Heartland, Habitat, Harvest, and Horticulture Act of 2007

(This measure has not been amended since it was introduced. The summary has been expanded because action occurred on the measure.)

Heartland, Habitat, Harvest, and Horticulture Act of 2007 - Title I: Supplemental Agricultural Disaster Assistance from the Agricultural Disaster Relief Trust Fund - (Sec. 101) Amends the Trade Act of 1974 to establish a program of supplemental agricultural disaster assistance.

Establishes an Agriculture Disaster Relief Trust Fund to provide payments to farmers and ranchers who suffer losses in areas declared as disaster areas by the Department of Agriculture. Authorizes payments from such Trust Fund in FY2008-FY2012 for crop disaster assistance, livestock indemnity, tree assistance, and emergency assistance for livestock, honey bees, and farm raised fish.

Creates a pest and disease management and disaster prevention program to conduct early pest detection and surveillance activities in coordination with state departments of agriculture.

Title II: Conservation Provisions - Subtitle A: Land and Species Preservation Provisions - (Sec. 201) Amends the Internal Revenue Code to allow a tax credit equal to the rental value of any land enrolled in the conservation reserve program established by the Food Security Act of 1985. Imposes a $750,000 annual limitation on such credit for FY2008-FY2012 and terminates such credit after FY2012.

(Sec. 202) Excludes conservation reserve program payments made to recipients of social security retirement or disability payments from self employment income for purposes of determining social security employment tax liability.

(Sec. 203) Makes permanent the special rule for enhanced tax deductions of contributions of capital gain real property for conservation purposes.

(Sec. 204) Allows certain landowners whose property contains the habitat of an endangered or threatened species and who enter into a habitat protection agreement a tax credit for costs and property losses relating to habitat protection easements and restoration. Places limits on the amount of such credit for each of calendar years 2008 through 2012. Directs the Comptroller General of the United States to study and report to Congress on the effectiveness of such credit.

(Sec. 205) Allows a tax deduction for expenditures related to endangered species recovery plans approved under the Endangered Species Act of 1973.

(Sec. 206) Excludes from gross income certain payments under: (1) the Partners for Fish and Wildlife Program authorized by the Partners for Fish and Wildlife Act; (2) the Landowner Incentive Program, the State Wildlife Grants Program, and the Private Stewardship Grants Program authorized by the Fish and Wildlife Act of 1956; and (3) the Forest Health Protection Program and the program related to integrated pest management authorized by the Cooperative Forestry Assistance Act of 1976.

(Sec. 207) Allows a new tax credit for the value of easements granted to the Secretary of Agriculture for wetlands reserve conservation and working grassland protection.

Subtitle B: Timber Provisions - (Sec. 211) Provides for the issuance of tax-exempt forest conservation bonds to nonprofit organizations to acquire forests and forest lands for conservation purposes. Allows an exclusion from the gross income of such organizations of income from certain timber harvesting activities on forest and forest lands acquired with forest conservation bonds.

(Sec. 212) Allows a tax deduction (available to taxpayers whether or not they itemize deductions) for up to 60% of gains from certain sales or exchanges of timber.

(Sec. 213) Exempts deductible timber gains from the excise tax on the undistributed income of real estate investment trusts (REITs).

(Sec. 214) Provides for the treatment of timber gains as qualifying REIT income and of mineral royalty income as qualifying real estate income for timber REITs.

(Sec. 216) Increases to 25% the limitation on ownership of securities in a taxable REIT subsidiary by a timber REIT.

(Sec. 217) Provides for a special exemption from prohibited transaction rules for sales of timber property to a nonprofit organization exclusively for conservation purposes (safe harbor rule).

Title III: Energy Provisions - Subtitle A: Electricity Generation - (Sec. 301) Allows a tax credit for 30% of qualified small wind energy property expenditures to generate electricity for residential use. Limits the annual amount of such credit to $4,000.

(Sec. 302) Excludes from gross income payments for easements granted to an electric utility for locating transmission lines.

(Sec. 303) Provides that loans, loan guarantees, or grants under the Farm Security and Rural Investment Act of 2002 shall not reduce the amount of the credit for producing electricity from renewable resources.

