess described in paragraph (1) arising in a taxable
year beginning in 2007, 2008, or 2009--
``(A) paragraph (1)(A) shall be applied by
substituting `each of the 3 taxable years' for ``the
taxable year',
``(B) paragraphs (2)(A) and (3)(C)(i) shall each be
applied by substituting `23 taxable years' for `21
taxable years', and
``(C) paragraphs (2)(B) and (3)(C)(ii) shall be
applied by substituting `23 taxable years' for `20
taxable years'.''.
(b) Foreign Tax Credit.--
(1) In general.--Section 904(c) is amended by adding at the
end thereof the following: ``In the case of taxable years
beginning in 2007, 2008, or 2009, the first sentence of this
subsection shall, at the election of the taxpayer, be applied
by substituting `in the third preceding taxable year, the
second preceding taxable year, the first preceding taxable
year' for `the first preceding taxable year'.''.
(2) Application of special refund rules.--Section 6411
(relating to tentative carryback and refund adjustments) is
amended by redesignating subsection (d) as subsection (e) and
by inserting after subsection (c) the following new subsection:
``(d) Application to Foreign Tax Credit Carryback.--Under rules
prescribed by the Secretary, in the case of taxable years beginning in
2007, 2008, and 2009, this section shall apply with respect to a
foreign tax credit carryback provided in section 904(c) in the same
manner as this section applies with respect to net operating loss
carrybacks provided in section 172(b), business credit carrybacks
provided in section 39, and capital loss carrybacks provided in
subsection (a)(1) or (c) of section 1212.''.
(c) Effective Date.--The amendments made by this section shall
apply to general business credits and foreign tax credits arising in
taxable years beginning after December 31, 2006.
SEC. 194. ELECTION TO ACCELERATE AMT AND R AND D CREDITS IN LIEU OF
BONUS DEPRECIATION.
(a) In General.--Section 168(k) is amended by adding at the end the
following new paragraph:
``(4) Election to accelerate amt and r and d credits in
lieu of bonus depreciation.--
``(A) In general.--If a corporation elects to have
this paragraph apply --
``(i) no additional depreciation shall be
allowed under paragraph (1) for any property
placed in service during the taxable year, and
``(ii) the limitations described in
subparagraph (B) for such taxable year shall be
increased by an aggregate amount not in excess
of the bonus depreciation amount for such
taxable year.
``(B) Limitations to be increased.--The limitations
described in this subparagraph are--
``(i) the limitation under section 38(c),
and
``(ii) the limitation under section 53(c).
``(C) Bonus depreciation amount.--For purposes of
this paragraph--
``(i) In general.--The bonus depreciation
amount for any taxable year is an amount equal
to the product of the applicable percentage and
the excess (if any) of--
``(I) the aggregate amount of
depreciation which would be determined
under this section for property placed
in service during the taxable year if
no election under this paragraph were
made, over
``(II) the aggregate amount of
depreciation allowable under this
section for property placed in service
during the taxable year.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage shall
be--
``(I) 30 percent in the case of the
limitation under section 38(c), and
``(II) 20 percent in the case of
the limitation under section 53(c).
``(D) Allocation of bonus depreciation amounts.--
``(i) In general.--Subject to clauses (ii)
and (iii), the taxpayer shall, at such time and
in such manner as the Secretary may prescribe,
specify the portion (if any) of the bonus
depreciation amount which is to be allocated to
each of the limitations described in
subparagraph (B).
``(ii) Business credit limitation.--The
portion of the bonus depreciation amount
allocated to the limitation described in
subparagraph (B)(i) shall not exceed an amount
equal to the portion of the credit allowable
under section 38 for the taxable year which is
allocable to business credit carryforwards to
such taxable year which are--
``(I) from taxable years beginning
before January 1, 2006, and
``(II) properly allocable
(determined under the rules of section
38(d)) to the research credit
determined under section 41(a).
``(iii) Alternative minimum tax credit
limitation.--The portion of the bonus
depreciation amount allocated to the limitation
described in subparagraph (B)(ii) shall not
exceed an amount equal to the portion of the
minimum tax credit allowable under section 53
for the taxable year which is allocable to the
adjusted minimum tax imposed for taxable years
beginning before January 1, 2006.
``(E) Credit refundable.--Any aggregate increases
in the credits allowed under section 38 or 53 by reason
of this paragraph shall, for purposes of this title, be
treated as a credit allowed to the taxpayer under
subpart C of part IV of subchapter A.
``(F) Other rules.--
``(i) Election.--Any election under this
paragraph (including any allocation under
subparagraph (D)) may be revoked only with the
consent of the Secretary.
``(ii) Deduction allowed in computing
minimum tax.--Notwithstanding this paragraph,
paragraph (2)(G) shall apply with respect to
the deduction computed under this section
(after application of this paragraph) with
respect to property placed in service during
any applicable taxable year.''.
(b) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2007, in taxable
years ending after such date.
SEC. 195. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING GAIN
OR LOSS.
(a) In General.--Part II of subchapter O of chapter 1 (relating to
basis rules of general application) is amended by redesignating section
1023 as section 1024 and by inserting after section 1022 the following
new section:
``SEC. 1023. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF DETERMINING
GAIN OR LOSS.
``(a) General Rule.--
``(1) Indexed basis substituted for adjusted basis.--Solely
for purposes of determining gain or loss on the sale or other
disposition by a taxpayer (other than a corporation) of an
indexed asset which has been held for more than 3 years, the
indexed basis of the asset shall be substituted for its
adjusted basis.
``(2) Exception for depreciation, etc.--The deductions for
depreciation, depletion, and amortization shall be determined
without regard to the application of paragraph (1) to the
taxpayer or any other person.
``(3) Written documentation requirement.--Paragraph (1)
shall apply only with respect to indexed assets for which the
taxpayer has written documentation of the original purchase
price paid or incurred by the taxpayer to acquire such asset.
``(b) Indexed Asset.--
``(1) In general.--For purposes of this section, the term
`indexed asset' means--
``(A) common stock in a C corporation (other than a
foreign corporation), or
``(B) tangible property,
which is a capital asset or property used in the trade or
business (as defined in section 1231(b)).
``(2) Stock in certain foreign corporations included.--For
purposes of this section--
``(A) In general.--The term `indexed asset'
includes common stock in a foreign corporation which is
regularly traded on an established securities market.
``(B) Exception.--Subparagraph (A) shall not apply
to--
``(i) stock in a passive foreign investment
company (as defined in section 1296), and
``(ii) stock in a foreign corporation held
by a United States person who meets the
requirements of section 1248(a)(2).
``(C) Treatment of american depository receipts.--
An American depository receipt for common stock in a
foreign corporation shall be treated as common stock in
such corporation.
``(c) Indexed Basis.--For purposes of this section--
``(1) General rule.--The indexed basis for any asset is--
``(A) the adjusted basis of the asset, increased by
``(B) the applicable inflation adjustment.
``(2) Applicable inflation adjustment.--The applicable
inflation adjustment for any asset is an amount equal to--
``(A) the adjusted basis of the asset, multiplied
by
``(B) the percentage (if any) by which--
``(i) the gross domestic product deflator
for the last calendar quarter ending before the
asset is disposed of, exceeds
``(ii) the gross domestic product deflator
for the last calendar quarter ending before the
asset was acquired by the taxpayer.
The percentage under subparagraph (B) shall be rounded to the
nearest \1/10\ of 1 percentage point.
``(3) Gross domestic product deflator.--The gross domestic
product deflator for any calendar quarter is the implicit price
deflator for the gross domestic product for such quarter (as
shown in the last revision thereof released by the Secretary of
Commerce before the close of the following calendar quarter).
``(d) Suspension of Holding Period Where Diminished Risk of Loss;
Treatment of Short Sales.--
``(1) In general.--If the taxpayer (or a related person)
enters into any transaction which substantially reduces the
risk of loss from holding any asset, such asset shall not be
treated as an indexed asset for the period of such reduced
risk.
``(2) Short sales.--
``(A) In general.--In the case of a short sale of
an indexed asset with a short sale period in excess of
3 years, for purposes of this title, the amount
realized shall be an amount equal to the amount
realized (determined without regard to this paragraph)
increased by the applicable inflation adjustment. In
applying subsection (c)(2) for purposes of the
preceding sentence, the date on which the property is
sold short shall be treated as the date of acquisition
and the closing date for the sale shall be treated as
the date of disposition.
