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Thursday, October 2, 2008, 3:00 AM H.R. 1424: Bailout Bill, Part 16
3 (a)(4)(A)(i) and (c)(3)(B),
4 (D) by disregarding clauses (ii) and (iii) of
5 subsection (a)(4)(A) thereof,
6 (E) by substituting ``qualified storm dam-
7 age distribution'' for ``qualified Katrina dis-
8 tribution'' each place it appears,
9 (F) by substituting ``after the date which
10 is 6 months before the applicable disaster date
11 and before the date which is the day after the
12 applicable disaster date'' for ``after February
13 28, 2005, and before August 29, 2005'' in sub-
14 section (b)(2)(B)(ii),
15 (G) by substituting ``the Midwestern dis-
16 aster area, but not so purchased or constructed
17 on account of severe storms, tornados, or flood-
18 ing giving rise to the designation of the area as
19 a disaster area'' for ``the Hurricane Katrina
20 disaster area, but not so purchased or con-
21 structed on account of Hurricane Katrina'' in
22 subsection (b)(2)(B)(iii),
23 (H) by substituting ``beginning on the ap-
24 plicable disaster date and ending on the date
25 which is 5 months after the date of the enact-
407
1 ment of the Heartland Disaster Tax Relief Act
2 of 2008'' for ``beginning on August 25, 2005,
3 and ending on February 28, 2006'' in sub-
4 section (b)(3)(A),
5 (I) by substituting ``qualified storm dam-
6 age individual'' for ``qualified Hurricane
7 Katrina individual'' each place it appears,
8 (J) by substituting ``December 31, 2009''
9 for ``December 31, 2006'' in subsection
10 (c)(2)(A),
11 (K) by disregarding subparagraphs (C)
12 and (D) of subsection (c)(3) thereof,
13 (L) by substituting ``beginning on the date
14 of the enactment of the Heartland Disaster Tax
15 Relief Act of 2008 and ending on December 31,
16 2009'' for ``beginning on September 24, 2005,
17 and ending on December 31, 2006'' in sub-
18 section (c)(4)(A)(i),
19 (M) by substituting ``the applicable dis-
20 aster date'' for ``August 25, 2005'' in sub-
21 section (c)(4)(A)(ii), and
22 (N) by substituting ``January 1, 2010'' for
23 ``January 1, 2007'' in subsection (d)(2)(A)(ii).
408
1 (11) EMPLOYEE RETENTION CREDIT FOR EM-
2 PLOYERS AFFECTED BY SEVERE STORMS, TOR-
3 NADOS, AND FLOODING.--Section 1400R(a)--
4 (A) by substituting ``the applicable disaster
5 date'' for ``August 28, 2005'' each place it ap-
6 pears,
7 (B) by substituting ``January 1, 2009'' for
8 ``January 1, 2006'' both places it appears, and
9 (C) only with respect to eligible employers
10 who employed an average of not more than 200
11 employees on business days during the taxable
12 year before the applicable disaster date.
13 (12) TEMPORARY SUSPENSION OF LIMITATIONS
14 ON CHARITABLE CONTRIBUTIONS.--Section
15 1400S(a), by substituting the following paragraph
16 for paragraph (4) thereof:
17 ``(4) QUALIFIED CONTRIBUTIONS.--
18 ``(A) IN GENERAL.--For purposes of this
19 subsection, the term `qualified contribution'
20 means any charitable contribution (as defined
21 in section 170(c)) if--
22 ``(i) such contribution--
23 ``(I) is paid during the period be-
24 ginning on the earliest applicable dis-
25 aster date for all States and ending
409
1 on December 31, 2008, in cash to an
2 organization described in section
3 170(b)(1)(A), and
4 ``(II) is made for relief efforts in
5 1 or more Midwestern disaster areas,
6 ``(ii) the taxpayer obtains from such
7 organization contemporaneous written ac-
8 knowledgment (within the meaning of sec-
9 tion 170(f)(8)) that such contribution was
10 used (or is to be used) for relief efforts in
11 1 or more Midwestern disaster areas, and
12 ``(iii) the taxpayer has elected the ap-
13 plication of this subsection with respect to
14 such contribution.
