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H.R.2206
U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Enrolled as Agreed to or Passed by Both House and Senate)

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SEC. 8102. MINIMUM WAGE.

  (a) IN GENERAL- Section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:

    `(1) except as otherwise provided in this section, not less than--

      `(A) $5.85 an hour, beginning on the 60th day after the date of enactment of the Fair Minimum Wage Act of 2007;

      `(B) $6.55 an hour, beginning 12 months after that 60th day; and

      `(C) $7.25 an hour, beginning 24 months after that 60th day;'.

  (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect 60 days after the date of enactment of this Act.

SEC. 8103. APPLICABILITY OF MINIMUM WAGE TO AMERICAN SAMOA AND THE COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS.

  (a) IN GENERAL- Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) shall apply to American Samoa and the Commonwealth of the Northern Mariana Islands.

  (b) TRANSITION- Notwithstanding subsection (a)--

    (1) the minimum wage applicable to the Commonwealth of the Northern Mariana Islands under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--

      (A) $3.55 an hour, beginning on the 60th day after the date of enactment of this Act; and

      (B) increased by $0.50 an hour (or such lesser amount as may be necessary to equal the minimum wage under section 6(a)(1) of such Act), beginning 1 year after the date of enactment of this Act and each year thereafter until the minimum wage applicable to the Commonwealth of the Northern Mariana Islands under this paragraph is equal to the minimum wage set forth in such section; and

    (2) the minimum wage applicable to American Samoa under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--

      (A) the applicable wage rate in effect for each industry and classification under section 697 of title 29, Code of Federal Regulations, on the date of enactment of this Act;

      (B) increased by $0.50 an hour, beginning on the 60th day after the date of enactment of this Act; and

      (C) increased by $0.50 an hour (or such lesser amount as may be necessary to equal the minimum wage under section 6(a)(1) of such Act), beginning 1 year after the date of enactment of this Act and each year thereafter until the minimum wage applicable to American Samoa under this paragraph is equal to the minimum wage set forth in such section.

  (c) CONFORMING AMENDMENTS-

    (1) IN GENERAL- The Fair Labor Standards Act of 1938 is amended--

      (A) by striking sections 5 and 8; and

      (B) in section 6(a), by striking paragraph (3) and redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.

    (2) EFFECTIVE DATE- The amendments made by this subsection shall take effect 60 days after the date of enactment of this Act.

SEC. 8104. STUDY ON PROJECTED IMPACT.

  (a) STUDY- Beginning on the date that is 60 days after the date of enactment of this Act, the Secretary of Labor shall, through the Bureau of Labor Statistics, conduct a study to--

    (1) assess the impact of the wage increases required by this Act through such date; and

    (2) project the impact of any further wage increase,

  on living standards and rates of employment in American Samoa and the Commonwealth of the Northern Mariana Islands.

  (b) REPORT- Not later than the date that is 8 months after the date of enactment of this Act, the Secretary of Labor shall transmit to Congress a report on the findings of the study required by subsection (a).

Subtitle B--Small Business Tax Incentives

SEC. 8201. SHORT TITLE; AMENDMENT OF CODE; TABLE OF CONTENTS.

  (a) SHORT TITLE- This subtitle may be cited as the `Small Business and Work Opportunity Tax Act of 2007'.

  (b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided, whenever in this subtitle 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.

  (c) TABLE OF CONTENTS- The table of contents of this subtitle is as follows:

    Sec. 8201. Short title; amendment of Code; table of contents.

Part 1--Small Business Tax Relief Provisions

SUBPART A--GENERAL PROVISIONS

    Sec. 8211. Extension and modification of work opportunity tax credit.

    Sec. 8212. Extension and increase of expensing for small business.

    Sec. 8213. Determination of credit for certain taxes paid with respect to employee cash tips.

    Sec. 8214. Waiver of individual and corporate alternative minimum tax limits on work opportunity credit and credit for taxes paid with respect to employee cash tips.

    Sec. 8215. Family business tax simplification.

SUBPART B--GULF OPPORTUNITY ZONE TAX INCENTIVES

    Sec. 8221. Extension of increased expensing for qualified section 179 Gulf Opportunity Zone property.