``(B) Short sale period.--For purposes of
subparagraph (A), the short sale period begins on the
day that the property is sold and ends on the closing
date for the sale.
``(e) Treatment of Regulated Investment Companies and Real Estate
Investment Trusts.--
``(1) Adjustments at entity level.--
``(A) In general.--Except as otherwise provided in
this paragraph, the adjustment under subsection (a)
shall be allowed to any qualified investment entity
(including for purposes of determining the earnings and
profits of such entity).
``(B) Exception for corporate shareholders.--Under
regulations--
``(i) in the case of a distribution by a
qualified investment entity (directly or
indirectly) to a corporation--
``(I) the determination of whether
such distribution is a dividend shall
be made without regard to this section,
and
``(II) the amount treated as gain
by reason of the receipt of any capital
gain dividend shall be increased by the
percentage by which the entity's net
capital gain for the taxable year
(determined without regard to this
section) exceeds the entity's net
capital gain for such year determined
with regard to this section, and
``(ii) there shall be other appropriate
adjustments (including deemed distributions) so
as to ensure that the benefits of this section
are not allowed (directly or indirectly) to
corporate shareholders of qualified investment
entities.
For purposes of the preceding sentence, any amount
includible in gross income under section 852(b)(3)(D)
shall be treated as a capital gain dividend and an S
corporation shall not be treated as a corporation.
``(C) Exception for qualification purposes.--This
section shall not apply for purposes of sections 851(b)
and 856(c).
``(D) Exception for certain taxes imposed at entity
level.--
``(i) Tax on failure to distribute entire
gain.--If any amount is subject to tax under
section 852(b)(3)(A) for any taxable year, the
amount on which tax is imposed under such
section shall be increased by the percentage
determined under subparagraph (B)(i)(II). A
similar rule shall apply in the case of any
amount subject to tax under paragraph (2) or
(3) of section 857(b) to the extent
attributable to the excess of the net capital
gain over the deduction for dividends paid
determined with reference to capital gain
dividends only. The first sentence of this
clause shall not apply to so much of the amount
subject to tax under section 852(b)(3)(A) as is
designated by the company under section
852(b)(3)(D).
``(ii) Other taxes.--This section shall not
apply for purposes of determining the amount of
any tax imposed by paragraph (4), (5), or (6)
of section 857(b).
``(2) Adjustments to interests held in entity.--
``(A) Regulated investment companies.--Stock in a
regulated investment company (within the meaning of
section 851) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the average of the fair market values
of the indexed assets held by such company at
the close of each month during such quarter,
bears to
``(ii) the average of the fair market
values of all assets held by such company at
the close of each such month.
``(B) Real estate investment trusts.--Stock in a
real estate investment trust (within the meaning of
section 856) shall be an indexed asset for any calendar
quarter in the same ratio as--
``(i) the fair market value of the indexed
assets held by such trust at the close of such
quarter, bears to
``(ii) the fair market value of all assets
held by such trust at the close of such
quarter.
``(C) Ratio of 80 percent or more.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 80
percent or more, such ratio for such quarter shall be
100 percent.
``(D) Ratio of 20 percent or less.--If the ratio
for any calendar quarter determined under subparagraph
(A) or (B) would (but for this subparagraph) be 20
percent or less, such ratio for such quarter shall be
zero.
``(E) Look-thru of partnerships.--For purposes of
this paragraph, a qualified investment entity which
holds a partnership interest shall be treated (in lieu
of holding a partnership interest) as holding its
proportionate share of the assets held by the
partnership.
``(3) Treatment of return of capital distributions.--Except
as otherwise provided by the Secretary, a distribution with
respect to stock in a qualified investment entity which is not
a dividend and which results in a reduction in the adjusted
basis of such stock shall be treated as allocable to stock
acquired by the taxpayer in the order in which such stock was
acquired.
``(4) Qualified investment entity.--For purposes of this
subsection, the term `qualified investment entity' means--
``(A) a regulated investment company (within the
meaning of section 851), and
``(B) a real estate investment trust (within the
meaning of section 856).
``(f) Other Pass-Thru Entities.--
``(1) Partnerships.--
``(A) In general.--In the case of a partnership,
the adjustment made under subsection (a) at the
partnership level shall be passed through to the
partners.
``(B) Special rule in the case of section 754
elections.--In the case of a transfer of an interest in
a partnership with respect to which the election
provided in section 754 is in effect--
``(i) the adjustment under section
743(b)(1) shall, with respect to the transferor
partner, be treated as a sale of the
partnership assets for purposes of applying
this section, and
``(ii) with respect to the transferee
partner, the partnership's holding period for
purposes of this section in such assets shall
be treated as beginning on the date of such
adjustment.
``(2) S corporations.--In the case of an S corporation, the
adjustment made under subsection (a) at the corporate level
shall be passed through to the shareholders. This section shall
not apply for purposes of determining the amount of any tax
imposed by section 1374 or 1375.
``(3) Common trust funds.--In the case of a common trust
fund, the adjustment made under subsection (a) at the trust
level shall be passed through to the participants.
``(4) Indexing adjustment disregarded in determining loss
on sale of interest in entity.--Notwithstanding the preceding
provisions of this subsection, for purposes of determining the
amount of any loss on a sale or exchange of an interest in a
partnership, S corporation, or common trust fund, the
adjustment made under subsection (a) shall not be taken into
account in determining the adjusted basis of such interest.
``(g) Dispositions Between Related Persons.--
``(1) In general.--This section shall not apply to any sale
or other disposition of property between related persons except
to the extent that the basis of such property in the hands of
the transferee is a substituted basis.
``(2) Related persons defined.--For purposes of this
section, the term `related persons' means--
``(A) persons bearing a relationship set forth in
section 267(b), and
``(B) persons treated as single employer under
subsection (b) or (c) of section 414.
``(h) Transfers To Increase Indexing Adjustment.--If any person
transfers cash, debt, or any other property to another person and the
principal purpose of such transfer is to secure or increase an
adjustment under subsection (a), the Secretary may disallow part or all
of such adjustment or increase.
``(i) Special Rules.--For purposes of this section--
``(1) Treatment of improvements, etc.--If there is an
addition to the adjusted basis of any tangible property or of
any stock in a corporation during the taxable year by reason of
an improvement to such property or a contribution to capital of
such corporation--
``(A) such addition shall never be taken into
account under subsection (c)(1)(A) if the aggregate
amount thereof during the taxable year with respect to
such property or stock is less than $1,000, and
``(B) such addition shall be treated as a separate
asset acquired at the close of such taxable year if the
aggregate amount thereof during the taxable year with
respect to such property or stock is $1,000 or more.
A rule similar to the rule of the preceding sentence shall
apply to any other portion of an asset to the extent that
separate treatment of such portion is appropriate to carry out
the purposes of this section.
``(2) Assets which are not indexed assets throughout
holding period.--The applicable inflation adjustment shall be
appropriately reduced for periods during which the asset was
not an indexed asset.
``(3) Treatment of certain distributions.--A distribution
with respect to stock in a corporation which is not a dividend
shall be treated as a disposition.
``(4) Section cannot increase ordinary loss.--To the extent
that (but for this paragraph) this section would create or
increase a net ordinary loss to which section 1231(a)(2)
applies or an ordinary loss to which any other provision of
this title applies, such provision shall not apply. The
taxpayer shall be treated as having a long-term capital loss in
an amount equal to the amount of the ordinary loss to which the
preceding sentence applies.
``(5) Acquisition date where there has been prior
application of subsection (a)(1) with respect to the
taxpayer.--If there has been a prior application of subsection
(a)(1) to an asset while such asset was held by the taxpayer,
the date of acquisition of such asset by the taxpayer shall be
treated as not earlier than the date of the most recent such
prior application.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(b) Clerical Amendment.--The table of sections for part II of
subchapter O of chapter 1 is amended by striking the item relating to
section 1023 and by inserting after the item relating to section 1022
the following new item:
``Sec. 1023. Indexing of certain assets for purposes of determining
gain or loss.
``Sec. 1024. Cross references.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales and other dispositions of indexed assets after the date
of the enactment of this Act, in taxable years ending after such date.
SEC. 196. DEFERRAL OF GAIN ON SALE OF CERTAIN PRINCIPAL RESIDENCES.
(a) In General.--Part III of subchapter O of chapter 1 of subtitle
A (relating to common nontaxable exchanges) is amended by inserting
after section 1033 the following new section:
``SEC. 1034. DEFERRAL OF GAIN ON SALE OF CERTAIN PRINCIPAL RESIDENCES.
