[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3768 Enrolled Bill (ENR)]
H.R.3768
One Hundred Ninth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday,
the fourth day of January, two thousand and five
An Act
To provide emergency tax relief for persons affected by Hurricane
Katrina.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Katrina Emergency
Tax Relief Act of 2005''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title, etc.
Sec. 2. Hurricane Katrina disaster area.
TITLE I--SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING
TO HURRICANE KATRINA
Sec. 101. Tax-favored withdrawals from retirement plans for relief
relating to Hurricane Katrina.
Sec. 102. Recontributions of withdrawals for home purchases cancelled
due to Hurricane Katrina.
Sec. 103. Loans from qualified plans for relief relating to Hurricane
Katrina.
Sec. 104. Provisions relating to plan amendments.
TITLE II--EMPLOYMENT RELIEF
Sec. 201. Work opportunity tax credit for Hurricane Katrina employees.
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. Additional exemption for housing Hurricane Katrina displaced
individuals.
Sec. 303. Increase in standard mileage rate for charitable use of
vehicles.
Sec. 304. Mileage reimbursements to charitable volunteers excluded from
gross income.
Sec. 305. Charitable deduction for contributions of food inventory.
Sec. 306. Charitable deduction for contributions of book inventories to
public schools.
TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS
Sec. 401. Exclusions of certain cancellations of indebtedness by reason
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 relating to Hurricane Katrina.
Sec. 404. Special rules for mortgage revenue bonds.
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--
(1) Hurricane katrina disaster area.--The term ``Hurricane
Katrina disaster area'' means an area 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 by reason of Hurricane Katrina.
(2) Core disaster area.--The term ``core disaster area'' means
that portion of the Hurricane Katrina disaster area determined by
the President to warrant individual or individual and public
assistance from the Federal Government under such Act.
TITLE I--SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING
TO HURRICANE KATRINA
SEC. 101. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS FOR RELIEF
RELATING TO HURRICANE KATRINA.
(a) In General.--Section 72(t) of the Internal Revenue Code of 1986
shall not apply to any qualified Hurricane Katrina distribution.
(b) Aggregate Dollar Limitation.--
(1) In general.--For purposes of this section, the aggregate
amount of distributions received by an individual which may be
treated as qualified Hurricane Katrina distributions for any
taxable year shall not exceed the excess (if any) of--
(A) $100,000, over
(B) the aggregate amounts treated as qualified Hurricane
Katrina distributions received by such individual for all prior
taxable years.
(2) Treatment of plan distributions.--If a distribution to an
individual would (without regard to paragraph (1)) be a qualified
Hurricane Katrina distribution, a plan shall not be treated as
violating any requirement of the Internal Revenue Code of 1986
merely because the plan treats such distribution as a qualified
Hurricane Katrina 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.
(3) Controlled group.--For purposes of paragraph (2), the term
``controlled group'' means any group treated as a single employer
under subsection (b), (c), (m), or (o) of section 414 of such Code.
(c) Amount Distributed May Be Repaid.--
(1) In general.--Any individual who receives a qualified
Hurricane Katrina distribution may, at any time during the 3-year
period beginning on the day after the date on which such
distribution was received, make one or more contributions in an
aggregate amount not to exceed the amount of such distribution to
an eligible retirement plan 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) of such Code, as the case may
be.
(2) Treatment of repayments of distributions from eligible
retirement plans other than iras.--For purposes of such Code, if a
contribution is made pursuant to paragraph (1) with respect to a
qualified Hurricane Katrina distribution from an eligible
retirement plan 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 Hurricane Katrina
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.
(3) Treatment of repayments for distributions from iras.--For
purposes of such Code, if a contribution is made pursuant to
paragraph (1) with respect to a qualified Hurricane Katrina
distribution from an individual retirement plan (as defined by
section 7701(a)(37) of such Code), then, to the extent of the
amount of the contribution, the qualified Hurricane Katrina
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 in a direct trustee to trustee
transfer within 60 days of the distribution.
(d) Definitions.--For purposes of this section--
(1) Qualified hurricane katrina distribution.--Except as
provided in subsection (b), the term ``qualified Hurricane Katrina
distribution'' means any distribution from an eligible retirement
plan made on or after August 25, 2005, and before January 1, 2007,
to an individual whose principal place of abode on August 28, 2005,
is located in the Hurricane Katrina disaster area and who has
sustained an economic loss by reason of Hurricane Katrina.
(2) Eligible retirement plan.--The term ``eligible retirement
plan'' shall have the meaning given such term by section
402(c)(8)(B) of such Code.
(e) Income Inclusion Spread Over 3 Year Period for Qualified
Hurricane Katrina Distributions.--
(1) In general.--In the case of any qualified Hurricane Katrina
distribution, unless the taxpayer elects not to have this
subsection 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.
(2) Special rule.--For purposes of paragraph (1), rules similar
to the rules of subparagraph (E) of section 408A(d)(3) of such Code
shall apply.