    Sec. 8222. Extension and expansion of low-income housing credit rules for buildings in the GO Zones.

    Sec. 8223. Special tax-exempt bond financing rule for repairs and reconstructions of residences in the GO Zones.

    Sec. 8224. GAO study of practices employed by State and local governments in allocating and utilizing tax incentives provided pursuant to the Gulf Opportunity Zone Act of 2005.

SUBPART C--SUBCHAPTER S PROVISIONS

    Sec. 8231. Capital gain of S corporation not treated as passive investment income.

    Sec. 8232. Treatment of bank director shares.

    Sec. 8233. Special rule for bank required to change from the reserve method of accounting on becoming S corporation.

    Sec. 8234. Treatment of the sale of interest in a qualified subchapter S subsidiary.

    Sec. 8235. Elimination of all earnings and profits attributable to pre-1983 years for certain corporations.

    Sec. 8236. Deductibility of interest expense on indebtedness incurred by an electing small business trust to acquire S corporation stock.

Part 2--Revenue Provisions

    Sec. 8241. Increase in age of children whose unearned income is taxed as if parent's income.

    Sec. 8242. Suspension of certain penalties and interest.

    Sec. 8243. Modification of collection due process procedures for employment tax liabilities.

    Sec. 8244. Permanent extension of IRS user fees.

    Sec. 8245. Increase in penalty for bad checks and money orders.

    Sec. 8246. Understatement of taxpayer liability by return preparers.

    Sec. 8247. Penalty for filing erroneous refund claims.

    Sec. 8248. Time for payment of corporate estimated taxes.

PART 1--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 8211. EXTENSION AND MODIFICATION OF WORK OPPORTUNITY TAX CREDIT.

  (a) EXTENSION- Section 51(c)(4)(B) (relating to termination) is amended by striking `December 31, 2007' and inserting `August 31, 2011'.

  (b) INCREASE IN MAXIMUM AGE FOR DESIGNATED COMMUNITY RESIDENTS-

    (1) IN GENERAL- Paragraph (5) of section 51(d) is amended to read as follows:

    `(5) DESIGNATED COMMUNITY RESIDENTS-

      `(A) IN GENERAL- The term `designated community resident' means any individual who is certified by the designated local agency--

        `(i) as having attained age 18 but not age 40 on the hiring date, and

        `(ii) as having his principal place of abode within an empowerment zone, enterprise community, renewal community, or rural renewal county.

      `(B) INDIVIDUAL MUST CONTINUE TO RESIDE IN ZONE, COMMUNITY, OR COUNTY- In the case of a designated community resident, the term `qualified wages' shall not include wages paid or incurred for services performed while the individual's principal place of abode is outside an empowerment zone, enterprise community, renewal community, or rural renewal county.

      `(C) RURAL RENEWAL COUNTY- For purposes of this paragraph, the term `rural renewal county' means any county which--

        `(i) is outside a metropolitan statistical area (defined as such by the Office of Management and Budget), and

        `(ii) during the 5-year periods 1990 through 1994 and 1995 through 1999 had a net population loss.'.

    (2) CONFORMING AMENDMENT- Subparagraph (D) of section 51(d)(1) is amended to read as follows:

      `(D) a designated community resident,'.

  (c) CLARIFICATION OF TREATMENT OF INDIVIDUALS UNDER INDIVIDUAL WORK PLANS- Subparagraph (B) of section 51(d)(6) (relating to vocational rehabilitation referral) is amended by striking `or' at the end of clause (i), by striking the period at the end of clause (ii) and inserting `, or', and by adding at the end the following new clause:

        `(iii) an individual work plan developed and implemented by an employment network pursuant to subsection (g) of section 1148 of the Social Security Act with respect to which the requirements of such subsection are met.'.

  (d) TREATMENT OF DISABLED VETERANS UNDER THE WORK OPPORTUNITY TAX CREDIT-

    (1) DISABLED VETERANS TREATED AS MEMBERS OF TARGETED GROUP-

      (A) IN GENERAL- Subparagraph (A) of section 51(d)(3) (relating to qualified veteran) is amended by striking `agency as being a member of a family' and all that follows and inserting `agency as--

        `(i) being a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for at least a 3-month period ending during the 12-month period ending on the hiring date, or

        `(ii) entitled to compensation for a service-connected disability, and--

          `(I) having a hiring date which is not more that 1 year after having been discharged or released from active duty in the Armed Forces of the United States, or

          `(II) having aggregate periods of unemployment during the 1-year period ending on the hiring date which equal or exceed 6 months.'.

