[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3768 Engrossed Amendment Senate (EAS)]


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                    September 15, 2005.
    Resolved, That the bill from the House of Representatives (H.R. 
3768) entitled ``An Act to provide emergency tax relief for persons 
affected by Hurricane Katrina.'', do pass with the following

                               AMENDMENT:

            Strike all after the enacting clause and insert the 
      following:

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Hurricane Katrina 
Tax Relief Act of 2005''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act 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 for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Hurricane Katrina disaster area.

 TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS IN THE CASE OF NATURAL 
                               DISASTERS

Sec. 101. Penalty free withdrawals from retirement plans for victims of 
                            federally declared natural disasters.
Sec. 102. Income averaging for disaster-relief distributions related to 
                            Hurricane Katrina.
Sec. 103. Recontributions of withdrawals for home purchases cancelled 
                            due to Hurricane Katrina.
Sec. 104. Loans from qualified plans to victims of Hurricane Katrina.
Sec. 105. Provisions relating to plan amendments.

                      TITLE II--EMPLOYMENT RELIEF

Sec. 201. Work opportunity tax credit for Hurricane Katrina employee 
                            survivors.
Sec. 202. Employee retention credit for employers affected by Hurricane 
                            Katrina.

                TITLE III--CHARITABLE GIVING INCENTIVES

Sec. 301. Temporary suspension of limitations on charitable 
                            contributions.
Sec. 302. Charitable deduction for contributions of food inventories.
Sec. 303. Charitable deduction for contributions of book inventories.
Sec. 304. Additional exemption for housing Hurricane Katrina displaced 
                            individuals.
Sec. 305. Increase in standard mileage rate for charitable use of 
                            passenger automobile.
Sec. 306. Mileage reimbursements to charitable volunteers excluded from 
                            gross income.

               TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

Sec. 401. Exclusions of certain cancellations of indebtedness for 
                            victims of Hurricane Katrina.
Sec. 402. Suspension of certain limitations on personal casualty 
                            losses.
Sec. 403. Required exercise of authority under section 7508A for tax 
                            relief for victims of Hurricane Katrina.
Sec. 404. Special mortgage financing rules for residences located in 
                            Hurricane Katrina disaster area.
Sec. 405. Extension of replacement period for nonrecognition of gain 
                            for property located in Hurricane Katrina 
                            disaster area.
Sec. 406. Special rule for determining earned income.
Sec. 407. Secretarial authority to make adjustments regarding taxpayer 
                            and dependency status.

                     TITLE V--EMERGENCY REQUIREMENT

Sec. 501. Emergency requirement.

SEC. 2. HURRICANE KATRINA DISASTER AREA.

    For purposes of this Act, the term ``Hurricane Katrina disaster 
area'' means an area--
            (1) with respect to which a major disaster has been 
        declared by the President before September 14, 2005, under 
        section 401 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act in connection with Hurricane Katrina, 
        and
            (2) which--
                    (A) except as provided in subparagraph (B), is 
                determined by the President before such date to warrant 
                assistance from the Federal Government under such Act, 
                and
                    (B) in the case of sections 201 and 202, is 
                determined by the President before such date to warrant 
                individual assistance, or individual and public 
                assistance, from the Federal Government under such Act.

 TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS IN THE CASE OF NATURAL 
                               DISASTERS

SEC. 101. PENALTY FREE WITHDRAWALS FROM RETIREMENT PLANS FOR VICTIMS OF 
              FEDERALLY DECLARED NATURAL DISASTERS.