``(a) Deferral of Gain.--
``(1) In general.--In the case of a sale of a principal
residence by a taxpayer, the taxpayer's gain (if any) from such
sale shall be recognized only to the extent that the taxpayer's
adjusted sales price exceeds the taxpayer's cost of purchasing
a qualified residence.
``(2) Reduction of basis in qualified residence.--In the
case of a nonrecognition of gain on the sale of a principal
residence due to the purchase of a qualified residence under
paragraph (1), the taxpayer's basis in the qualified residence
shall be reduced by the amount of such gain.
``(b) Definitions.--
``(1) Adjusted sales price.--
``(A) In general.--For purposes of this section,
the term `adjusted sales price' means the amount
realized, reduced by the aggregate of the expenses for
work performed on a principal residence in order to
assist in its sale.
``(B) Limitation.--The reduction provided in
subparagraph (A) applies only to expenses--
``(i) for work performed during the 90-day
period ending on the day on which the contract
to sell the principal residence is entered
into,
``(ii) which are paid on or before the 30th
day after the date of the sale of the principal
residence, and
``(iii) which are--
``(I) not allowable as deductions
in computing taxable income under
section 63, and
``(II) not taken into account in
computing the amount realized from the
sale of the principal residence.
``(2) Qualified residence.--For purposes of this section,
the term `qualified residence' means property that is--
``(A) purchased by the taxpayer for use as a
principal residence, and
``(B) purchased during the period beginning 2 years
before the date of the sale of the taxpayer's previous
principal residence and ending 2 years after the date
of such sale.
``(c) Application of Section.--For purposes of this section:
``(1) Exchange of residence for property.--An exchange by
the taxpayer of a principal residence for other property shall
be treated as a sale of such residence, and the acquisition of
a qualified residence on the exchange of property shall be
treated as a purchase of such residence.
``(2) Construction of residence.--A qualified residence any
part of which was constructed or reconstructed by the taxpayer
shall be treated as purchased by the taxpayer. In determining
the taxpayer's cost of purchasing a qualified residence, there
shall be included only so much of such cost as is attributable
to the acquisition, construction, reconstruction, and
improvements made which are properly chargeable to capital
account, during the period specified in subsection (b)(2)(B).
``(3) Sale of new residence prior to sale of principal
residence.--If a residence is purchased by the taxpayer before
the date of the sale of the taxpayer's principal residence,
such purchased residence shall not be a qualified residence
under this section if such residence is sold or otherwise
disposed of by the taxpayer before the date of the sale of the
taxpayer's principal residence.
``(4) Multiple principal residences.--If the taxpayer,
during the period described in subsection (b)(2)(B), purchases
more than 1 residence which is used as the taxpayer's principal
residence at some time during the 2 years after the date of the
sale of a principal residence for which gain is deferred under
this section, only the last of such residences so used by the
taxpayer within such 2 years shall be a qualified residence
under this section. If a qualified residence is sold in a sale
to which subsection (d)(2) applies within 2 years after the
sale of the taxpayer's previous principal residence, for
purposes of applying the preceding sentence with respect to
such principal residence, the qualified residence sold shall be
treated as the last residence used during such 2-year period.
``(d) Limitation.--
``(1) In general.--Subsection (a) shall not apply with
respect to the sale of the taxpayer's principal residence if
within 2 years before the date of such sale the taxpayer sold
at a gain other property used by him as his principal
residence, and any part of such gain was deferred by reason of
subsection (a).
``(2) Subsequent sale connected with new principal place of
work.--Paragraph (1) shall not apply with respect to the sale
of the taxpayer's principal residence if--
``(A) such sale was in connection with the
commencement of work by the taxpayer (or the taxpayer's
spouse, if such spouse has the same principal residence
as the taxpayer) as an employee or as a self-employed
individual at a new principal place of work, and
``(B) the taxpayer would satisfy the conditions of
section 217(c) if the principal residence so sold were
treated as the former residence for purposes of section
217.
``(e) Tenant-Stockholder in a Cooperative Housing Corporation.--For
purposes of this section, references to property used by the taxpayer
as a principal residence shall include stock held by a tenant-
stockholder (as defined in section 216) in a cooperative housing
corporation (as so defined) if--
``(1) in the case of stock sold, the house or apartment
which the taxpayer was entitled to occupy as such stockholder
was used by the taxpayer as a principal residence, and
``(2) in the case of stock purchased, the taxpayer used as
a principal residence the house or apartment which the taxpayer
was entitled to occupy as such stockholder.
``(f) Joint Ownership.--In the case of a residence jointly owned
and used as a principal residence by 1 or more taxpayers, or by a
married couple filing separately, the gain (if any) from the sale of
such principal residence which may be deferred under subsection (a)
shall be allocated among such taxpayers according to regulations which
shall be prescribed by the Secretary.
``(g) Members of the Armed Forces.--
``(1) In general.--The running of any period of time
specified in subsection (b)(2)(B) or (c) (other than the 2
years referred to in subsection (c)(4)) shall be suspended
during any time that the taxpayer (or the taxpayer's spouse, if
such spouse has the same principal residence as the taxpayer)
serves on extended active duty with the Armed Forces of the
United States after the date of the sale of the principal
residence for which gain is deferred under this section, except
that any period of time so suspended shall not extend beyond
the date that is 4 years after the date of sale of such
principal residence.
``(2) Members stationed outside the united states or
required to reside in government quarters.--In the case of a
taxpayer (or the taxpayer's spouse, if such spouse has the same
principal residence as the taxpayer) who, during any period of
time the running of which is suspended under paragraph (1)--
``(A) is stationed outside the United States, or
``(B) after returning from a tour of duty outside
of the United States and pursuant to a determination by
the Secretary of Defense that adequate off-base housing
is not available at a remote base site, is required to
reside in on-base Government quarters,
any period of time so suspended shall not expire before the day
that is 1 year after the last day that such taxpayer or spouse
is so stationed or under such requirement, except that any
period so suspended shall not extend beyond the date which is 8
years after the date of the sale of the principal residence.
``(h) Individual Whose Tax Home Is Outside the United States.--The
running of any period of time specified in subsection (b)(2)(B) or (c)
(other than the 2 years referred to in subsection (c)(4)) shall be
suspended during any time that the taxpayer (or the taxpayer's spouse,
if such spouse has the same principal residence as the taxpayer) has a
tax home (as defined in section 911(d)(3)) outside the United States
after the date of the sale of the principal residence for which gain is
deferred under this section, except that any period of time so
suspended shall not extend beyond the date that is 4 years after the
date of sale of such principal residence.
``(i) Special Rule for Condemnation.--In the case of the seizure,
requisition, or condemnation of a principal residence, or the sale or
exchange of a principal residence under threat or imminence thereof,
the taxpayer may elect to have this section apply in lieu of section
1033. If such election is made, such seizure, requisition, or
condemnation shall be treated as the sale of the principal residence.
Such election shall be made at such time and in such manner as the
Secretary shall prescribe.
``(j) Statute of Limitations.--In the case of any sale of a
principal residence that results in gain--
``(1) the statutory period for the assessment of any
deficiency attributable to any part of such gain shall not
expire before the expiration of 3 years from the date the
Secretary is notified by the taxpayer (in such manner as the
Secretary shall prescribe) of--
``(A) the taxpayer's cost of purchasing any
qualified residence which results in nonrecognition of
such gain,
``(B) the taxpayer's intention not to purchase such
a qualified residence during the period specified in
subsection (b)(2)(B), or
``(C) a failure to make such a purchase within such
period, and
``(2) such deficiency may be assessed before the expiration
of such 3-year period notwithstanding the provisions of any
other law or rule of law which would otherwise prevent such
assessment.
``(k) Application of Exclusion on the Sale of a Principal
Residence.--In the case of a sale of a principal residence by a
taxpayer to which section 121 applies, the amount of the gain on such
sale that may be deferred under subsection (a) of this section shall be
reduced by the amount of gain on such sale that is excluded from gross
income under section 121(a).''.
(b) Conforming Amendments.--
(1) Coordination with section 121.--
(A) Section 121 (relating to exclusion of gain from
sale of principal residence) is amended by adding at
the end the following new subsection:
``(h) Coordination With Section 1034 Deferral.--For deferral of
gain from the sale of a principal residence in the case of a purchase
of another qualified residence, see section 1034.''.