15 ``(B) EXCEPTION.--Such term shall not in-
16 clude a contribution by a donor if the contribu-
17 tion is--
18 ``(i) to an organization described in
19 section 509(a)(3), or
20 ``(ii) for establishment of a new, or
21 maintenance of an existing, donor advised
22 fund (as defined in section 4966(d)(2)).
23 ``(C) APPLICATION OF ELECTION TO PART-
24 NERSHIPS AND S CORPORATIONS.--In the case
25 of a partnership or S corporation, the election
410
1 under subparagraph (A)(iii) shall be made sepa-
2 rately by each partner or shareholder.''.
3 (13) SUSPENSION OF CERTAIN LIMITATIONS ON
4 PERSONAL CASUALTY LOSSES.--Section
5 1400S(b)(1), by substituting ``the applicable disaster
6 date'' for ``August 25, 2005''.
7 (14) SPECIAL RULE FOR DETERMINING
8 EARNED INCOME.--Section 1400S(d)--
9 (A) by treating an individual as a qualified
10 individual if such individual's principal place of
11 abode on the applicable disaster date was lo-
12 cated in a Midwestern disaster area,
13 (B) by treating the applicable disaster date
14 with respect to any such individual as the appli-
15 cable date for purposes of such subsection, and
16 (C) by treating an area as described in
17 paragraph (2)(B)(ii) thereof if the area is a
18 Midwestern disaster area only by reason of sub-
19 section (b)(2) of this section (relating to areas
20 eligible only for public assistance).
21 (15) ADJUSTMENTS REGARDING TAXPAYER AND
22 DEPENDENCY STATUS.--Section 1400S(e), by sub-
23 stituting ``2008 or 2009'' for ``2005 or 2006''.
24 (e) MODIFICATIONS TO KATRINA EMERGENCY TAX
25 RELIEF ACT OF 2005.--The following provisions of the
411
1 Katrina Emergency Tax Relief Act of 2005 shall be ap-
2 plied with the following modifications:
3 (1) ADDITIONAL EXEMPTION FOR HOUSING DIS-
4 PLACED INDIVIDUAL.--Section 302--
5 (A) by substituting ``2008 or 2009'' for
6 ``2005 or 2006'' in subsection (a) thereof,
7 (B) by substituting ``Midwestern displaced
8 individual'' for ``Hurricane Katrina displaced
9 individual'' each place it appears, and
10 (C) by treating an area as a core disaster
11 area for purposes of applying subsection (c)
12 thereof if the area is a Midwestern disaster area
13 without regard to subsection (b)(2) of this sec-
14 tion (relating to areas eligible only for public
15 assistance).
16 (2) INCREASE IN STANDARD MILEAGE RATE.--
17 Section 303, by substituting ``beginning on the ap-
18 plicable disaster date and ending on December 31,
19 2008'' for ``beginning on August 25, 2005, and end-
20 ing on December 31, 2006''.
21 (3) MILEAGE REIMBURSEMENTS FOR CHARI-
22 TABLE VOLUNTEERS.--Section 304--
23 (A) by substituting ``beginning on the ap-
24 plicable disaster date and ending on December
25 31, 2008'' for ``beginning on August 25, 2005,
412
1 and ending on December 31, 2006'' in sub-
2 section (a), and
3 (B) by substituting ``the applicable disaster
4 date'' for ``August 25, 2005'' in subsection (a).
5 (4) EXCLUSION OF CERTAIN CANCELLATION OF
6 INDEBTEDNESS INCOME.--Section 401--
7 (A) by treating an individual whose prin-
8 cipal place of abode on the applicable disaster
9 date was in a Midwestern disaster area (deter-
10 mined without regard to subsection (b)(2) of
11 this section) as an individual described in sub-
12 section (b)(1) thereof, and by treating an indi-
13 vidual whose principal place of abode on the ap-
14 plicable disaster date was in a Midwestern dis-
15 aster area solely by reason of subsection (b)(2)
16 of this section as an individual described in sub-
17 section (b)(2) thereof,
18 (B) by substituting ``the applicable disaster
19 date'' for ``August 28, 2005'' both places it ap-
20 pears, and
21 (C) by substituting ``January 1, 2010'' for
22 ``January 1, 2007'' in subsection (e).