    (a) In General.--Paragraph (2) of section 72(t) (relating to 10-
percent additional tax on early distributions from qualified retirement 
plans) is amended by adding at the end the following new subparagraph:
                    ``(G) Distributions from retirement plans to 
                victims of federally declared natural disasters.--
                            ``(i) Distribution allowed.--Any qualified 
                        disaster-relief distribution.
                            ``(ii) Amount distributed may be repaid.--
                                    ``(I) In general.--Any individual 
                                who receives a qualified disaster-
                                relief distribution may, at any time 
                                during the 3-year period beginning on 
                                the day after the date on which such 
                                distribution was made, make one or more 
                                contributions in an aggregate amount 
                                not to exceed the amount of such 
                                distribution to an eligible retirement 
                                plan (as defined in section 
                                402(c)(8)(B)) of which such individual 
                                is a beneficiary and to which a 
                                rollover contribution of such 
                                distribution could be made under 
                                section 402(c), 403(a)(4), 403(b)(8), 
                                408(d)(3), or 457(e)(16), as the case 
                                may be.
                                    ``(II) Treatment of repayments for 
                                distributions from eligible retirement 
                                plans other than iras.--For purposes of 
                                this title, if a contribution is made 
                                pursuant to subclause (I) with respect 
                                to a qualified disaster-relief 
                                distribution from an eligible 
                                retirement plan (as so defined) other 
                                than an individual retirement plan, 
                                then the taxpayer shall, to the extent 
                                of the amount of the contribution, be 
                                treated as having received the 
                                qualified disaster-relief distribution 
                                in an eligible rollover distribution 
                                (as defined in section 402(c)(4)) and 
                                as having transferred the amount to the 
                                eligible retirement plan in a direct 
                                trustee to trustee transfer within 60 
                                days of the distribution.
                                    ``(III) Treatment of repayments for 
                                distributions from iras.--For purposes 
                                of this title, if a contribution is 
                                made pursuant to subclause (I) with 
                                respect to a qualified disaster-relief 
                                distribution from an individual 
                                retirement plan, then, to the extent of 
                                the amount of the contribution, the 
                                qualified disaster-relief distribution 
                                shall be treated as a distribution 
                                described in section 408(d)(3) and as 
                                having been transferred to the eligible 
                                retirement plan in a direct trustee to 
                                trustee transfer within 60 days of the 
                                distribution.
                                    ``(IV) Application to governmental 
                                section 457 plans.--In determining 
                                whether any distribution is a qualified 
                                disaster-relief distribution for 
                                purposes of this clause, an eligible 
                                deferred compensation plan (as defined 
                                in section 457(b)) maintained by an 
                                employer described in section 
                                457(e)(1)(A) shall be treated as a 
                                qualified retirement plan.
                            ``(iii) Qualified disaster-relief 
                        distribution.--Except as provided in clause 
                        (iv), for purposes of this subparagraph, the 
                        term `qualified disaster-relief distribution' 
                        means any distribution--
                                    ``(I) to an individual who has 
                                sustained a loss as a result of a major 
                                disaster declared under section 401 of 
                                the Robert T. Stafford Disaster Relief 
                                and Emergency Assistance Act and who 
                                has a principal place of abode 
                                immediately before the declaration in a 
                                qualified disaster area, and
                                    ``(II) which is made during the 1-
                                year period beginning on the date such 
                                declaration is made.
                            ``(iv) Dollar limitation.--
                                    ``(I) In general.--The term 
                                `qualified disaster-relief 
                                distribution' shall not include any 
                                distributions for any taxable year to 
                                the extent the aggregate amount of such 
                                distributions exceeds $100,000, reduced 
                                by the aggregate amounts treated as 
                                qualified disaster-relief distributions 
                                with respect to such individual for all 
                                prior taxable years.
                                    ``(II) Treatment of plan 
                                distributions.--If a distribution to an 
                                individual with respect to any such 
                                major disaster would (without regard to 
                                subclause (I)) be a qualified disaster-
                                relief distribution, a plan shall not 
                                be treated as violating any requirement 
                                of this title merely because it treats 
                                such distribution as a qualified 
                                disaster-relief distribution, unless 
                                the aggregate amount of such 
                                distributions from all plans maintained 
                                by the employer (and any member of any 
                                controlled group which includes the 
                                employer) to such individual exceeds 
                                $100,000.
                            ``(v) Qualified disaster area.--For 
                        purposes of this subparagraph, the term 
                        `qualified disaster area' means an area--
                                    ``(I) with respect to which a major 
                                disaster has been declared by the 
                                President before September 14, 2005, 
                                under section 401 of the Robert T. 
                                Stafford Disaster Relief and Emergency 
                                Assistance Act in connection with 
                                Hurricane Katrina, and
                                    ``(II) which is determined by the 
                                President before such date to warrant 
                                assistance from the Federal Government 
                                under such Act.''.
    (b) Exemption of Distributions From Trustee to Trustee Transfer and 
Withholding Rules.--Paragraph (4) of section 402(c) (relating to 
eligible rollover distribution) is amended by striking ``and'' at the 
end of subparagraph (B), by striking the period at the end of 
subparagraph (C) and inserting ``, and'', and by inserting at the end 
the following new subparagraph:
                    ``(D) any qualified disaster-relief distribution 
                (within the meaning of section 72(t)(2)(G)).''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) is amended by striking ``or'' 
        at the end of subclause (III), by striking ``and'' at the end 
        of subclause (IV) and inserting ``or'', and by inserting after 
        subclause (IV) the following new subclause:
                                    ``(V) the date on which a period 
                                referred to in section 
                                72(t)(2)(G)(iii)(II) begins (but only 
                                to the extent provided in section 
                                72(t)(2)(G)), and''.
            (2) Section 403(b)(7)(A)(ii) is amended by inserting 
        ``sustains a loss as a result of a major disaster declared 
        under section 401 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act by reason of Hurricane Katrina (but 
        only to the extent provided in section 72(t)(2)(G)),'' before 
        ``or''.
            (3) Section 403(b)(11) is amended by striking ``or'' at the 
        end of subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting ``, or'', and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) for distributions to which section 
                72(t)(2)(G) applies.''.
            (4) Section 457(d)(1)(A) is amended by striking ``or'' at 
        the end of clause (ii), by adding ``or'' at the end of clause 
        (iii), and by adding at the end the following new clause:
                            ``(iv) in the case of an eligible deferred 
                        compensation plan established and maintained by 
                        an employer described in subsection (e)(1)(A), 
                        when the participant sustains a loss as a 
                        result of a major disaster declared under 
                        section 401 of the Robert T. Stafford Disaster 
                        Relief and Emergency Assistance Act by reason 
                        of Hurricane Katrina (but only to the extent 
                        provided in section 72(t)(2)(G)),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions received after August 28, 2005.