(B) Subsection (g) of section 121 (relating to
residences acquired in rollovers under section 1034) is
amended by striking ``(as in effect on the day before
the date of the enactment of this section)''.
(2) Extension of period of limitation.--Section 6503
(relating to suspension of running of period of limitation) is
amended--
(A) by redesignating subsection (k) as subsection
(l), and
(B) by inserting after subsection (j) the following
new subsection:
``(k) Extension of Time for Assessment of Tax Liability on Gain
From the Sale of Certain Principal Residences.--The running of any
period of limitations for collection of any amount of tax liability on
gain from the sale of a principal residence that is deferred under
section 1034 shall be suspended for the period of any extension of time
specified under section 1034(j).''.
(3) Reduction in basis.--Subsection (a) of section 1016
(relating to general rule) is amended--
(A) by striking ``and'' at the end of paragraph
(36),
(B) by striking the period at the end of paragraph
(37) and inserting ``, and'', and
(C) by adding at the end the following new
paragraph:
``(38) to the extent provided in section 1034(a)(2).''.
(c) Clerical Amendment.--The table of sections for part III of
subchapter O of chapter 1 of subtitle A (relating to common nontaxable
exchanges) is amended by inserting after the item relating to section
1033 the following new item:
``Sec. 1034. Deferral of gain on sale of certain principal
residences.''.
(d) Effective Date.--The amendments made by this section shall
apply to sales in taxable years beginning after the date of the
enactment of this Act.
SEC. 197. AMOUNT EXCLUDED FROM SALE OF PRINCIPAL RESIDENCE INDEXED FOR
INFLATION.
(a) In General.--Section 121 is amended by adding at the end the
following new subsection:
``(h) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2008, the $250,000 amount under subsection
(b)(1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2007' for `calendar year 1992' in
subparagraph (B) thereof.
``(2) Rounding.--If any amount as adjusted under
subparagraph (A) is not a multiple of $1,000, such amount shall
be rounded to the next lowest multiple of $1,000.''.
(b) Conforming Amendments.--
(1) Subparagraph (A) of section 121(b)(2) is amended--
(A) by striking ``Paragraph (1) shall be applied by
substituting `$500,000' for `$250,000''' and inserting
``The dollar amount under paragraph (1) shall be twice
the dollar amount otherwise in effect under such
paragraph'', and
(B) by striking ``$500,000'' in the heading and
inserting ``Increased''.
(2) Section 121(b)(4) is amended by striking ``paragraph
(1) shall be applied by substituting `$500,000' for
`$250,000''' and inserting ``the dollar amount under paragraph
(1) shall be twice the dollar amount otherwise in effect under
such paragraph''.
(c) Effective Date.--The amendments made by this section shall
apply to sales occurring after December 31, 2008.
SEC. 198. REPEAL OF PHASEIN FOR DOMESTIC PRODUCTION ACTIVITIES
DEDUCTION.
(a) In General.--Subsection (a) of section 199 (relating to income
attributable to domestic production activities) is amended to read as
follows:
``(a) Allowance of Deduction.--There shall be allowed as a
deduction an amount equal to 9 percent of the lesser of--
``(1) the qualified production activities income of the
taxpayer for the taxable year, or
``(2) taxable income (determined without regard to this
section) for the taxable year.''.
(b) Conforming Amendments.--Section 199 is amended by striking
``subsection (a)(1)(B)'' each place it appears and inserting
``subsection (a)(2)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
TITLE II--KEEPING AMERICA COMPETITIVE
SEC. 201. SENSE OF CONGRESS REGARDING THE LEGISLATIVE INITIATIVES
REQUIRED TO STRENGTHEN AND PROTECT THE WELL BEING OF OUR
NATION'S CAPITAL MARKETS.
(a) Findings.--Congress finds the following:
(1) America's capital markets are a foundation of our
Nation's economic well being and security.
(2) Healthy capital markets foster investment in the United
States economy, helping to sustain and create jobs.
(3) The American economy is fundamentally strong, but a
correction in the residential housing market, credit turmoil,
and high oil prices are hampering economic growth.
(4) American businesses and investors face ever increasing
competition from international competitors and markets.
(5) Economic policies that maintain low tax rates on
capital gains and dividends have historically fostered
sustained growth in the American economy.
(b) Sense of Congress.--It is the sense of the Congress that--
(1) Congress should not pass legislation that would create
new or greater uncertainty in the financial markets;
(2) Congress should not pass legislation that would serve
to further constrict liquidity in the marketplace;
(3) Congress should not pass legislation that would make
credit more expensive and less accessible in the United States
than in other world markets;
(4) Congress should not pass legislation that would inhibit
or impair capital formation and long-term investments;
(5) Congress should maintain existing tax policy regarding
capital formation and long-term investment, except in the case
of illegitimate tax shelter activity;
(6) Congress should pass legislation to extend permanently
the 2001 and 2003 tax rate cuts, including the 15 percent
capital gains and dividend rates, and to simplify and lower
corporate tax rates; and
(7) Congress should promote the entrepreneurship and
economic development fostered by long-term, private investment.
SEC. 202. DIRECTING THE SECURITIES AND EXCHANGE COMMISSION TO CONVENE A
PUBLIC HEARING ON THE IMPACT OF EXCESSIVE LITIGATION.
(a) Findings.--Congress finds that--
(1) companies listed on United States securities exchanges
face the potential of extraordinary litigation costs that
companies listed abroad do not;
(2) securities class action settlements in the United
States for 2006 totaled $10,600,000,000 (not counting the
Enron-related settlements of approximately $7,100,000,000),
reflecting an increase of--
(A) 255 percent from 2004;
(B) more than 500 percent from 2000 (not including
the $3,100,000,000 Cendant settlement); and
(C) an astonishing 7,000 percent from 1995;
(3) while many such claims are legitimate, the sheer number
of cases and the staggering settlement amounts illustrate the
growing impact of the tort system on the United States economy;
and
(4) by contrast, such private shareholder class action
suits do not exist in the United Kingdom and other European
Union countries.
(b) Public Hearing.--Not later than 60 days after the date of
enactment of this Act, the Chairman of the Securities and Exchange
Commission (in this section referred to as the ``Commission'') shall
convene a public hearing on the impact of excessive litigation on the
competitiveness of companies listed on United States securities
exchanges.
SEC. 203. DIRECTING THE COMMISSION TO ESTABLISH FORMAL PROCESSES AND
PROCEDURES FOR COST-BENEFIT ANALYSES OF PROPOSED AND
EXISTING RULES AND REGULATIONS.
(a) Study.--Not later than 180 days after the date of enactment of
this Act, the Commission shall submit to Congress a study of its
existing processes and procedures for conducting cost-benefit analyses
of proposed and existing rules and regulations, and shall report to
Congress on ways in which the Commission could perform more rigorous
and informed cost-benefit analyses of such rules and regulations.
(b) Proposed Rule.--
(1) In general.--Not later than 180 days after the date of
submission to Congress of the report under subsection (a), the
Commission shall issue a final rule to establish formal
processes and procedures for conducting cost-benefit analyses
of proposed and existing rules and regulations.
(2) Certain content required.--At a minimum, processes and
procedures proposed by the Commission under this subsection
shall include provisions directing the Commission--
(A) to assess all costs and benefits of available
regulatory alternatives, including both quantifiable
measures (to the extent that such measures can be
usefully estimated) and qualitative measures of costs
and benefits that are difficult to quantify, but
nevertheless essential to consider;
(B) to design its rules and regulations in the most
cost-effective manner to achieve the regulatory
objective, considering incentives for innovation,
consistency, predictability, the costs of enforcement
and compliance, and flexibility;
(C) to assess both the costs and the benefits of
the intended rule or regulation and propose or adopt a
rule or regulation only upon a reasoned determination
that the benefits of the intended rule or regulation
justify its costs;
(D) to base its decisions on the best reasonably
obtainable economic and other information concerning
the need for, and consequences of, the intended rule or
regulation;
(E) to tailor its rules and regulations to impose
the least possible burden on individuals, businesses of
differing sizes, and other entities, consistent with
obtaining the regulatory objectives, taking into
account, among other things, and to the extent
practicable, the cumulative costs; and
(F) to establish a process for reexamining existing
rules and regulations, or, at a minimum, those rules
and regulations that the Commission, industry
participants, or others identify as imposing
unjustifiable costs or competitive burdens, that shall
be designed to determine whether the rules and
regulations are working as intended, whether there are
satisfactory alternatives of a less burdensome nature,
and whether changes should be made.