Subtitle B: Alcohol Fuel - (Sec. 311) Allows accelerated depreciation for property used solely to produce cellulosic biomass alcohol. Defines "cellulosic biomass alcohol" as any alcohol produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.

(Sec. 312) Allows a new tax credit for the production of cellulosic biomass alcohol.

(Sec. 313) Extends through 2012 the small ethanol production tax credit.

(Sec. 314) Allows a new tax credit for the production of fossil free alcohol by a producer with a capacity of not more than 60 million gallons per year.

(Sec. 315) Modifies the income and excise tax credits for ethanol blenders to reduce the amount of such credits after the production of 7.5 billion gallons of ethanol (including cellulosic ethanol).

(Sec. 316) Excludes any denaturant added to alcohol from the volume measurements for purposes of the alcohol fuels tax credit.

(Sec. 317) Amends the Harmonized Tariff Schedule of the United States to extend the tariff duty on ethanol until January 1, 2011.

(Sec. 318) Amends the Tariff Act of 1930 to impose limitations and reductions on duty drawbacks of certain imported ethanol mixtures.

Subtitle C: Biodiesel and Renewable Diesel Fuel - (Sec. 321) Extends through 2010 the tax credit for biodiesel and renewable diesel used as fuel (through 2012 for the small agri-biodiesel producer tax credit). Places a 60 million gallon limit on production of renewable diesel through co-processing of biomass and petroleum. Revises the definition of "agri-biodiesel" to include camelina as a biodiesel source.

(Sec. 322) Includes qualified alcohol fuel and biodiesel fuel mixtures as taxable fuels for excise tax purposes. Imposes certain reporting requirements on producers of such fuel mixtures.

Subtitle D: Alternative Fuel - (Sec. 331) Extends through 2010 the alternative fuel and alternative fuel mixture excise tax credit and refund provisions. Includes compressed or liquefied biomass gas within the definition of alternative fuels for purposes of such credit.

Allows an alternative fuel excise tax credit for aviation fuel purposes.

Sets forth requirements for the alternative fuel excise tax credit relating to carbon capture.

Establishes a Carbon Sequestration Capability Panel. Directs the Panel to study carbon sequestration requirements and report to the Secretary of the Treasury and Congress on such study.

(Sec. 332) Extends through 2010 the tax credit for alternative fuel vehicle refueling property expenditures (other than for hydrogen-related property).

Title IV: Agricultural Provisions - (Sec. 401) Increases to $450,000 the maximum loan limit on small issue agricultural bonds available to first-time farmers and indexes such increased amount for inflation after 2008. Eliminates the fair market value test from the definition of substantial farmland for purposes of determining eligibility for small issue bonds.

(Sec. 402) Repeals the recognition of recapture income requirements for sales of single purpose agricultural or horticultural structures or any tree or vine bearing fruit or nuts eligible for a depreciation classification as 10-year property.

(Sec. 403) Allows tax-free exchanges of shares in certain mutual ditch, reservoir, or irrigation companies.

(Sec. 404) Allows holders of rural renaissance bonds a tax credit of 25% of the annual credit amount for such bonds as determined by the Secretary of the Treasury. Defines "rural renaissance bond" as any bond issued by a rural renaissance bond lender, a cooperative electric company, or a governmental entity that is used for capital expenditures for qualified projects in rural areas, including projects for water or waste treatment, distance learning or telemedicine programs, rural electric and telephone programs, and broadband access programs.

Sets forth rules for bond refinancing, maturity limitations, and allocations, including a requirement that 95% of the proceeds from the sale of a rural renaissance bond be spent on qualified projects within five years from the date of a bond issuance. Terminates the authority for issuing rural renaissance bonds after 2008.

(Sec. 405) Allows a retailer of agricultural products and chemicals or a manufacturer, formulator, distributor, or transporter of certain pesticides a business tax credit for 30 percent of costs for or related to the protection of such chemicals or pesticides, including employee security training and background checks, installation of security equipment, and computer network safeguards. Sets a $2 million annual limit on such credit and a per facility limitation of $100,000 (reduced by credits received for the five prior taxable years). Terminates such credit after 2012.