SEC. 102. INCOME AVERAGING FOR DISASTER-RELIEF DISTRIBUTIONS RELATED TO 
              HURRICANE KATRINA.

    (a) In General.--In the case of any qualified disaster-relief 
distribution (within the meaning of section 72(t)(2)(G) of the Internal 
Revenue Code of 1986) from a qualified retirement plan (as defined in 
section 4974(c) of such Code) to a qualified individual, unless the 
taxpayer elects not to have this section apply for any taxable year, 
any amount required to be included in gross income for such taxable 
year shall be so included ratably over the 3-taxable year period 
beginning with such taxable year.
    (b) Special Rules.--
            (1) Application to governmental section 457 plans.--In 
        determining whether any distribution is a qualified disaster-
        relief distribution (as so defined) for purposes of this 
        section, an eligible deferred compensation plan (as defined in 
        section 457(b) of such Code) maintained by an employer 
        described in section 457(e)(1)(A) of such Code shall be treated 
        as a qualified retirement plan (as so defined)
            (2) Certain rules to apply.--Rules similar to the rules of 
        subparagraph (E) of section 408A(d)(3) of such Code shall apply 
        for purposes of this section.
    (c) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means an individual who has sustained a loss 
as a result of the major disaster declared under section 401 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5170) in connection with Hurricane Katrina and who has a 
principal place of abode immediately before the declaration in a 
Hurricane Katrina disaster area.

SEC. 103. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED 
              DUE TO HURRICANE KATRINA.

    (a) Recontributions.--
            (1) In general.--Any individual who received a qualified 
        distribution may, at any time during the 6-month period 
        beginning on the day after the disaster declaration date, make 
        one or more contributions in an aggregate amount not to exceed 
        the amount of such qualified distribution to an eligible 
        retirement plan (as defined in section 402(c)(8)(B) of the 
        Internal Revenue Code of 1986) of which such individual is a 
        beneficiary and to which a rollover contribution of such 
        distribution could be made under section 402(c), 403(a)(4), 
        403(b)(8), or 408(d)(3) of such Code, as the case may be.
            (2) Treatment of repayments.--
                    (A) Treatment of repayments for distributions from 
                eligible retirement plans other than iras.--For 
                purposes of the Internal Revenue Code of 1986, if a 
                contribution is made pursuant to paragraph (1) with 
                respect to a qualified distribution from an eligible 
                retirement plan (as so defined) other than an 
                individual retirement plan (as defined in section 
                7701(a)(37) of such Code), then the taxpayer shall, to 
                the extent of the amount of the contribution, be 
                treated as having received the qualified distribution 
                in an eligible rollover distribution (as defined in 
                section 402(c)(4) of such Code) and as having 
                transferred the amount to the eligible retirement plan 
                in a direct trustee to trustee transfer within 60 days 
                of the distribution.
                    (B) Treatment of repayments for distributions from 
                iras.--For purposes of the Internal Revenue Code of 
                1986, if a contribution is made pursuant to paragraph 
                (1) with respect to a qualified distribution from an 
                individual retirement plan (as so defined), then, to 
                the extent of the amount of the contribution, the 
                qualified distribution shall be treated as a 
                distribution described in section 408(d)(3) of such 
                Code and as having been transferred to the eligible 
                retirement plan (as so defined) in a direct trustee to 
                trustee transfer within 60 days of the distribution.
    (b) Definitions.--For purposes of this section--
            (1) Qualified distribution.--The term ``qualified 
        distribution'' means any distribution--
                    (A) described in section 401(k)(2)(B)(i)(IV), 
                403(b)(7)(A)(ii) (but only to the extent such 
                distribution relates to financial hardship), 
                403(b)(11)(B), or 72(t)(2)(F) of the Internal Revenue 
                Code of 1986,
                    (B) received after February 28, 2005, and before 
                August 29, 2005, and
                    (C) which was to be used to purchase or construct a 
                principal residence in a Hurricane Katrina disaster 
                area, but which was not so purchased or constructed.
            (2) Disaster declaration date.--The term ``disaster 
        declaration date'' means the date on which the President 
        designated the area as a Hurricane Katrina disaster area.

SEC. 104. LOANS FROM QUALIFIED PLANS TO VICTIMS OF HURRICANE KATRINA.