(3) Periodic review.--Each rule and regulation of the
Commission that is subject to review pursuant to paragraph
(2)(F) shall be reviewed not less frequently than 2 years after
the date of its issuance in final form, and once every 10 years
thereafter.
SEC. 204. DIRECTING THE COMMISSION TO DEFINE ``SMALLER PUBLIC COMPANY''
TO PROVIDE CERTAINTY TO ISSUERS.
(a) Rule Revision Required.--Not later than 90 days after the date
of enactment of this Act, the Commission, pursuant to its authority to
amend rules of the Public Company Accounting Oversight Board under
section 107 of the Sarbanes-Oxley Act of 2002, shall revise Auditing
Standard No. 5 of the Oversight Board, as in effect on the date of
enactment of this Act, to include a definition of the term ``smaller
public company''.
(b) Definition of Smaller Public Company.--For purposes of the rule
revision required under subsection (a), the term ``smaller public
company'' shall mean an issuer for which an annual report is required
by section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m, 78o(d)) that--
(1) has a total market capitalization at the beginning of
the relevant reporting period of less than $700,000,000; and
(2) has total revenues for that reporting period of less
than $250,000,000.
SEC. 205. MUTUAL RECOGNITION.
(a) Findings.--Congress finds that--
(1) there is an ongoing and pressing need to update the
United States financial regulatory structure to address the
increasingly global nature of the financial marketplace;
(2) existing regulations on cross-border activities are
outdated, and predate the revolution in communications
technology and the accompanying transformations in global
markets;
(3) existing regulations on cross-border activities are
complex, inefficient, not flexible enough to meet modern market
needs, and have the effect of chilling innovation and imposing
significant and unnecessary burdens on United States investors;
(4) the Commission has delayed the timetable for Commission
action on key elements of reexamining and developing new
approaches to cross-border regulation, including much needed
reform to Commission rule 240.15a-6 of title 17, Code of
Federal Regulations, as in effect on the date of enactment of
this Act, and potential recognition of foreign regulatory
regimes; and
(5) such delay postpones the regulatory changes needed to
eliminate unnecessary inefficiencies from international
financial transactions, and poses an increasingly significant
risk to the effective modernization and competitiveness of
United States capital markets.
(b) Modernization of Cross-Border Rules Applicable to Brokers and
Dealers.--
(1) In general.--The Commission shall, by rule, exempt any
foreign broker or dealer from the registration requirements of
the Securities Exchange Act of 1934, and any other regulation
applicable to registered or unregistered brokers or dealers, to
the extent that the foreign broker or dealer effects
transactions in securities with or for, or induces or attempts
to induce the purchase or sale of any security by--
(A) a qualified investor, as defined in section
3(a)(54) of the Securities Exchange Act of 1934;
(B) an investor that is a resident outside of the
United States; and
(C) any person described in Commission rule
240.15a-6(a)(4) of title 17, Code of Federal
Regulations, as in effect on the date of enactment of
this Act.
(2) Definition of foreign broker or dealer.--As used in
this section, the term ``Foreign broker or dealer'' has the
same meaning as in section 240.15a-6(b)(3) of title 17, Code of
Federal Regulations, as in effect on the date of enactment of
this Act.
(3) Regulatory authority.--The Commission may, upon a
finding that such action is necessary to protect United States
investors and consistent with this section, require a foreign
broker or dealer and its associated persons--
(A) to file documentation to establish that the
foreign broker or dealer and its associated persons are
not subject to statutory disqualification;
(B) to consent to service of process for any civil
action brought by or proceeding before the Commission
or a self-regulatory organization; and
(C) to agree to provide any information or
documents that the Commission reasonably requests,
relating to effecting transactions in securities with
or for, or inducing or attempting to induce the
purchase or sale of any security by persons described
in subparagraphs (A) through (C) of paragraph (1),
subject to limitations recognizing potential conflicts
with applicable foreign laws or regulations.
(4) Limitation on state action.--No State or political
subdivision thereof, or any self-regulatory organization, may
impose any registration, licensing, qualification, or other
legal requirement applicable to a foreign broker or dealer or
associated person thereof that is exempt from Commission
registration and regulation pursuant to this subsection, except
that the State or political subdivision thereof, or such self-
regulatory organization, may require the foreign broker or
dealer to provide copies of any documents filed with the
Commission, as described in this subsection.
(5) Timing of regulations.--Final regulations to carry out
this subsection shall be issued by the Commission, and such
regulations shall become effective, not later than 180 days
after the date of enactment of this Act.
(c) Mutual Recognition Rules.--
(1) In general.--The Commission shall issue regulations
designed to provide for a framework for mutual recognition of
foreign regulatory regimes, so that foreign brokers, dealers,
and exchanges shall be regulated based on regulation in their
home country, and shall not be subject to duplicative
regulatory requirements, except to the extent that the
Commission finds necessary to protect United States investors.
(2) Implementation.--The Commission shall adopt regulations
that provide an expeditious and transparent implementation
mechanism for this section, based on objective qualification
criteria and fixed timelines, that is designed to enable
foreign brokers, dealers, and exchanges to operate in the
United States and abroad based on regulation in their home
country.
(3) Limitation.--The regulations required by this
subsection--
(A) shall not require individualized review and
approval process for foreign brokers, dealers, and
exchanges to be eligible to rely on regulation in their
home country, but shall permit such brokers, dealers,
and exchanges to make a supplemental showing, on an
individual exemptive basis, to demonstrate their
qualifications to do business with relevant classes of
investors; and
(B) may not create regulatory distinctions that
limit trading of portfolios containing both United
States and non-United States securities or impose other
requirements that are inconsistent with the business
objectives of investors.
(4) Timing.--The Commission shall issue proposed
regulations to carry out this subsection not later than 90 days
after the date of enactment of this Act, and shall make such
regulations effective reasonably promptly thereafter.
(5) Exemption authority.--The Commission may, by rule,
provide for such exemptions to the provisions of this
subsection as the Commission determines appropriate.
SEC. 206. SUPPORTING THE SECURITIES AND EXCHANGE COMMISSION REFORM
EFFORTS TO SPEED THE PROCESS OF RULEMAKING FOR SELF
REGULATORY ORGANIZATIONS.
(a) Findings.--Congress finds that--
(1) United States capital markets are evolving quickly, and
United States equity exchanges face increasing competition,
both domestically and internationally;
(2) the Commission has recognized this transformation in
the competitive landscape and announced a project to redesign
the rule approval process for exchanges to make it more
efficient;
(3) rather than approving rule filings by self regulatory
organizations within the 35-day period prescribed under the
Securities Exchange Act of 1934, the Commission has routinely
requested that exchanges agree to extend deadlines while rules
are weighed and considered within the agency, potentially
resulting in years before exchange rule filings are finally
approved;
(4) this antiquated and overly rigid regulatory model does
not recognize the new realities of international competition
among exchanges or new competition from innovative products
that compete with traditional asset classes; and
(5) competitors to United States equity exchanges operate
under different regulatory regimes, which can allow such
competitors to adapt to rapidly changing business environments
while United States exchanges are frozen in rule approval
process review by the Commission for months or years.
(b) Rulemaking.--The Commission shall promulgate rules under
section 19 of the Securities Exchange Act of 1934, to speed the process
of rulemaking to enable self-regulatory organizations to respond to
competitive inequities and better meet customer needs. Such rules and
other actions should be completed not later than 180 days after the
date of enactment of this Act, and should predate or be coterminous
with any foreign exchange mutual recognition regime established under
this Act.
SEC. 207. ELIMINATE THE EXEMPTION FROM STATE REGULATION FOR CERTAIN
SECURITIES DESIGNATED BY NATIONAL SECURITIES EXCHANGES.
Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C.
77r(b)(1)) is amended--
(1) in subparagraph (A)--
(A) by striking ``or the American Stock Exchange,
or listed, or authorized for listing, on the National
Market System of the Nasdaq Stock Market (or any
successor to such entities)'' and inserting ``, the
American Stock Exchange, or the Nasdaq Stock Market (or
any successor to such entities)''; and
(B) by inserting before the semicolon at the end
the following: ``, except that a security listed, or
authorized for listing, on the New York Stock Exchange,
the American Stock Exchange, or the Nasdaq Stock Market
(or any successor to any such entity) shall not be a
covered security if the exchange adopts listing
standards pursuant to section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) that designates
a tier or segment of such securities as securities that
are not covered securities for purposes of this section
and such security is listed, or authorized for listing,
on such tier or segment''; and
(2) in subparagraph (B), by inserting ``covered'' after
``applicable to''.