      (B) DEFINITIONS- Paragraph (3) of section 51(d) is amended by adding at the end the following new subparagraph:

      `(C) OTHER DEFINITIONS- For purposes of subparagraph (A), the terms `compensation' and `service-connected' have the meanings given such terms under section 101 of title 38, United States Code.'.

    (2) INCREASE IN AMOUNT OF WAGES TAKEN INTO ACCOUNT FOR DISABLED VETERANS- Paragraph (3) of section 51(b) is amended--

      (A) by inserting `($12,000 per year in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii))' before the period at the end, and

      (B) by striking `ONLY FIRST $6,000 OF' in the heading and inserting `LIMITATION ON'.

  (e) EFFECTIVE DATE- The amendments made by this section shall apply to individuals who begin work for the employer after the date of the enactment of this Act.

SEC. 8212. EXTENSION AND INCREASE OF EXPENSING FOR SMALL BUSINESS.

  (a) EXTENSION- Subsections (b)(1), (b)(2), (b)(5), (c)(2), and (d)(1)(A)(ii) of section 179 (relating to election to expense certain depreciable business assets) are each amended by striking `2010' and inserting `2011'.

  (b) INCREASE IN LIMITATIONS- Subsection (b) of section 179 is amended--

    (1) by striking `$100,000 in the case of taxable years beginning after 2002' in paragraph (1) and inserting `$125,000 in the case of taxable years beginning after 2006', and

    (2) by striking `$400,000 in the case of taxable years beginning after 2002' in paragraph (2) and inserting `$500,000 in the case of taxable years beginning after 2006'.

  (c) INFLATION ADJUSTMENT- Subparagraph (A) of section 179(b)(5) is amended--

    (1) by striking `2003' and inserting `2007',

    (2) by striking `$100,000 and $400,000' and inserting `$125,000 and $500,000', and

    (3) by striking `2002' in clause (ii) and inserting `2006'.

  (d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

SEC. 8213. DETERMINATION OF CREDIT FOR CERTAIN TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.

  (a) IN GENERAL- Subparagraph (B) of section 45B(b)(1) is amended by inserting `as in effect on January 1, 2007, and' before `determined without regard to'.

  (b) EFFECTIVE DATE- The amendment made by this section shall apply to tips received for services performed after December 31, 2006.

SEC. 8214. WAIVER OF INDIVIDUAL AND CORPORATE ALTERNATIVE MINIMUM TAX LIMITS ON WORK OPPORTUNITY CREDIT AND CREDIT FOR TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.

  (a) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX- Subparagraph (B) of section 38(c)(4) is amended by striking `and' at the end of clause (i), by inserting a comma at the end of clause (ii), and by adding at the end the following new clauses:

        `(iii) the credit determined under section 45B, and

        `(iv) the credit determined under section 51.'.

  (b) EFFECTIVE DATE- The amendments made by this section shall apply to credits determined under sections 45B and 51 of the Internal Revenue Code of 1986 in taxable years beginning after December 31, 2006, and to carrybacks of such credits.

SEC. 8215. FAMILY BUSINESS TAX SIMPLIFICATION.

  (a) IN GENERAL- Section 761 (defining terms for purposes of partnerships) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

  `(f) QUALIFIED JOINT VENTURE-

    `(1) IN GENERAL- In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title--

      `(A) such joint venture shall not be treated as a partnership,

      `(B) all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and

      `(C) each spouse shall take into account such spouse's respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor.

    `(2) QUALIFIED JOINT VENTURE- For purposes of paragraph (1), the term `qualified joint venture' means any joint venture involving the conduct of a trade or business if--

      `(A) the only members of such joint venture are a husband and wife,

      `(B) both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and

      `(C) both spouses elect the application of this subsection.'.