    (a) Increase in Limit on Loans Not Treated as Distributions.--In 
the case of any loan from a qualified employer plan (as defined under 
section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified 
individual (as defined in section 102(c)) made after the date of 
enactment of this Act and before the date which is 1 year after the 
disaster declaration date (as defined in section 103(b)(2))--
            (1) clause (i) of section 72(p)(2)(A) of such Code shall be 
        applied by substituting ``$100,000'' for ``$50,000'', and
            (2) clause (ii) of such section shall be applied by 
        substituting ``the present value of the nonforfeitable accrued 
        benefit of the employee under the plan'' for ``one-half of the 
        present value of the nonforfeitable accrued benefit of the 
        employee under the plan''.
    (b) Delay of Repayment.--In the case of a qualified individual (as 
defined in section 102(c)) with an outstanding loan on or after August 
26, 2005, from a qualified employer plan (as defined in section 
72(p)(4) of the Internal Revenue Code of 1986)--
            (1) if the due date pursuant to subparagraph (B) or (C) of 
        section 72(p)(2) of such Code for any repayment with respect to 
        such loan occurs during the period beginning after August 29, 
        2005, and ending before August 30, 2006, such due date shall be 
        delayed for 1 year,
            (2) any subsequent repayments with respect to any such loan 
        shall be appropriately adjusted to reflect the delay in the due 
        date under paragraph (1) and any interest accruing during such 
        delay, and
            (3) in determining the 5-year period and the term of a loan 
        under subparagraph (B) or (C) of section 72(p)(2) of such Code, 
        such period shall be disregarded.

SEC. 105. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment such plan or contract shall be treated as being operated in 
accordance with the terms of the plan during the period described in 
subsection (b)(2)(A).
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this title, 
                or pursuant to any regulation issued by the Secretary 
                of the Treasury or the Secretary of Labor under this 
                title, and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2007, or such 
                later date as the Secretary of the Treasury may 
                prescribe.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), subparagraph (B) 
        shall be applied by substituting the date which is 2 years 
        after the date otherwise applied under subparagraph (B).
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect; and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

                      TITLE II--EMPLOYMENT RELIEF

SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEE 
              SURVIVORS.

    (a) In General.--For purposes of section 51 of the Internal Revenue 
Code of 1986, a Hurricane Katrina employee survivor shall be treated as 
a member of a targeted group.
    (b) Hurricane Katrina Employee Survivor.--For purposes of this 
section, the term ``Hurricane Katrina employee survivor'' means any 
individual who is certified as an individual who--
            (1) on August 28, 2005, had a principal place of abode in a 
        Hurricane Katrina disaster area, and
            (2) became unemployed as a result of Hurricane Katrina.
    (c) Special Rules for Determining Credit.--For purposes of applying 
subpart F of part IV of subchapter A of chapter 1 of such Code to wages 
paid or incurred to any Hurricane Katrina employee survivor--
            (1) section 51(c)(4) of such Code shall not apply,
            (2) notwithstanding section 51(d)(12) of such Code, the 
        certification under subsection (b) shall be made in such manner 
        and at such time as determined by the Secretary of the 
        Treasury, except that the certification shall be made by a 
        person other than the such employee survivor or the employer 
        (within the meaning of section 51 of such Code), and
            (3) section 51(i)(2) of such Code shall not apply with 
        respect to the first hire of such employee survivor, unless 
        such employee survivor was an employee of the employer on 
        August 28, 2005.
    (d) Application of Section.--This section shall apply to wages 
(within the meaning on section 51(c) of such Code) paid or incurred to 
any individual who begins work--
            (1) for an employer during the 6-month period beginning on 
        August 29, 2005, or
            (2) in the case of an individual who is being hired for a 
        position the principal place of employment of which is located 
        in a Hurricane Katrina disaster area, for any employer during 
        the 2-year period beginning on such date.

SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE 
              KATRINA.

    (a) In General.--In the case of an eligible employer, there shall 
be allowed as a credit against the tax imposed by chapter 1 of the 
Internal Revenue Code of 1986 for the taxable year an amount equal to 
40 percent of the qualified wages with respect to each eligible 
employee of such employer for such taxable year. For purposes of the 
preceding sentence, the amount of qualified wages which may be taken 
into account with respect to any individual shall not exceed $6,000.
    (b) Definitions.--For purposes of this section--
            (1) Eligible employer.--The term ``eligible employer'' 
        means any employer--
                    (A) which conducted an active trade or business on 
                August 28, 2005, in a Hurricane Katrina disaster area, 
                and
                    (B) with respect to whom the trade or business 
                described in subparagraph (A) is inoperable on any day 
                after August 28, 2005, and before January 1, 2006, as a 
                result of damage sustained in connection with Hurricane 
                Katrina.
            (2) Eligible employee.--The term ``eligible employee'' 
        means with respect to an eligible employer--
                    (A) an employee whose principal place of employment 
                on August 28, 2005, with such eligible employer was in 
                a Hurricane Katrina disaster area, or
                    (B) a Ready Reserve-National Guard employee of such 
                eligible employer who is performing qualified active 
                duty and whose principal place of employment 
                immediately before the date on which such employee 
                began performing such qualified active duty was in a 
                Hurricane Katrina disaster area.
            (3) Qualified wages.--The term ``qualified wages'' means 
        wages (as defined in section 51(c)(1) of the Internal Revenue 
        Code of 1986, but without regard to section 3306(b)(2)(B) of 
        such Code) paid or incurred by an eligible employer with 
        respect to an eligible employee on any day after August 28, 
        2005, and before January 1, 2006, which occurs during the 
        period--
                    (A) beginning on the date on which the trade or 
                business described in paragraph (1) first became 
                inoperable at the principal place of employment of the 
                employee immediately before Hurricane Katrina, and
                    (B) ending on the date on which such trade or 
                business has resumed significant operations at such 
                principal place of employment.
        Such term shall include wages paid without regard to whether 
        the employee performs no services, performs services at a 
        different place of employment than such principal place of 
        employment, or performs services at such principal place of 
        employment before significant operations have resumed.
            (4) Ready reserve-national guard employee.--The term 
        ``Ready Reserve-National Guard employee'' means an employee who 
        is a member of the Ready Reserve of a reserve component of an 
        Armed Force of the United States as described in section 10142 
        and 10101 of title 10, United States Code and who is performing 
        qualified active duty.
            (5) Qualified active duty.--The term ``qualified active 
        duty'' means--
                    (A) active duty, other than the training duty 
                specified in section 10147 of title 10, United States 
                Code (relating to training requirements for Ready 
                Reserve), or section 502(a) of title 32, United States 
                Code (relating to required drills and field exercises 
                for the National Guard), in connection with which an 
                employee is entitled to reemployment rights and other 
                benefits or to a leave of absence from employment under 
                chapter 43 of title 38, United States Code, and
                    (B) hospitalization incident to such duty.
    (c) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of sections 51(i)(1), 52, and 280C(a) of the 
Internal Revenue Code of 1986 of the shall apply.
    (d) Credit To Be Part of General Business Credit.--The credit 
allowed under this section shall be added to the current year business 
credit under section 38(b) of the Internal Revenue Code of 1986 and 
shall be treated as a credit allowed under subpart D of part IV of 
subchapter A of chapter 1 of such Code.