23 (5) EXTENSION OF REPLACEMENT PERIOD FOR
24 NONRECOGNITION OF GAIN.--Section 405, by sub-
413
1 stituting ``on or after the applicable disaster date''
2 for ``on or after August 25, 2005''.
3 SEC. 703. REPORTING REQUIREMENTS RELATING TO DIS-
4 ASTER RELIEF CONTRIBUTIONS.
5 (a) IN GENERAL.--Section 6033(b) (relating to re-
6 turns of certain organizations described in section
7 501(c)(3)) is amended by striking ``and'' at the end of
8 paragraph (13), by redesignating paragraph (14) as para-
9 graph (15), and by adding after paragraph (13) the fol-
10 lowing new paragraph:
11 ``(14) such information as the Secretary may
12 require with respect to disaster relief activities, in-
13 cluding the amount and use of qualified contribu-
14 tions to which section 1400S(a) applies, and''.
15 (b) EFFECTIVE DATE.--The amendments made by
16 this section shall apply to returns the due date for which
17 (determined without regard to any extension) occurs after
18 December 31, 2008.
19 SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND
20 LOW-INCOME HOUSING TAX RELIEF FOR
21 AREAS DAMAGED BY HURRICANE IKE.
22 (a) TAX-EXEMPT BOND FINANCING.--Section
23 1400N(a) of the Internal Revenue Code of 1986 shall
24 apply to any Hurricane Ike disaster area in addition to
414
1 any other area referenced in such section, but with the
2 following modifications:
3 (1) By substituting ``qualified Hurricane Ike
4 disaster area bond'' for ``qualified Gulf Opportunity
5 Zone Bond'' each place it appears, except that in de-
6 termining whether a bond is a qualified Hurricane
7 Ike disaster area bond--
8 (A) paragraph (2)(A)(i) shall be applied by
9 only treating costs as qualified project costs
10 if--
11 (i) in the case of a project involving a
12 private business use (as defined in section
13 141(b)(6)), either the person using the
14 property suffered a loss in a trade or busi-
15 ness attributable to Hurricane Ike or is a
16 person designated for purposes of this sec-
17 tion by the Governor of the State in which
18 the project is located as a person carrying
19 on a trade or business replacing a trade or
20 business with respect to which another per-
21 son suffered such a loss, and
22 (ii) in the case of a project relating to
23 public utility property, the project involves
24 repair or reconstruction of public utility
25 property damaged by Hurricane Ike, and
415
1 (B) paragraph (2)(A)(ii) shall be applied
2 by treating an issue as a qualified mortgage
3 issue only if 95 percent or more of the net pro-
4 ceeds (as defined in section 150(a)(3)) of the
5 issue are to be used to provide financing for
6 mortgagors who suffered damages to their prin-
7 cipal residences attributable to Hurricane Ike.
8 (2) By substituting ``any State in which any
9 Hurricane Ike disaster area is located'' for ``the
10 State of Alabama, Louisiana, or Mississippi'' in
11 paragraph (2)(B).
12 (3) By substituting ``designated for purposes of
13 this section (on the basis of providing assistance to
14 areas in the order in which such assistance is most
15 needed)'' for ``designated for purposes of this sec-
16 tion'' in paragraph (2)(C).
17 (4) By substituting ``January 1, 2013'' for
18 ``January 1, 2011'' in paragraph (2)(D).