SEC. 208. DIRECTING THE COMMISSION TO ACCELERATE FULL CONVERSION OF
IFRS AND UNITED STATES GAAP.
(a) Findings.--Congress finds that--
(1) the accounting framework applied in more than 100
countries around the world is the International Financial
Reporting Standard (in this section referred to as ``IFRS'');
(2) a number of additional important United States trading
partners, including Canada, Brazil, Chile, India, and South
Korea, have announced dates to shift to IFRS; and
(3) the difficulty and expense of reconciling IFRS with
generally accepted accounting principles employed in the United
States (in this section referred to as ``GAAP''), the
accounting framework within which companies whose shares are
listed on United States exchanges must report their financial
information, is among the highest hurdles for foreign companies
considering a United States listing, and one of the most
compelling incentives for foreign-based businesses to list
their shares on exchanges based somewhere other than the United
States.
(b) Acceleration of Effort.--The Commission shall--
(1) accelerate efforts to offer to both United States- and
foreign-based companies the option of reporting financial
information using either IFRS or GAAP; and
(2) accelerate efforts with the Commission's foreign
counterparts to achieve full conversion of IFRS and GAAP.
SEC. 209. PROMOTING MARKET ACCESS FOR FINANCIAL SERVICES.
(a) Findings.--Congress finds that--
(1) there is a need to consistently monitor and increase
Government advocacy for United States financial services firms'
attempts to gain overseas financial market access;
(2) the presence of foreign financial services firms in the
United States and their activities should be documented to find
which countries' firms enjoy full market access in the United
States, while their home governments deny national treatment to
American financial services firms; and
(3) an analysis of the results achieved from the U.S.-China
Strategic Economic Dialogue (referred to as ``SED'') and how
such results specifically apply to United States financial
services firms, including benchmarks and timeframes for future
improvements, should be compiled to assess the efficacy of the
negotiations.
(b) Amendments to Financial Reports Act.--The Financial Reports Act
of 1988 (22 U.S.C. 5351 et seq.) is amended--
(1) in section 3602--
(A) in the section heading, by striking
``quadrennial'' and inserting ``annual'';
(B) by striking ``Not less frequently than every 4
years, beginning December 1, 1990'' and inserting
``Beginning July 1, 2008, and annually thereafter,'';
and
(C) by striking ``to the Congress'' and inserting
``to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives''; and
(2) in section 3603--
(A) by redesignating subsections (b), (c), and (d)
as subsections (c), (d), and (e), respectively; and
(B) by inserting after subsection (a) the
following:
``(b) Report on SED.--
``(1) In general.--The Secretary shall include in the
initial report required under section 3602, a summary of the
results of the most recent United States-China Strategic
Economic Dialogue (in this subsection referred to as `SED') and
the results of the SED as it relates to promoting market access
for financial institutions.
``(2) Progress report.--The reports required under section
3602 shall include a progress report on the implementation of
any agreements resulting from the SED, a description of the
remaining challenges, if any, in improving market access for
financial institutions, and a plan, including benchmarks and
time frames, for dealing with the remaining challenges.
``(3) Specific content.--Each report described in this
subsection shall specifically address issues regarding--
``(A) foreign investment rules;
``(B) the problems of a dual-share stock market;
``(C) the openness of the derivatives market;
``(D) restrictions on foreign bank branching;
``(E) the ability to offer insurance (including
innovative products); and
``(F) regulatory and procedural transparency.''.
TITLE III--PROTECTING HOMEOWNERS
SEC. 301. SUBPRIME REFINANCING LOANS THROUGH USE OF QUALIFIED MORTGAGE
BONDS.
(a) Use of Qualified Mortgage Bonds Proceeds for Subprime
Refinancing Loans.--Section 143(k) of the Internal Revenue Code of 1986
(relating to other definitions and special rules) is amended by adding
at the end the following:
``(12) Special rules for subprime refinancings.--
``(A) In general.--Notwithstanding the requirements
of subsection (i)(1), the proceeds of a qualified
mortgage issue may be used to refinance a mortgage on a
residence which was originally financed by the
mortgagor through a qualified subprime loan.
``(B) Special rules.--In applying this paragraph to
any case in which the proceeds of a qualified mortgage
issue are used for any refinancing described in
subparagraph (A)--
``(i) subsection (a)(2)(D)(i) shall be
applied by substituting `12-month period' for
`42-month period' each place it appears,
``(ii) subsection (d) (relating to 3-year
requirement) shall not apply, and
``(iii) subsection (e) (relating to
purchase price requirement) shall be applied by
using the market value of the residence at the
time of refinancing in lieu of the acquisition
cost.
``(C) Qualified subprime loan.--The term `qualified
subprime loan' means an adjustable rate single-family
residential mortgage loan originated after December 31,
2001, and before January 1, 2008, that the bond issuer
determines would be reasonably likely to cause
financial hardship to the borrower if not refinanced.
``(D) Termination.--This paragraph shall not apply
to any bonds issued after December 31, 2010.''.
(b) Increased Volume Cap for Certain Bonds.--
(1) In general.--Subsection (d) of section 146 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following:
``(5) Increase and set aside for housing bonds for 2008.--
``(A) Increase for 2008.--In the case of calendar
year 2008, the State ceiling for each State shall be
increased by an amount equal to $10,000,000,000
multiplied by a fraction--
``(i) the numerator of which is the
population of such State (as reported in the
most recent decennial census), and
``(ii) the denominator of which is the
total population of all States (as reported in
the most recent decennial census).
``(B) Set aside.--
``(i) In general.--Any amount of the State
ceiling for any State which is attributable to
an increase under this paragraph shall be
allocated solely for one or more qualified
purposes.
``(ii) Qualified purpose.--For purposes of
this paragraph, the term `qualified purpose'
means--
``(I) the issuance of exempt
facility bonds used solely to provide
qualified residential rental projects,
or
``(II) a qualified mortgage issue
(determined by substituting `12-month
period' for `42-month period' each
place it appears in section
143(a)(2)(D)(i)).''.
(2) Carryforward of unused limitations.--Subsection (f) of
section 146 of such Code is amended by adding at the end the
following:
``(6) Special rules for increased volume cap under
subsection (d)(5).--
``(A) In general.--No amount which is attributable
to the increase under subsection (d)(5) may be used--
``(i) for a carryforward purpose other than
a qualified purpose (as defined in subsection
(d)(5)), and
``(ii) to issue any bond after calendar
year 2010.
``(B) Ordering rules.--For purposes of subparagraph
(A), any carryforward of an issuing authority's volume
cap for calendar year 2008 shall be treated as
attributable to such increase to the extent of such
increase.''.
(c) Alternative Minimum Tax.--
(1) In general.--Clause (ii) of section 57(a)(5)(C) of the
Internal Revenue Code of 1986 is amended by striking ``shall
not include'' and all that follows and inserting ``shall not
include--
``(I) any qualified 501(c)(3) bond
(as defined in section 145), or
``(II) any qualified mortgage bond
(as defined in section 143(a)) or
qualified veteran's mortgage bond (as
defined in section 143(b)) issued after
the date of the enactment of this
subclause and before January 1,
2011.''.
(2) Conforming amendment.--The heading for section
57(a)(5)(C)(ii) of the Internal Revenue Code of 1986 is amended
by striking ``qualified 501(c)(3) bonds'' and inserting
``certain bond''.
(d) Effective Date.--The amendments made by this section shall
apply to bonds issued after the date of the enactment of this Act.
SEC. 302. EXPEDITIOUS DISTRIBUTION OF FUNDS ALREADY PROVIDED FOR
MORTGAGE FORECLOSURE COUNSELING.
Upon certification by the Neighborhood Reinvestment Corporation
under paragraph (4) under the heading ``Neighborhood Reinvestment
Corporation--Payment to the Neighborhood Reinvestment Corporation'' of
Public Law 110-161 that Housing and Urban Development or Neighborhood
Reinvestment Corporation-approved counseling intermediaries and State
Housing Finance Agencies have the need for additional portions of the
$180,000,000 provided therein for mortgage foreclosure mitigation
activities in States and areas with high rates of mortgage
foreclosures, defaults, or related activities beyond the initial
awards, and the expertise to use such funds effectively, the
Neighborhood Reinvestment Corporation shall expeditiously continue to
award such funds as need and expertise is shown.