                TITLE III--CHARITABLE GIVING INCENTIVES

SEC. 301. TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE 
              CONTRIBUTIONS.

    (a) In General.--Except as otherwise provided in subsection (b), 
section 170(b) of the Internal Revenue Code of 1986 shall not apply to 
qualified contributions and such contributions shall not be taken into 
account for purposes of subsections (b) and (d) of section 170 of the 
Internal Revenue Code of 1986.
    (b) Treatment of Excess Contributions.--For purposes of section 170 
of such Code--
            (1) Individuals.--In the case of an individual--
                    (A) Limitation.--Any qualified contribution shall 
                be allowed only to the extent that the aggregate of 
                such contributions does not exceed the excess of the 
                taxpayer's contribution base (as defined in paragraph 
                (1) of section 170(b) of such Code) over the amount of 
                all other charitable contributions allowed under such 
                paragraph.
                    (B) Carryover.--If the aggregate amount of 
                qualified contributions made in the contribution year 
                (within the meaning of section 170(d)(1) of such Code) 
                exceeds the limitation of subparagraph (A), such excess 
                shall be added to the excess described in the portion 
                of subparagraph (A) of such section which precedes 
                clause (i) thereof for purposes of applying such 
                section.
            (2) Corporations.--In the case of a corporation--
                    (A) Limitation.--Any qualified contribution shall 
                be allowed only to the extent that the aggregate of 
                such contributions does not exceed the excess of the 
                taxpayer's taxable income (as determined under 
                paragraph (2) of section 170(b) of such Code) over the 
                amount of all other charitable contributions allowed 
                under such paragraph.
                    (B) Carryover.--Rules similar to the rules of 
                paragraph (1)(B) shall apply for purposes of this 
                paragraph.
    (c) Exception to Overall Limitation on Itemized Deductions.--So 
much of any deduction allowed under section 170 of such Code as does 
not exceed the qualified contributions made during the taxable year 
shall not be treated as an itemized deduction for purposes of section 
68 of such Code.
    (d) Qualified Contributions.--For purposes of this section, the 
term ``qualified contribution'' means any charitable contribution (as 
defined in section 170(c) of such Code)--
            (1) made during the period beginning on August 28, 2005, 
        and ending on December 31, 2005, in cash to an organization 
        described in section 170(b)(1)(A) of such Code (other than an 
        organization described in section 509(a)(3) of such Code), and
            (2) with respect to which the taxpayer has elected the 
        application of this section.
In the case of a partnership or S corporation, the election under 
paragraph (2) shall be made separately by each partner or shareholder. 
For purposes of subsection (b)(2), a contribution shall be treated as a 
qualified contribution only if the contribution is for relief efforts 
related to Hurricane Katrina.