19 (5) By substituting the following for subpara-
20 graph (A) of paragraph (3):
21 ``(A) AGGREGATE AMOUNT DESIGNATED.--
22 The maximum aggregate face amount of bonds
23 which may be designated under this subsection
24 with respect to any State shall not exceed the
416
1 product of $2,000 multiplied by the portion of
2 the State population which is in--
3 ``(i) in the case of Texas, the counties
4 of Brazoria, Chambers, Galveston, Jeffer-
5 son, and Orange, and
6 ``(ii) in the case of Louisiana, the par-
7 ishes of Calcasieu and Cameron,
8 (as determined on the basis of the most recent
9 census estimate of resident population released
10 by the Bureau of Census before September 13,
11 2008).''.
12 (6) By substituting ``qualified Hurricane Ike
13 disaster area repair or construction'' for ``qualified
14 GO Zone repair or construction'' each place it ap-
15 pears.
16 (7) By substituting ``after the date of the en-
17 actment of the Heartland Disaster Tax Relief Act of
18 2008 and before January 1, 2013'' for ``after the
19 date of the enactment of this paragraph and before
20 January 1, 2011'' in paragraph (7)(C).
21 (8) By disregarding paragraph (8) thereof.
22 (9) By substituting ``any Hurricane Ike disaster
23 area'' for ``the Gulf Opportunity Zone'' each place it
24 appears.
417
1 (b) LOW-INCOME HOUSING CREDIT.--Section
2 1400N(c) of the Internal Revenue Code of 1986 shall
3 apply to any Hurricane Ike disaster area in addition to
4 any other area referenced in such section, but with the
5 following modifications:
6 (1) Only with respect to calendar years 2008,
7 2009, and 2010.
8 (2) By substituting ``any Hurricane Ike disaster
9 area'' for ``the Gulf Opportunity Zone'' each place it
10 appears.
11 (3) By substituting ``Hurricane Ike Recovery
12 Assistance housing amount'' for ``Gulf Opportunity
13 housing amount'' each place it appears.
14 (4) By substituting the following for subpara-
15 graph (B) of paragraph (1):
16 ``(B) HURRICANE IKE HOUSING
17 AMOUNT.--For purposes of subparagraph (A),
18 the term `Hurricane Ike housing amount'
19 means, for any calendar year, the amount equal
20 to the product of $16.00 multiplied by the por-
21 tion of the State population which is in--
22 ``(i) in the case of Texas, the counties
23 of Brazoria, Chambers, Galveston, Jeffer-
24 son, and Orange, and
418
1 ``(ii) in the case of Louisiana, the par-
2 ishes of Calcasieu and Cameron,
3 (as determined on the basis of the most recent
4 census estimate of resident population released
5 by the Bureau of Census before September 13,
6 2008).''.
7 (5) Determined without regard to paragraphs
8 (2), (3), (4), (5), and (6) thereof.
9 (c) HURRICANE IKE DISASTER AREA.--For purposes
10 of this section and for applying the substitutions described
11 in subsections (a) and (b), the term ``Hurricane Ike dis-
12 aster area'' means an area in the State of Texas or Lou-
13 isiana--
14 (1) with respect to which a major disaster has
15 been declared by the President on September 13,
16 2008, under section 401 of the Robert T. Stafford
17 Disaster Relief and Emergency Assistance Act by
18 reason of Hurricane Ike, and
19 (2) determined by the President to warrant in-
20 dividual or individual and public assistance from the
21 Federal Government under such Act with respect to
22 damages attributable to Hurricane Ike.
419
1 Subtitle B--National Disaster
2 Relief
3 SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DE-
4 CLARED DISASTERS.
5 (a) WAIVER OF ADJUSTED GROSS INCOME LIMITA-
6 TION.--
7 (1) IN GENERAL.--Subsection (h) of section
8 165 is amended by redesignating paragraphs (3) and
9 (4) as paragraphs (4) and (5), respectively, and by
10 inserting after paragraph (2) the following new
11 paragraph:
12 ``(3) SPECIAL RULE FOR LOSSES IN FEDERALLY
13 DECLARED DISASTERS.--
14 ``(A) IN GENERAL.--If an individual has a
15 net disaster loss for any taxable year, the
16 amount determined under paragraph (2)(A)(ii)
17 shall be the sum of--
18 ``(i) such net disaster loss, and
19 ``(ii) so much of the excess referred to
20 in the matter preceding clause (i) of para-
21 graph (2)(A) (reduced by the amount in
22 clause (i) of this subparagraph) as exceeds
23 10 percent of the adjusted gross income of
24 the individual.