(f) Special Rules.--
(1) Exemption of distributions from trustee to trustee transfer
and withholding rules.--For purposes of sections 401(a)(31),
402(f), and 3405 of such Code, qualified Hurricane Katrina
distributions shall not be treated as eligible rollover
distributions.
(2) Qualified hurricane katrina distributions treated as
meeting plan distribution requirements.--For purposes of such Code,
a qualified Hurricane Katrina distribution shall be treated as
meeting the requirements of sections 401(k)(2)(B)(i),
403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.
SEC. 102. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED
DUE TO HURRICANE KATRINA.
(a) Recontributions.--
(1) In general.--Any individual who received a qualified
distribution may, during the period beginning on August 25, 2005,
and ending on February 28, 2006, 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.--Rules similar to the rules of
paragraphs (2) and (3) of section 101(c) of this Act shall apply
for purposes of this section.
(b) Qualified Distribution Defined.--For purposes of this section,
the term ``qualified distribution'' means any distribution--
(1) 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 such Code,
(2) received after February 28, 2005, and before August 29,
2005, and
(3) which was to be used to purchase or construct a principal
residence in the Hurricane Katrina disaster area, but which was not
so purchased or constructed on account of Hurricane Katrina.
SEC. 103. LOANS FROM QUALIFIED PLANS FOR RELIEF RELATING TO 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 made after the date of enactment of this Act and before
January 1, 2007--
(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 with
an outstanding loan on or after August 25, 2005, from a qualified
employer plan (as defined in section 72(p)(4) of such Code)--
(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 on August 25, 2005,
and ending on December 31, 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, the
period described in paragraph (1) shall be disregarded.
(c) Qualified Individual.--For purposes of this section, the term
``qualified individual'' means an individual whose principal place of
abode on August 28, 2005, is located in the Hurricane Katrina disaster
area and who has sustained an economic loss by reason of Hurricane
Katrina.
SEC. 104. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any amendment to any
plan or annuity contract, 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 EMPLOYEES.
(a) In General.--For purposes of section 51 of the Internal Revenue
Code of 1986, a Hurricane Katrina employee shall be treated as a member
of a targeted group.
(b) Hurricane Katrina Employee.--For purposes of this section, the
term ``Hurricane Katrina employee'' means--
(1) any individual who on August 28, 2005, had a principal
place of abode in the core disaster area and who is hired during
the 2-year period beginning on such date for a position the
principal place of employment of which is located in the core
disaster area, and
(2) any individual who on such date had a principal place of
abode in the core disaster area, who is displaced from such abode
by reason of Hurricane Katrina, and who is hired during the period
beginning on such date and ending on December 31, 2005.
(c) Reasonable Identification Acceptable.--In lieu of the
certification requirement under subparagraph (A) of section 51(d)(12)
of such Code, an individual may provide to the employer reasonable
evidence that the individual is a Hurricane Katrina employee, and
subparagraph (B) of such section shall be applied as if such evidence
were a certification described in such subparagraph.
(d) 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--
(1) section 51(c)(4) of such Code shall not apply, and
(2) section 51(i)(2) of such Code shall not apply with respect
to the first hire of such employee as a Hurricane Katrina employee,
unless such employee was an employee of the employer on August 28,
2005.
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 core 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 by reason of Hurricane Katrina.
(2) Eligible employee.--The term ``eligible employee'' means
with respect to an eligible employer an employee whose principal
place of employment on August 28, 2005, with such eligible employer
was in a core disaster area.
(3) Qualified wages.--The term ``qualified wages'' means wages
(as defined in section 51(c)(1) of such Code, 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.
(c) Credit not Allowed for Large Businesses.--The term ``eligible
employer'' shall not include any trade or business for any taxable year
if such trade or business employed an average of more than 200
employees on business days during the taxable year.
(d) Certain Rules to Apply.--For purposes of this section, rules
similar to the rules of sections 51(i)(1), 52, and 280C(a) of such Code
shall apply.
(e) Employee not Taken Into Account More Than Once.--An employee
shall not be treated as an eligible employee for purposes of this
section for any period with respect to any employer if such employer is
allowed a credit under section 51 of such Code with respect to such
employee for such period.
(f) 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 such Code 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 applying subsections (b) and (d) of section 170
of such Code to other contributions.
(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 subparagraph (F) of section
170(b)(1) of such Code) over the amount of all other charitable
contributions allowed under such section 170(b)(1).
(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 paid during the taxable year
shall not be treated as an itemized deduction for purposes of section
68 of such Code.
(d) Qualified Contributions.--
(1) In general.--For purposes of this section, the term
``qualified contribution'' means any charitable contribution (as
defined in section 170(c) of such Code)--
(A) paid 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),
(B) in the case of a contribution paid by a corporation,
such contribution is for relief efforts related to Hurricane
Katrina, and
(C) with respect to which the taxpayer has elected the
application of this section.