SEC. 302. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORIES.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by adding at the end the following new paragraph:
            ``(7) Application of paragraph (3) to certain contributions 
        of food inventory.--For purposes of this section--
                    ``(A) Extension to individuals.--In the case of a 
                charitable contribution of apparently wholesome food--
                            ``(i) paragraph (3)(A) shall be applied 
                        without regard to whether the contribution is 
                        made by a C corporation, and
                            ``(ii) in the case of a taxpayer other than 
                        a C corporation, the aggregate amount of such 
                        contributions for any taxable year which may be 
                        taken into account under this section shall not 
                        exceed 10 percent of the taxpayer's net income 
                        for such taxable year from all trades or 
                        businesses from which such contributions were 
                        made for such taxable year, computed without 
                        regard to this section.
                    ``(B) Limitation on reduction.--In the case of a 
                charitable contribution of apparently wholesome food, 
                notwithstanding paragraph (3)(B), the amount of the 
                reduction determined under paragraph (1)(A) shall not 
                exceed the amount by which the fair market value of 
                such property exceeds twice the basis of such property.
                    ``(C) Determination of basis.--If a taxpayer--
                            ``(i) does not account for inventories 
                        under section 471, and
                            ``(ii) is not required to capitalize 
                        indirect costs under section 263A,
                the taxpayer may elect, solely for purposes of 
                paragraph (3)(B), to treat the basis of any apparently 
                wholesome food as being equal to 25 percent of the fair 
                market value of such food.
                    ``(D) Determination of fair market value.--In the 
                case of a charitable contribution of apparently 
                wholesome food which is a qualified contribution 
                (within the meaning of paragraph (3), as modified by 
                subparagraph (A) of this paragraph) and which, solely 
                by reason of internal standards of the taxpayer or lack 
                of market, cannot or will not be sold, the fair market 
                value of such contribution shall be determined--
                            ``(i) without regard to such internal 
                        standards or such lack of market and
                            ``(ii) by taking into account the price at 
                        which the same or substantially the same food 
                        items (as to both type and quality) are sold by 
                        the taxpayer at the time of the contribution 
                        (or, if not so sold at such time, in the recent 
                        past).
                    ``(E) Apparently wholesome food.--For purposes of 
                this paragraph, the term `apparently wholesome food' 
                has the meaning given such term by section 22(b)(2) of 
                the Bill Emerson Good Samaritan Food Donation Act (42 
                U.S.C. 1791(b)(2)), as in effect on the date of the 
                enactment of this paragraph.
                    ``(F) Application.--This paragraph shall apply to 
                contributions made after August 28, 2005, and before 
                January 1, 2006.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after August 28, 2005.

SEC. 303. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES.

    (a) In General.--Section 170(e)(3) (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by redesignating subparagraph (C) as subparagraph (D) and by inserting 
after subparagraph (B) the following new subparagraph:
                    ``(C) Special rule for contributions of book 
                inventory for educational purposes.--
                            ``(i) Contributions of book inventory.--In 
                        determining whether a qualified book 
                        contribution is a qualified contribution, 
                        subparagraph (A) shall be applied without 
                        regard to whether--
                                    ``(I) the donee is an organization 
                                described in the matter preceding 
                                clause (i) of subparagraph (A), and
                                    ``(II) the property is to be used 
                                by the donee solely for the care of the 
                                ill, the needy, or infants.
                            ``(ii) Amount of reduction.--
                        Notwithstanding subparagraph (B), the amount of 
                        the reduction determined under paragraph (1)(A) 
                        shall not exceed the amount by which the fair 
                        market value of the contributed property (as 
                        determined by the taxpayer using a bona fide 
                        published market price for such book) exceeds 
                        twice the basis of such property.
                            ``(iii) Qualified book contribution.--For 
                        purposes of this paragraph, the term `qualified 
                        book contribution' means a charitable 
                        contribution of books, but only if the 
                        requirements of clauses (iv) and (v) are met.
                            ``(iv) Identity of donee.--The requirement 
                        of this clause is met if the contribution is to 
                        an organization--
                                    ``(I) described in subclause (I) or 
                                (III) of paragraph (6)(B)(i), or
                                    ``(II) described in section 
                                501(c)(3) and exempt from tax under 
                                section 501(a) (other than a private 
                                foundation, as defined in section 
                                509(a), which is not an operating 
                                foundation, as defined in section 
                                4942(j)(3)), which is organized 
                                primarily to make books available to 
                                the general public at no cost or to 
                                operate a literacy program.
                            ``(v) Certification by donee.--The 
                        requirement of this clause is met if, in 
                        addition to the certifications required by 
                        subparagraph (A) (as modified by this 
                        subparagraph), the donee certifies in writing 
                        that--
                                    ``(I) the books are suitable, in 
                                terms of currency, content, and 
                                quantity, for use in the donee's 
                                educational programs, and
                                    ``(II) the donee will use the books 
                                in its educational programs.
                            ``(vi) Bona fide published market price.--
                        For purposes of this subparagraph, the term 
                        `bona fide published market price' means, with 
                        respect to any book, a price--
                                    ``(I) determined using the same 
                                printing and edition,
                                    ``(II) determined in the usual 
                                market in which such a book has been 
                                customarily sold by the taxpayer, and
                                    ``(III) for which the taxpayer can 
                                demonstrate to the satisfaction of the 
                                Secretary that the taxpayer customarily 
                                sold such books in arm's length 
                                transactions within 7 years preceding 
                                the contribution of such a book.
                            ``(vii) Application.--This subparagraph 
                        shall apply to contributions made after August 
                        28, 2005, and before January 1, 2006.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to contributions made after August 28, 2005.