420
1 ``(B) NET DISASTER LOSS.--For purposes
2 of subparagraph (A), the term `net disaster
3 loss' means the excess of--
4 ``(i) the personal casualty losses--
5 ``(I) attributable to a federally
6 declared disaster occurring before
7 January 1, 2010, and
8 ``(II) occurring in a disaster
9 area, over
10 ``(ii) personal casualty gains.
11 ``(C) FEDERALLY DECLARED DISASTER.--
12 For purposes of this paragraph--
13 ``(i) FEDERALLY DECLARED DIS-
14 ASTER.--The term `federally declared dis-
15 aster' means any disaster subsequently de-
16 termined by the President of the United
17 States to warrant assistance by the Fed-
18 eral Government under the Robert T. Staf-
19 ford Disaster Relief and Emergency Assist-
20 ance Act.
21 ``(ii) DISASTER AREA.--The term `dis-
22 aster area' means the area so determined
23 to warrant such assistance.''.
24 (2) CONFORMING AMENDMENTS.--
421
1 (A) Section 165(h)(4)(B) (as so redesig-
2 nated) is amended by striking ``paragraph (2)''
3 and inserting ``paragraphs (2) and (3)''.
4 (B) Section 165(i)(1) is amended by strik-
5 ing ``loss'' and all that follows through ``Act''
6 and inserting ``loss occurring in a disaster area
7 (as defined by clause (ii) of subsection
8 (h)(3)(C)) and attributable to a federally de-
9 clared disaster (as defined by clause (i) of such
10 subsection)''.
11 (C) Section 165(i)(4) is amended by strik-
12 ing ``Presidentially declared disaster (as defined
13 by section 1033(h)(3))'' and inserting ``federally
14 declared disaster (as defined by subsection
15 (h)(3)(C)(i)''.
16 (D)(i) So much of subsection (h) of section
17 1033 as precedes subparagraph (A) of para-
18 graph (1) thereof is amended to read as follows:
19 ``(h) SPECIAL RULES FOR PROPERTY DAMAGED BY
20 FEDERALLY DECLARED DISASTERS.--
21 ``(1) PRINCIPAL RESIDENCES.--If the tax-
22 payer's principal residence or any of its contents is
23 located in a disaster area and is compulsorily or in-
24 voluntarily converted as a result of a federally de-
25 clared disaster--''.
422
1 (ii) Paragraph (2) of section 1033(h) is
2 amended by striking ``investment'' and all that
3 follows through ``disaster'' and inserting ``in-
4 vestment located in a disaster area and
5 compulsorily or involuntarily converted as a re-
6 sult of a federally declared disaster''.
7 (iii) Paragraph (3) of section 1033(h) is
8 amended to read as follows:
9 ``(3) FEDERALLY DECLARED DISASTER; DIS-
10 ASTER AREA.--The terms ``federally declared dis-
11 aster'' and ``disaster area'' shall have the respective
12 meaning given such terms by section 165(h)(3)(C).''.
13 (iv) Section 139(c)(2) is amended to read
14 as follows:
15 ``(2) federally declared disaster (as defined by
16 section 165(h)(3)(C)(i)),''.
17 (v) Subclause (II) of section
18 172(b)(1)(F)(ii) is amended by striking ``Presi-
19 dentially declared disasters (as defined in sec-
20 tion 1033(h)(3))'' and inserting ``federally de-
21 clared disasters (as defined by subsection
22 (h)(3)(C)(i))''.
23 (vi) Subclause (III) of section
24 172(b)(1)(F)(ii) is amended by striking ``Presi-
423
1 dentially declared disasters'' and inserting ``fed-
2 erally declared disasters''.
3 (vii) Subsection (a) of section 7508A is
4 amended by striking ``Presidentially declared
5 disaster (as defined in section 1033(h)(3))'' and
6 inserting ``federally declared disaster (as de-
7 fined by section 165(h)(3)(C)(i))''.