SEC. 303. CREDIT FOR PURCHASE OF HOMES IN OR NEAR FORECLOSURE.
(a) Allowance of Credit.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to refundable
credits) is amended by inserting after section 25D the following new
section:
``SEC. 25E. CREDIT FOR PURCHASE OF HOMES IN OR NEAR FORECLOSURE.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual who is a
purchaser of a qualified principal residence during the taxable
year, there shall be allowed as a credit against the tax
imposed by this chapter an amount equal to so much of the
purchase price of the residence as does not exceed $15,000.
``(2) Allocation of credit amount.--The amount of the
credit allowed under paragraph (1) shall be equally divided
among the 3 taxable years beginning with the taxable year in
which the purchase of the qualified principal residence is
made.
``(b) Limitations.--
``(1) Date of purchase.--The credit allowed under
subsection (a) shall be allowed only with respect to purchases
made--
``(A) after February 29, 2008, and
``(B) before March 1, 2009.
``(2) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for any taxable year shall
not exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) for the taxable year.
``(3) One-time only.--
``(A) In general.--If a credit is allowed under
this section in the case of any individual (and such
individual's spouse, if married) with respect to the
purchase of any qualified principal residence, no
credit shall be allowed under this section in any
taxable year with respect to the purchase of any other
qualified principal residence by such individual or a
spouse of such individual.
``(B) Joint purchase.--In the case of a purchase of
a qualified principal residence by 2 or more unmarried
individuals or by 2 married individuals filing
separately, no credit shall be allowed under this
section if a credit under this section has been allowed
to any of such individuals in any taxable year with
respect to the purchase of any other qualified
principal residence.
``(c) Qualified Principal Residence.--
``(1) In general.--For purposes of this section, the term
`qualified principal residence' means an eligible single-family
residence that is purchased to be the principal residence of
the purchaser.
``(2) Eligible single-family residence.--
``(A) In general.--For purposes of this subsection,
the term `eligible single-family residence' means a
single-family structure that is--
``(i) a new previously unoccupied residence
for which a building permit is issued and
construction begins on or before September 1,
2007, but only if such residence is purchased
by the taxpayer directly from the person to
whom such building permit was issued,
``(ii) an owner-occupied residence with
respect to which the owner's acquisition
indebtedness (as defined in section
163(h)(3)(B), determined without regard to
clause (ii) thereof) is in default on or before
March 1, 2008, or
``(iii) a residence with respect to which a
foreclosure event has taken place and which is
owned by the mortgagor or the mortgagor's
agent, but only if such residence was occupied
as a principal residence by the mortgagee for
at least 1 year prior to the foreclosure event.
``(B) Certification.--In the case of an eligible
single-family residence described in subparagraph
(A)(i), no credit shall be allowed under this section
unless the purchaser submits a certification by the
seller of such residence that such residence meets the
requirements of such subparagraph.
``(d) Denial of Double Benefit.--No credit shall be allowed under
this section for any purchase for which a credit is allowed under
section 1400C.
``(e) Recapture in the Case of Certain Dispositions.--In the event
that a taxpayer--
``(1) disposes of the qualified principal residence with
respect to which a credit is allowed under subsection (a), or
``(2) fails to occupy such residence as the taxpayer's
principal residence,
at any time within 36 months after the date on which the taxpayer
purchased such residence, then the remaining portion of the credit
allowed under subsection (a) shall be disallowed in the taxable year
during which such disposition occurred or in which the taxpayer failed
to occupy the residence as a principal residence, and in any subsequent
taxable year in which the remaining portion of the credit would, but
for this subsection, have been allowed.
``(f) Special Rules.--
``(1) Joint purchase.--
``(A) Married individuals filing separately.--In
the case of 2 married individuals filing separately,
subsection (a) shall be applied to each such individual
by substituting `$7,500' for `$15,000' in subsection
(a)(1).
``(B) Unmarried individuals.--If 2 or more
individuals who are not married purchase a qualified
principal residence, the amount of the credit allowed
under subsection (a) shall be allocated among such
individuals in such manner as the Secretary may
prescribe, except that the total amount of the credits
allowed to all such individuals shall not exceed
$15,000.
``(2) Purchase.--In defining the purchase of a qualified
principal residence, rules similar to the rules of paragraphs
(2) and (3) of section 1400C(e) (as in effect on the date of
the enactment of this section) shall apply.
``(3) Reporting requirement.--Rules similar to the rules of
section 1400C(f) (as so in effect) shall apply.
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section with respect to the purchase of any
residence, the basis of such residence shall be reduced by the amount
of the credit so allowed.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Credit for certain home purchases.''.
SEC. 304. ENHANCED MORTGAGE LOAN DISCLOSURES.
(a) Truth in Lending Act Disclosures.--Section 128(b)(2) of the
Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended--
(1) by inserting ``(A)'' before ``In the'';
(2) by striking ``a residential mortgage transaction, as
defined in section 103(w)'' and inserting ``any extension of
credit that is secured by the dwelling of a consumer'';
(3) by striking ``shall be made in accordance'' and all
that follows through ``extended, or''; and
(4) by striking ``If the'' and all that follows through the
end of the paragraph and inserting the following:
``(B) In the case of an extension of credit that is
secured by the dwelling of a consumer, in addition to
the other disclosures required by subsection (a), the
disclosures provided under this paragraph shall--
``(i) state in conspicuous type size and
format, the following: `You are not required to
complete this agreement merely because you have
received these disclosures or signed a loan
application.'; and
``(ii) be furnished to the borrower not
later than 7 business days before the date of
consummation of the transaction, and at the
time of consummation of the transaction,
subject to subparagraph (D).
``(C) In the case of an extension of credit that is
secured by the dwelling of a consumer, under which the
annual rate of interest is variable, or with respect to
which the regular payments may otherwise be variable,
in addition to the other disclosures required by
subsection (a), the disclosures provided under this
paragraph shall--
``(i) label the payment schedule as
follows: `Payment Schedule: Payments Will Vary
Based on Interest Rate Changes';
``(ii) state the maximum amount of the
regular required payments on the loan, based on
the maximum interest rate allowed, introduced
with the following language in conspicuous type
size and format: `Your payment can go as high
as $_______', the blank to be filled in with
the maximum possible payment amount;
``(iii) if the loan is an adjustable rate
mortgage that includes an initial fixed
interest rate--
``(I) state in conspicuous type
size and format the following phrase:
This loan is an adjustable rate
mortgage with an initial fixed interest
rate. Your initial fixed interest rate
is AAA with a monthly payment of BBB
until CCC. After that date, the
interest rate on your loan will `reset'
to an adjustable rate and both your
interest rate and payment could go
higher on that date and in the future.
For example, if your initial fixed rate
ended today, your new adjustable
interest rate would be DDD and your new
payment EEE. If interest rates are one
percent higher than they are today or
at some point in the future, your new
payment would be FFF. There is no
guarantee you will be able to refinance
your loan to a lower interest rate and
payment before your initial fixed
interest rate ends.;
``(II) the blank AAA in
subparagraph (I) to be filled in with
the initial fixed interest rate;
``(III) the blank BBB in
subparagraph (I) to be filled in with
the payment amount under the initial
fixed interest rate;
``(IV) the blank CCC in
subparagraph (I) to be filled in with
the loan reset date;
``(V) the blank DDD in subparagraph
(I) to be filled in with the adjustable
rate as if the initial rate expired on
the date of disclosure under
subparagraph (B);
``(VI) the blank EEE in
subparagraph (I) to be filled in with
the payment under the adjustable rate
as if the initial rate expired on the
date of disclosure under subparagraph
(B); and
``(VII) the blank FFF in
subparagraph (I) to be filled in with
the payment under the adjustable rate
as if index rate on which the
adjustable rate was one percent higher
than of the date of disclosure under
subparagraph (B); and
``(iv) if the loan contains a prepayment
penalty--
``(I) state in conspicuous type and
format the following phrase: This loan
contains a prepayment penalty. If you
desire to pay off this loan before GGG,
you will pay a penalty of HHH.;
``(II) the blank GGG in
subparagraph (I) to be filled in with
the date the prepayment penalty
expires; and
``(III) the blank HHH in
subparagraph (I) to be filled in with
the prepayment penalty amount.
