Senate Approves Mortgage Debt Relief, Farm Legislation

On December 14, 2007, the Senate approved by unanimous consent an amended version of the Mortgage Forgiveness Debt Relief Bill of 2007 (HR 3648). The legislation includes a three-year mortgage debt forgiveness exclusion of up to $2 million in debt on a principal residence, retroactive to January 1, 2007. The legislation also extends the mortgage insurance premium deduction for three years, includes an exclusion for benefits to volunteer fire-fighters and emergency medical responders, extends the joint return sale of principal residence exclusion to certain post-marriage sales by surviving spouses, clarifies student housing eligible for the low-income housing credit, and provides alternative tests for qualifying as a cooperative housing corporation. To pay for these provisions, the legislation increases and expands the penalties on failure to file partnership and S Corporation returns and modifies the amounts due on particular dates with respect to corporate estimated taxes.

On December 14, 2007, the Senate also approved the Farm, Nutrition, and Bioenergy Bill of 2007 (HR 2419) by a vote of 79 to 14. The legislation would convert certain conservation payment programs into tax credit programs and include a tax credit designed to protect endangered species. Included in its energy provisions are a residential wind credit and several provisions providing new credits or expanding existing tax credits focused on alternative energy production. The principal revenue raisers included in the legislation are focused on clarification of the economic substance doctrine and disallowance of future losses on Sale-In/Lease-Out (SILO) leases involving foreign tax exempt use property. Difference between the House and Senate versions of the farm bill will have to be worked out in Conference Committee.