8 (b) INCREASE IN STANDARD DEDUCTION BY DIS-
9 ASTER CASUALTY LOSS.--
10 (1) IN GENERAL.--Paragraph (1) of section
11 63(c), as amended by the Housing Assistance Tax
12 Act of 2008, is amended by striking ``and'' at the
13 end of subparagraph (B), by striking the period at
14 the end of subparagraph (C) and inserting ``, and'',
15 and by adding at the end the following new subpara-
16 graph:
17 ``(D) the disaster loss deduction.''.
18 (2) DISASTER LOSS DEDUCTION.--Subsection
19 (c) of section 63, as amended by the Housing Assist-
20 ance Tax Act of 2008, is amended by adding at the
21 end the following new paragraph:
22 ``(8) DISASTER LOSS DEDUCTION.--For the
23 purposes of paragraph (1), the term `disaster loss
24 deduction' means the net disaster loss (as defined in
25 section 165(h)(3)(B)).''.
424
1 (3) ALLOWANCE IN COMPUTING ALTERNATIVE
2 MINIMUM TAXABLE INCOME.--Subparagraph (E) of
3 section 56(b)(1) is amended by adding at the end
4 the following new sentence: ``The preceding sentence
5 shall not apply to so much of the standard deduction
6 as is determined under section 63(c)(1)(D).''.
7 (c) INCREASE IN LIMITATION ON INDIVIDUAL LOSS
8 PER CASUALTY.--Paragraph (1) of section 165(h) is
9 amended by striking ``$100'' and inserting ``$500 ($100
10 for taxable years beginning after December 31, 2009)''.
11 (d) EFFECTIVE DATES.--
12 (1) IN GENERAL.--Except as provided by para-
13 graph (2), the amendments made by this section
14 shall apply to disasters declared in taxable years be-
15 ginning after December 31, 2007.
16 (2) INCREASE IN LIMITATION ON INDIVIDUAL
17 LOSS PER CASUALTY.--The amendment made by
18 subsection (c) shall apply to taxable years beginning
19 after December 31, 2008.
20 SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.
21 (a) IN GENERAL.--Part VI of subchapter B of chap-
22 ter 1 is amended by inserting after section 198 the fol-
23 lowing new section:
425
1 ``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX-
2 PENSES.
3 ``(a) IN GENERAL.--A taxpayer may elect to treat
4 any qualified disaster expenses which are paid or incurred
5 by the taxpayer as an expense which is not chargeable to
6 capital account. Any expense which is so treated shall be
7 allowed as a deduction for the taxable year in which it
8 is paid or incurred.
9 ``(b) QUALIFIED DISASTER EXPENSE.--For purposes
10 of this section, the term `qualified disaster expense' means
11 any expenditure--
12 ``(1) which is paid or incurred in connection
13 with a trade or business or with business-related
14 property,
15 ``(2) which is--
16 ``(A) for the abatement or control of haz-
17 ardous substances that were released on ac-
18 count of a federally declared disaster occurring
19 before January 1, 2010,
20 ``(B) for the removal of debris from, or the
21 demolition of structures on, real property which
22 is business-related property damaged or de-
23 stroyed as a result of a federally declared dis-
24 aster occurring before such date, or
426
1 ``(C) for the repair of business-related
2 property damaged as a result of a federally de-
3 clared disaster occurring before such date, and
4 ``(3) which is otherwise chargeable to capital ac-
5 count.
6 ``(c) OTHER DEFINITIONS.--For purposes of this
7 section--
8 ``(1) BUSINESS-RELATED PROPERTY.--The
9 term `business-related property' means property--
10 ``(A) held by the taxpayer for use in a
11 trade or business or for the production of in-
12 come, or
13 ``(B) described in section 1221(a)(1) in the
14 hands of the taxpayer.
15 ``(2) FEDERALLY DECLARED DISASTER.--The
16 term `federally declared disaster' has the meaning
17 given such term by section 165(h)(3)(C)(i).