``(D) In any case in which the disclosure statement
provided 7 business days before the date of
consummation of the transaction contains an annual
percentage rate of interest that is no longer accurate,
as determined under section 107(c), the creditor shall
furnish an additional, corrected statement to the
borrower, not later than 3 business days before the
date of consummation of the transaction.''.
(b) Civil Liability.--Section 130(a) of the Truth in Lending Act
(15 U.S.C. 1640(a)) is amended--
(1) in paragraph (2)(A)(iii), by striking ``not less than
$200 or greater than $2,000'' and inserting ``$5,000, such
amount to be adjusted annually based on the consumer price
index, to maintain current value''; and
(2) in the penultimate sentence of the undesignated matter
following paragraph (4)--
(A) by striking ``only for'' and inserting ``for'';
(B) by striking ``section 125 or'' and inserting
``section 122, section 125,'';
(C) by inserting ``or section 128(b),'' after
``128(a),''; and
(D) by inserting ``or section 128(b)'' before the
period.
SEC. 305. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5
YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.
(a) In General.--Subparagraph (H) of section 172(b)(1) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(H) 5-year carryback of certain losses.--
``(i) Taxable years ending during 2001 and
2002.--In the case of a net operating loss for
any taxable year ending during 2001 or 2002,
subparagraph (A)(i) shall be applied by
substituting `5' for `2' and subparagraph (F)
shall not apply.
``(ii) Taxable years ending during 2006,
2007, 2008, and 2009.--In the case of a net
operating loss for any taxable year ending
during 2006, 2007, 2008, or 2009--
``(I) subparagraph (A)(i) shall be
applied by substituting `5' for `2',
``(II) subparagraph (E)(ii) shall
be applied by substituting `4' for `2',
and
``(III) subparagraph (F) shall not
apply.''.
(b) Temporary Suspension of 90 Percent Limit on Certain NOL
Carrybacks and Carryovers.--
(1) In general.--Section 56(d) of the of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(3) Additional adjustments.--For purposes of paragraph
(1)(A), the amount described in clause (I) of paragraph
(1)(A)(ii) shall be increased by the amount of the net
operating loss deduction allowable for the taxable year under
section 172 attributable to the sum of--
``(A) carrybacks of net operating losses from
taxable years ending during 2006, 2007, 2008, and 2009,
and
``(B) carryovers of net operating losses to taxable
years ending during 2006, 2007, 2008, or 2009.''.
(2) Conforming amendment.--Subclause (I) of section
56(d)(1)(A)(i) of such Code is amended by inserting ``amount of
such'' before ``deduction described in clause (ii)(I)''.
(c) Anti-Abuse Rules.--The Secretary of Treasury or the Secretary's
designee shall prescribes such rules as are necessary to prevent the
abuse of the purposes of the amendments made by this section, including
anti-stuffing rules, anti-churning rules (including rules relating to
sale-leasebacks), and rules similar to the rules under section 1091 of
the Internal Revenue Code of 1986 relating to losses from wash sales.
(d) Effective Dates.--
(1) Subsection (a).--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by subsection (a) shall apply
to net operating losses arising in taxable years ending
in 2006, 2007, 2008, or 2009.
(B) Election.--In the case of a net operating loss
for a taxable year ending during 2006 or 2007--
(i) any election made under section
172(b)(3) of the Internal Revenue Code of 1986
may (notwithstanding such section) be revoked
before November 1, 2008, and
(ii) any election made under section 172(j)
of such Code shall (notwithstanding such
section) be treated as timely made if made
before November 1, 2008.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years ending after December 31, 1995.
TITLE IV--REDUCING THE LITIGATION TAX
SEC. 401 LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES.
(a) Definition of Covered Small Business.--In this section, the
term ``covered small business'' means any unincorporated business, or
any partnership, corporation, association, unit of local government, or
organization--
(1) that has fewer than 25 full-time employees as of the
date that the relevant civil action is filed; and
(2) the principal place of business of which is in a State
other than the State where the relevant civil action is filed.
(b) General Rule.--Except as provided in subsection (c), in any
civil action filed in a Federal or State court against a covered small
business, punitive damages--
(1) may be awarded against that covered small business only
if the court finds by clear and convincing evidence that
conduct of that covered small business was--
(A) carried out with a conscious, flagrant
indifference to the rights or safety of others; and
(B) the proximate cause of the harm that is the
subject of the civil action; and
(2) shall not be awarded against that covered small
business in an amount greater than $250,000.
(c) Exceptions.--This section shall not apply to a civil action if
the court finds by clear and convincing evidence that--
(1) the covered small business acted with specific intent
to cause the type of harm that is the subject of the civil
action;
(2) the conduct of the covered small business constitute a
criminal offense; or
(3) the conduct of the covered small business resulted in
serious environmental degradation.
(d) Application by the Court.--The limitation on punitive damages
under this section shall be carried out by the court and shall not be
disclosed to the jury, if any.
SEC. 402. REASONABLENESS REVIEW OF ATTORNEY'S FEES.
(a) In General.--In any civil action in a Federal or State court in
which the damages awarded to a party exceed $5,000,000, the court shall
review the fees paid to any attorney for the prevailing party and
ensure that those fees are reasonable in light of the hours of work
actually performed by that attorney and the risk of nonpayment of fees
assumed by that attorney when that attorney agreed to represent the
party.
(b) Unreasonable Fees.--If a Federal or State court determines
under subsection (a) that the fees paid to an attorney for a prevailing
party are not reasonable, the court shall reduce the amount of that
attorney's fees.
(c) Assistance.--A Federal or State court may, as appropriate,
retain the services of an independent accounting firm to assist the
court in conducting a review under this section.
SEC. 403. PARTIAL AWARD OF ATTORNEY'S FEES FOR UNREASONABLE LAWSUITS.
(a) In General.--In any civil action described in subsection (b), a
court shall award to a prevailing party 30 percent of the reasonable
attorney's fees that were incurred by that prevailing party in
connection with a claim described in subsection (b)(2) after the date
on which the party asserting that claim knew or should have known of
the facts that would require that claim to be dismissed because there
was no genuine issue of material fact.
(b) Civil Actions.--A civil action described in this subsection is
a civil action--
(1) filed in a Federal court or against a party whose
principal residence or place of business is in a State other
than the State where the civil action is filed; and
(2) in which the court finds that no genuine issue of
material fact exists with regard to a claim that would allow a
reasonable juror to find in favor of the party presenting that
claim.
SEC. 404. MANDATORY SANCTIONS FOR FRIVOLOUS LAWSUITS.
(a) In General.--If a court of the United States (as that term is
defined in section 451 of title 28, United States Code) determines,
whether on a motion of a party or on its own motion, that there has
been a violation of rule 11 of the Federal Rules of Civil Procedure in
any civil action, the court shall impose upon the attorney, law firm,
or pro se litigant that violated rule 11, or is responsible for such
violation, an appropriate sanction.
(b) Sanctions.--A sanction imposed under this section--
(1) shall include an order to pay any other party to the
relevant civil action the reasonable expenses incurred by that
party as a direct result of the filing of the pleading, motion,
or other paper that is the subject of the violation of rule 11
of the Federal Rules of Civil Procedure, including reasonable
attorney's fees; and
(2) shall be sufficient to--
(A) deter the repetition of such conduct or
comparable conduct by other similarly situated persons;
and
(B) compensate any party injured by such conduct.
SEC. 405. BAR ON JUNK SCIENCE IN THE COURTROOM.
(a) In General.--In any civil action filed in a Federal court or
against a party whose principal residence or place of business is in a
State other than the State where the civil action is filed, if
scientific, technical, or other specialized knowledge will assist the
fact finder to understand the evidence or to determine a fact in issue,
a witness qualified as an expert by knowledge, skill, experience,
training, or education, may give testimony relating to that evidence or
fact, in the form of an opinion or otherwise, if--
(1) the witness has disclosed, upon the request of the
opposing party, those facts or data upon which the testimony of
the witness is based or that are material to the testimony of
the witness;
(2) the testimony is based upon sufficient facts or data;
(3) the testimony is the product of reliable principles and
methods; and
(4) the witness has applied the principles and methods
reliably to the facts.
(b) Review.--A trial court's application of subsection (a) shall be
subject to de novo review.
Calendar No. 587
110th CONGRESS
2d Session
S. 12
_______________________________________________________________________
A BILL
To promote home ownership, manufacturing, and economic growth.
_______________________________________________________________________
March 3, 2008
Read the second time and placed on the calendar