SEC. 304. ADDITIONAL EXEMPTION FOR HOUSING HURRICANE KATRINA DISPLACED 
              INDIVIDUALS.

    (a) In General.--In the case of taxable years of a natural person 
beginning in 2005 and 2006, for purposes of the Internal Revenue Code 
of 1986, taxable income shall be reduced by $500 for each Hurricane 
Katrina displaced individual of the taxpayer for the taxable year.
    (b) Limitations.--
            (1) Dollar limitation.--The reduction under subsection (a) 
        shall not exceed $2,000, reduced by the amount of the reduction 
        under this section for all previous taxable years.
            (2) Individuals taken into account only once.--An 
        individual shall not be taken into account under subsection (a) 
        if such individual was taken into account under such subsection 
        by the taxpayer in any prior taxable year.
    (c) Hurricane Katrina Displaced Individual.--For purposes of this 
subsection, the term ``Hurricane Katrina displaced individual'' means, 
with respect to any taxpayer for any taxable year, a natural person 
who--
            (1) was (as of August 28, 2005) a resident of any Hurricane 
        Katrina disaster area,
            (2) is displaced from the person's residence located in the 
        area described in paragraph (1), and
            (3) is provided housing free of charge by the taxpayer in 
        the principal residence of the taxpayer for a period of 60 
        consecutive days which ends in such taxable year.
Such term shall not include the spouse or any dependent of the 
taxpayer.

SEC. 305. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE USE OF 
              PASSENGER AUTOMOBILE.

    Notwithstanding section 170(i) of the Internal Revenue Code of 
1986, for purposes of computing the deduction under section 170 of such 
Code for use of a vehicle described in subsection (f)(12)(E)(i) for 
provision of relief related to Hurricane Katrina during the period 
beginning on August 29, 2005, and ending before January 1, 2007, the 
standard mileage rate shall be 70 percent of the standard mileage rate 
in effect under section 162(a) of such Code at the time of such use. 
Any increase under this section shall be rounded to the next highest 
cent.

SEC. 306. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 is amended 
by inserting after section 139A the following new section:

``SEC. 139B. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

    ``(a) In General.--Gross income of an individual does not include 
amounts received, from an organization described in section 170(c), as 
reimbursement of operating expenses with respect to use of a passenger 
automobile for the benefit of such organization. The preceding sentence 
shall apply only to the extent that the expenses which are reimbursed 
would be deductible under this chapter if section 274(d) were applied--
            ``(1) by using the standard business mileage rate 
        established under such section, and
            ``(2) as if the individual were an employee of an 
        organization not described in section 170(c).
    ``(b) Application to Volunteer Services Only.--Subsection (a) shall 
not apply with respect to any expenses relating to the performance of 
services for compensation.
    ``(c) No Double Benefit.--A taxpayer may not claim a deduction or 
credit under any other provision of this title with respect to the 
expenses under subsection (a).
    ``(d) Exemption From Reporting Requirements.--Section 6041 shall 
not apply with respect to reimbursements excluded from income under 
subsection (a).
    ``(e) Termination.--This section shall not apply to use of a 
passenger automobile after December 31, 2006.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 139A the following new item:

``Sec. 139B Mileage reimbursements to charitable volunteers''.
    (c) Effective Date.--The amendments made by this section shall 
apply to the use of a passenger automobile after the date of the 
enactment of this Act, in taxable years ending after such date.

               TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS FOR 
              VICTIMS OF HURRICANE KATRINA.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
gross income shall not include any amount which (but for this section) 
would be includible in gross income by reason of the discharge (in 
whole or in part) of indebtedness of a natural person by an applicable 
entity (as defined in section 6050P(c)(1)) if the discharge is by 
reason of the damage sustained by the taxpayer in connection with 
Hurricane Katrina.
    (b) Exception.--Subsection (a) shall not apply to any indebtedness 
incurred in connection with a trade or business.
    (c) Denial of Double Benefit.--The amount excluded from gross 
income under subsection (a) shall be applied to reduce the tax 
attributes of the taxpayer as provided in section 108(b) of such Code.
    (d) Effective Date.--This section shall apply to discharges made on 
or after August 29, 2005, and before January 1, 2007.

SEC. 402. SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CASUALTY 
              LOSSES.

    Paragraphs (1) and (2)(A) of section 165(h) of the Internal Revenue 
Code of 1986 shall not apply to losses described in section 165(c)(3) 
of such Code which are attributable to Hurricane Katrina. In the case 
of any other losses, section 165(h)(2)(A) of such Code shall be applied 
without regard to the losses referred to in the preceding sentence.

SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SECTION 7508A FOR TAX 
              RELIEF FOR VICTIMS OF HURRICANE KATRINA.