18 ``(d) DEDUCTION RECAPTURED AS ORDINARY IN-
19 COME ON SALE, ETC.--Solely for purposes of section
20 1245, in the case of property to which a qualified disaster
21 expense would have been capitalized but for this section--
22 ``(1) the deduction allowed by this section for
23 such expense shall be treated as a deduction for de-
24 preciation, and
427
1 ``(2) such property (if not otherwise section
2 1245 property) shall be treated as section 1245
3 property solely for purposes of applying section 1245
4 to such deduction.
5 ``(e) COORDINATION WITH OTHER PROVISIONS.--
6 Sections 198, 280B, and 468 shall not apply to amounts
7 which are treated as expenses under this section.
8 ``(f) REGULATIONS.--The Secretary shall prescribe
9 such regulations as may be necessary or appropriate to
10 carry out the purposes of this section.''.
11 (b) CLERICAL AMENDMENT.--The table of sections
12 for part VI of subchapter B of chapter 1 is amended by
13 inserting after the item relating to section 198 the fol-
14 lowing new item:
``Sec. 198A. Expensing of Qualified Disaster Expenses.''.
15 (c) EFFECTIVE DATE.--The amendments made by
16 this section shall apply to amounts paid or incurred after
17 December 31, 2007 in connection with disaster declared
18 after such date.
19 SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FED-
20 ERALLY DECLARED DISASTERS.
21 (a) IN GENERAL.--Paragraph (1) of section 172(b)
22 is amended by adding at the end the following new sub-
23 paragraph:
24 ``(J) CERTAIN LOSSES ATTRIBUTABLE
25 FEDERALLY DECLARED DISASTERS.--In the
428
1 case of a taxpayer who has a qualified disaster
2 loss (as defined in subsection (j)), such loss
3 shall be a net operating loss carryback to each
4 of the 5 taxable years preceding the taxable
5 year of such loss.''.
6 (b) QUALIFIED DISASTER LOSS.--Section 172 is
7 amended by redesignating subsections (j) and (k) as sub-
8 sections (k) and (l), respectively, and by inserting after
9 subsection (i) the following new subsection:
10 ``(j) RULES RELATING TO QUALIFIED DISASTER
11 LOSSES.--For purposes of this section--
12 ``(1) IN GENERAL.--The term `qualified dis-
13 aster loss' means the lesser of--
14 ``(A) the sum of--
15 ``(i) the losses allowable under section
16 165 for the taxable year--
17 ``(I) attributable to a federally
18 declared disaster (as defined in sec-
19 tion 165(h)(3)(C)(i)) occurring before
20 January 1, 2010, and
21 ``(II) occurring in a disaster area
22 (as defined in section
23 165(h)(3)(C)(ii)), and
24 ``(ii) the deduction for the taxable
25 year for qualified disaster expenses which
429
1 is allowable under section 198A(a) or
2 which would be so allowable if not other-
3 wise treated as an expense, or
4 ``(B) the net operating loss for such tax-
5 able year.
6 ``(2) COORDINATION WITH SUBSECTION
7 (b)(2).--For purposes of applying subsection (b)(2),
8 a qualified disaster loss for any taxable year shall be
9 treated in a manner similar to the manner in which
10 a specified liability loss is treated.
11 ``(3) ELECTION.--Any taxpayer entitled to a 5-
12 year carryback under subsection (b)(1)(J) from any
13 loss year may elect to have the carryback period
14 with respect to such loss year determined without re-
15 gard to subsection (b)(1)(J). Such election shall be
16 made in such manner as may be prescribed by the
17 Secretary and shall be made by the due date (includ-
18 ing extensions of time) for filing the taxpayer's re-
19 turn for the taxable year of the net operating loss.
20 Such election, once made for any taxable year, shall
21 be irrevocable for such taxable year.
22 ``(4) EXCLUSION.--The term `qualified disaster
23 loss' shall not include any loss with respect to any
24 property described in section 1400N(p)(3).''.