  (b) NET EARNINGS FROM SELF-EMPLOYMENT-

    (1) Subsection (a) of section 1402 (defining net earnings from self-employment) is amended by striking `, and' at the end of paragraph (15) and inserting a semicolon, by striking the period at the end of paragraph (16) and inserting `; and', and by inserting after paragraph (16) the following new paragraph:

    `(17) notwithstanding the preceding provisions of this subsection, each spouse's share of income or loss from a qualified joint venture shall be taken into account as provided in section 761(f) in determining net earnings from self-employment of such spouse.'.

    (2) Subsection (a) of section 211 of the Social Security Act (defining net earnings from self-employment) is amended by striking `and' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `; and', and by inserting after paragraph (15) the following new paragraph:

    `(16) Notwithstanding the preceding provisions of this subsection, each spouse's share of income or loss from a qualified joint venture shall be taken into account as provided in section 761(f) of the Internal Revenue Code of 1986 in determining net earnings from self-employment of such spouse.'.

  (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

Subpart B--Gulf Opportunity Zone Tax Incentives

SEC. 8221. EXTENSION OF INCREASED EXPENSING FOR QUALIFIED SECTION 179 GULF OPPORTUNITY ZONE PROPERTY.

  Paragraph (2) of section 1400N(e) (relating to qualified section 179 Gulf Opportunity Zone property) is amended--

    (1) by striking `this subsection, the term' and inserting:

      `this subsection--

      `(A) IN GENERAL- The term', and

    (2) by adding at the end the following new subparagraph:

      `(B) EXTENSION FOR CERTAIN PROPERTY- In the case of property substantially all of the use of which is in one or more specified portions of the GO Zone (as defined by subsection (d)(6)), such term shall include section 179 property (as so defined) which is described in subsection (d)(2), determined--

        `(i) without regard to subsection (d)(6), and

        `(ii) by substituting `2008' for `2007' in subparagraph (A)(v) thereof.'.

SEC. 8222. EXTENSION AND EXPANSION OF LOW-INCOME HOUSING CREDIT RULES FOR BUILDINGS IN THE GO ZONES.

  (a) TIME FOR MAKING LOW-INCOME HOUSING CREDIT ALLOCATIONS- Subsection (c) of section 1400N (relating to low-income housing credit) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

    `(5) TIME FOR MAKING LOW-INCOME HOUSING CREDIT ALLOCATIONS- Section 42(h)(1)(B) shall not apply to an allocation of housing credit dollar amount to a building located in the Gulf Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone, if such allocation is made in 2006, 2007, or 2008, and such building is placed in service before January 1, 2011.'.

  (b) EXTENSION OF PERIOD FOR TREATING GO ZONES AS DIFFICULT DEVELOPMENT AREAS-

    (1) IN GENERAL- Subparagraph (A) of section 1400N(c)(3) is amended by striking `2006, 2007, or 2008' and inserting `the period beginning on January 1, 2006, and ending on December 31, 2010'.

    (2) CONFORMING AMENDMENT- Clause (ii) of section 1400N(c)(3)(B) is amended by striking `such period' and inserting `the period described in subparagraph (A)'.

  (c) COMMUNITY DEVELOPMENT BLOCK GRANTS NOT TAKEN INTO ACCOUNT IN DETERMINING IF BUILDINGS ARE FEDERALLY SUBSIDIZED- Subsection (c) of section 1400N (relating to low-income housing credit), as amended by this Act, is amended by redesignating paragraph (6) as paragraph (7) and by inserting after paragraph (5) the following new paragraph:

    `(6) COMMUNITY DEVELOPMENT BLOCK GRANTS NOT TAKEN INTO ACCOUNT IN DETERMINING IF BUILDINGS ARE FEDERALLY SUBSIDIZED- For purpose of applying section 42(i)(2)(D) to any building which is placed in service in the Gulf Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone during the period beginning on January 1, 2006, and ending on December 31, 2010, a loan shall not be treated as a below market Federal loan solely by reason of any assistance provided under section 106, 107, or 108 of the Housing and Community Development Act of 1974 by reason of section 122 of such Act or any provision of the Department of Defense Appropriations Act, 2006, or the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006.'.

SEC. 
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