(Sec. 406) Allows a new business tax credit for 50% of certain safety and effectiveness testing expenses for new animal drugs intended for use in a minor species.

(Sec. 407) Allows accelerated depreciation (i.e., five-year recovery period) of certain machinery or equipment (other than any grain bin, cotton ginning assets, fence, or other land improvement) used in a farming business and placed in service before January 1, 2010.

(Sec. 408) Permits taxpayers to elect to expense (i.e., deduct all expenses in the current taxable year) certain broadband Internet access expenditures, including installation and connection costs for subscribers in rural or underserved areas.

Permits mutual or cooperative telephone companies to elect to reduce their unrelated business taxable income in any year by the amount of their broadband expenditures.

Directs the Secretary of the Treasury to: (1) designate census tracts identifying rural and underserved areas under this Act; and (2) prescribe regulations for carrying out the purposes of this Act. Prohibits federal or state agencies from adopting regulations and ratemaking procedures that would eliminate or reduce the broadband expense deduction provided by this Act.

(Sec. 409) Allows a new business tax credit for the purchase of qualified energy efficient motors that meet or exceed certain energy efficiency standards.

Title V: Revenue Raising Provisions - Subtitle A: Miscellaneous Revenue Provisions - (Sec. 501) Limits the deductibility of farming losses in any taxable year to $200,000 for taxpayers receiving agriculture program payments or loans from the Commodity Credit Corporation (CCC).

(Sec. 502) Amends the Internal Revenue Code and title II (Old Age, Survivors and Disability Insurance) of the Social Security Act to revise the optional method of computing the net earnings of self-employed individuals for purposes of determining social security benefit eligibility. Replaces the numerical formula for determining benefit eligibility with an indexed calculation based on a lower limit (the amount required under the Social Security Act for a quarter of coverage) and an upper limit (150% of the lower limit).

(Sec. 503) Requires the CCC, through the Secretary of Agriculture, to make an informational return setting forth any taxpayer market gain in relation to the repayment of a CCC loan.

(Sec. 504) Denies nonrecognition of gain treatment for exchanges of unimproved agricultural real property for which the owner is receiving any agriculture program payments or CCC loans, unless such property is permanently retired from farm program payments.

(Sec. 505) Amends the American Jobs Creation Act of 2004 to change the effective date applicable to leases of tax-exempt use property to foreign entities.

(Sec. 506) Amends the Tax Increase Prevention and Reconciliation Act of 2005 to increase by 7% the estimated tax payments of certain large corporations in the third quarter of 2012.

(Sec. 507) Denies nonrecognition of gain treatment for exchanges of collectibles.

(Sec. 508) Revises the rule denying a tax deduction for fines and penalties paid to a government for the violation of any law to provide that no deduction shall be allowed for any fine or penalty paid (whether by suit, agreement, or otherwise) to, or at the direction of, a government or nongovernmental regulatory entity for a violation of law or for the investigation or inquiry by such government or entity into a potential violation of any law.

Allows exceptions to the general rule of nondeductibility for: (1) certain restitution payments or payments required to come into compliance with law; (2) court-ordered payments not involving a government or nongovernmental regulatory entity; and (3) amounts paid or incurred as taxes due.

Requires governmental agencies involved in a settlement with a taxpayer to report to the Secretary of the Treasury and the taxpayer information about such settlement, including the amount of the settlement, the amount paid as restitution or remediation of property, and the amount paid to come into compliance with law.

(Sec. 509) Increases penalties for failing to file correct information returns, failing to provide correct payee information, and failing to comply with other information reporting requirements.

Subtitle B: Economic Substance Doctrine - (Sec. 511) Sets forth rules for the application of the economic substance doctrine to transactions affecting tax liability. Deems a transaction to have economic substance if it changes in a meaningful way a taxpayer's economic position and there is a substantial non-tax purpose for a taxpayer entering into such transaction.

(Sec. 512) Provides for an penalty of 30% of any understatement of tax attributable to transactions lacking economic substance. Reduces such penalty to 20% if facts relevant to such transactions are adequately disclosed in a tax return.

(Sec. 513) Denies a tax deduction for interest on underpayments of tax attributable to transactions lacking economic substance.