430
1 (c) LOSS DEDUCTION ALLOWED IN COMPUTING AL-
2 TERNATIVE MINIMUM TAXABLE INCOME.--Subsection (d)
3 of section 56 is amended by adding at the end the fol-
4 lowing new paragraph:
5 ``(3) NET OPERATING LOSS ATTRIBUTABLE TO
6 FEDERALLY DECLARED DISASTERS.--In the case of
7 a taxpayer which has a qualified disaster loss (as de-
8 fined by section 172(b)(1)(J)) for the taxable year,
9 paragraph (1) shall be applied by increasing the
10 amount determined under subparagraph (A)(ii)(I)
11 thereof by the sum of the carrybacks and carryovers
12 of such loss.''.
13 (d) CONFORMING AMENDMENTS.--
14 (1) Clause (ii) of section 172(b)(1)(F) is
15 amended by inserting ``or qualified disaster loss (as
16 defined in subsection (j))'' before the period at the
17 end of the last sentence.
18 (2) Paragraph (1) of section 172(i) is amended
19 by adding at the end the following new flush sen-
20 tence:
21 ``Such term shall not include any qualified disaster
22 loss (as defined in subsection (j)).''.
23 (e) EFFECTIVE DATE.--The amendments made by
24 this section shall apply to losses arising in taxable years
431
1 beginning after December 31, 2007, in connection with
2 disasters declared after such date.
3 SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND
4 REQUIREMENTS FOLLOWING FEDERALLY DE-
5 CLARED DISASTERS.
6 (a) IN GENERAL.--Subsection (k) of section 143 is
7 amended by adding at the end the following new para-
8 graph:
9 ``(12) SPECIAL RULES FOR RESIDENCES DE-
10 STROYED IN FEDERALLY DECLARED DISASTERS.--
11 ``(A) PRINCIPAL RESIDENCE DE-
12 STROYED.--At the election of the taxpayer, if
13 the principal residence (within the meaning of
14 section 121) of such taxpayer is--
15 ``(i) rendered unsafe for use as a resi-
16 dence by reason of a federally declared dis-
17 aster occurring before January 1, 2010, or
18 ``(ii) demolished or relocated by rea-
19 son of an order of the government of a
20 State or political subdivision thereof on ac-
21 count of a federally declared disaster oc-
22 curring before such date,
23 then, for the 2-year period beginning on the
24 date of the disaster declaration, subsection
25 (d)(1) shall not apply with respect to such tax-
432
1 payer and subsection (e) shall be applied by
2 substituting `110' for `90' in paragraph (1)
3 thereof.
4 ``(B) PRINCIPAL RESIDENCE DAMAGED.--
5 ``(i) IN GENERAL.--At the election of
6 the taxpayer, if the principal residence
7 (within the meaning of section 121) of
8 such taxpayer was damaged as the result
9 of a federally declared disaster occurring
10 before January 1, 2010, any owner-financ-
11 ing provided in connection with the repair
12 or reconstruction of such residence shall be
13 treated as a qualified rehabilitation loan.
14 ``(ii) LIMITATION.--The aggregate
15 owner-financing to which clause (i) applies
16 shall not exceed the lesser of--
17 ``(I) the cost of such repair or re-
18 construction, or
19 ``(II) $150,000.
20 ``(C) FEDERALLY DECLARED DISASTER.--
21 For purposes of this paragraph, the term `fed-
22 erally declared disaster' has the meaning given
23 such term by section 165(h)(3)(C)(i).
24 ``(D) ELECTION; DENIAL OF DOUBLE BEN-
25 EFIT.--
433
1 ``(i) ELECTION.--An election under
2 this paragraph may not be revoked except
3 with the consent of the Secretary.
4 ``(ii) DENIAL OF DOUBLE BENEFIT.--
5 If a taxpayer elects the application of this
6 paragraph, paragraph (11) shall not apply
7 with respect to the purchase or financing
8 of any residence by such taxpayer.''.
9 (b) EFFECTIVE DATE.--The amendment made by
10 subsection (a) shall apply to disasters occurring after De-
11 cember 31, 2007.
12 SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALI-
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