    (a) Authority Includes Suspension of Payment of Employment and 
Excise Taxes.--Subparagraphs (A) and (B) of section 7508(a)(1) are 
amended to read as follows:
                    ``(A) Filing any return of income, estate, gift, 
                employment, or excise tax;
                    ``(B) Payment of any income, estate, gift, 
                employment, or excise tax or any installment thereof or 
                of any other liability to the United States in respect 
                thereof;''.
    (b) Application to Victims of Hurricane Katrina.--In the case of 
any taxpayer determined by the Secretary of the Treasury to be affected 
by the Presidentially declared disaster relating to Hurricane Katrina, 
any relief provided by the Secretary of the Treasury under section 
7508A of the Internal Revenue Code of 1986 shall be for a period ending 
not earlier than February 28, 2006, and shall be treated as applying to 
the filing of returns relating to, and the payment of, employment and 
excise taxes.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply for any period for performing an act which has not expired before 
August 29, 2005.

SEC. 404. SPECIAL MORTGAGE FINANCING RULES FOR RESIDENCES LOCATED IN 
              HURRICANE KATRINA DISASTER AREA.

    In the case of a residence located in a Hurricane Katrina disaster 
area which replaces a residence destroyed by Hurricane Katrina or which 
is being repaired for damage caused by Hurricane Katrina, section 143 
of the Internal Revenue Code of 1986 shall be applied with the 
following modifications to financing provided with respect to such 
residence within 3 years after the date of the disaster declaration:
            (1) Subsections (d) of such section 143 shall be applied as 
        if such residence were a targeted area residence.
            (2) The limitation under subsection (k)(4) of such section 
        143 shall be increased (but not above $150,000) to the extent 
        the qualified home-improvement loan is for the repair of damage 
        caused by Hurricane Katrina.
This section shall apply only with respect to bonds issued after August 
28, 2005, and before August 29, 2008.

SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN 
              FOR PROPERTY LOCATED IN HURRICANE KATRINA DISASTER AREA.

    Notwithstanding subsections (g) and (h) of section 1033 of the 
Internal Revenue Code of 1986, clause (i) of section 1033(a)(2)(B) of 
such Code shall be applied by substituting ``5 years'' for ``2 years'' 
with respect to property which is compulsorily or involuntarily 
converted as a result of Hurricane Katrina in a Hurricane Katrina 
disaster area, but only if substantially all of the use of the 
replacement property is in such area.

SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME.

    (a) In General.--In the case of a qualified individual, if the 
earned income of the taxpayer for the taxable year of such taxpayer 
which includes August 28, 2005, is less than the earned income which is 
attributable to the taxpayer for the preceding taxable year, the 
credits allowed under sections 24(d) and 32 of the Internal Revenue 
Code of 1986 may, at the election of the taxpayer, be determined by 
substituting--
            (1) such earned income for the preceding taxable year, for
            (2) such earned income for the taxable year which includes 
        August 28, 2005.
    (b) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means any individual whose principal place of 
abode was (as of August 28, 2005) in any Hurricane Katrina disaster 
area.
    (c) Earned Income.--For purposes of this section, the term ``earned 
income'' has the meaning given such term under section 32(c) of such 
Code.
    (d) Special Rules.--
            (1) Application to joint returns.--For purpose of 
        subsection (a), in the case of a joint return for a taxable 
        year which includes August 28, 2005,
                    (A) such subsection shall apply if either spouse is 
                a qualified individual,
                    (B) the earned income which is attributable to the 
                taxpayer for the preceding taxable year shall be the 
                sum of the earned income which is attributable to each 
                spouse for such preceding taxable year, and
                    (C) the substitution described in such subsection 
                shall apply only with respect to earned income which is 
                attributable to a spouse who is a qualified individual.
            (2) Uniform application of election.--Any election made 
        under subsection (a) shall apply with respect to both section 
        24(d) and section 32 of such Code.
            (3) Errors treated as mathematical error.--For purposes of 
        section 6213 of such Code, an incorrect use on a return of 
        earned income pursuant to subsection (a) shall be treated as a 
        mathematical or clerical error.
            (4) No effect on determination of gross income.--For 
        purposes of the Internal Revenue Code of 1986, gross income 
        shall be determined without regard to any substitution under 
        subsection (a).

SEC. 407. SECRETARIAL AUTHORITY TO MAKE ADJUSTMENTS REGARDING TAXPAYER 
              AND DEPENDENCY STATUS.

    With respect to taxable years beginning in 2005 or 2006, the 
Secretary of the Treasury or the Secretary's delegate may make such 
adjustments in the application of the internal revenue laws as may be 
necessary to ensure that taxpayers do not lose any deduction or credit 
or experience a change of filing status by reason of temporary 
relocations after Hurricane Katrina or by reason of the receipt of 
hurricane relief. Any adjustments made under the preceding sentence 
shall ensure that an individual is not taken into account by more than 
one taxpayer with respect to the same tax benefit.

                     TITLE V--EMERGENCY REQUIREMENT

SEC. 501. EMERGENCY REQUIREMENT.

    Any provision of this Act causing an effect on receipts, budget 
authority, or outlays is designated as an emergency requirement 
pursuant to section 402 of H. Con. Res. 95 (109th Congress).

            Attest:

                                                             Secretary.
109th CONGRESS

  1st Session

                               H. R. 3768

_______________________________________________________________________

                               AMENDMENT