(2) Exception.--Such term shall not include a contribution if
the contribution is for establishment of a new, or maintenance in
an existing, segregated fund or account with respect to which the
donor (or any person appointed or designated by such donor) has, or
reasonably expects to have, advisory privileges with respect to
distributions or investments by reason of the donor's status as a
donor.
(3) Application of election to partnerships and s
corporations.--In the case of a partnership or S corporation, the
election under paragraph (1)(C) shall be made separately by each
partner or shareholder.
SEC. 302. ADDITIONAL EXEMPTION FOR HOUSING HURRICANE KATRINA DISPLACED
INDIVIDUALS.
(a) In General.--In the case of taxable years of a natural person
beginning in 2005 or 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 prior 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 for any prior taxable year.
(3) Identifying information required.--An individual shall not
be taken into account under subsection (a) for a taxable year
unless the taxpayer identification number of such individual is
included on the return of the taxpayer for such taxable year.
(c) Hurricane Katrina Displaced Individual.--For purposes of this
section, the term ``Hurricane Katrina displaced individual'' means,
with respect to any taxpayer for any taxable year, any natural person
if--
(1) such person's principal place of abode on August 28, 2005,
was in the Hurricane Katrina disaster area,
(2)(A) in the case of such an abode located in the core
disaster area, such person is displaced from such abode, or
(B) in the case of such an abode located outside of the core
disaster area, such person is displaced from such abode, and
(i) such abode was damaged by Hurricane Katrina, or
(ii) such person was evacuated from such abode by reason of
Hurricane Katrina, and
(3) such person 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.
(d) Compensation for Housing.--No deduction shall be allowed under
this section if the taxpayer receives any rent or other amount (from
any source) in connection with the providing of such housing.
SEC. 303. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE USE OF
VEHICLES.
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) of such
section for provision of relief related to Hurricane Katrina during the
period beginning on August 25, 2005, and ending on December 31, 2006,
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. 304. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS EXCLUDED FROM
GROSS INCOME.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
gross income of an individual for taxable years ending on or after
August 25, 2005, does not include amounts received, from an
organization described in section 170(c) of such Code, as reimbursement
of operating expenses with respect to use of a passenger automobile for
the benefit of such organization in connection with providing relief
relating to Hurricane Katrina during the period beginning on August 25,
2005, and ending on December 31, 2006. The preceding sentence shall
apply only to the extent that the expenses which are reimbursed would
be deductible under chapter 1 of such Code if section 274(d) of such
Code were applied--
(1) by using the standard business mileage rate in effect under
section 162(a) at the time of such use, and
(2) as if the individual were an employee of an organization
not described in section 170(c) of such Code.
(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.--No deduction or credit shall be allowed
under any other provision of such Code with respect to the expenses
excludable from gross income under subsection (a).
SEC. 305. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.
(a) In General.--Paragraph (3) of section 170(e) of the Internal
Revenue Code of 1986 (relating to special rule for certain
contributions of inventory and other 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 food inventory.--
``(i) General rule.--In the case of a charitable
contribution of food from any trade or business of the
taxpayer, this paragraph shall be applied--
``(I) without regard to whether the contribution is
made by a C corporation, and
``(II) only to food that is apparently wholesome
food.
``(ii) Limitation.--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 aggregate net income for such taxable year
from all trades or businesses from which such contributions
were made for such year, computed without regard to this
section.
``(iii) Apparently wholesome food.--For purposes of
this subparagraph, the term `apparently wholesome food' has
the meaning given to 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 subparagraph.
``(iv) Termination.--This subparagraph shall not apply
to contributions made after December 31, 2005.''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made on or after August 28, 2005, in taxable years
ending after such date.
SEC. 306. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES TO
PUBLIC SCHOOLS.
(a) In General.--Paragraph (3) of section 170(e) of the Internal
Revenue Code of 1986 (relating to certain contributions of ordinary
income and capital gain property), as amended by section 305, is
amended by redesignating subparagraph (D) as subparagraph (E) and by
inserting after subparagraph (C) the following new subparagraph:
``(D) Special rule for contributions of book inventory to
public schools.--
``(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 the donee is an organization described in
the matter preceding clause (i) of subparagraph (A).
``(ii) Qualified book contribution.--For purposes of
this paragraph, the term `qualified book contribution'
means a charitable contribution of books to a public school
which is an educational organization described in
subsection (b)(1)(A)(ii) and which provides elementary
education or secondary education (kindergarten through
grade 12).
``(iii) Certification by donee.--Subparagraph (A) shall
not apply to any contribution unless (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.
``(iv) Termination.--This subparagraph shall not apply
to contributions made after December 31, 2005.''.
(b) Effective Date.--The amendments made by this section shall
apply to contributions made on or after August 28, 2005, in taxable
years ending after such date.
TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS
SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS BY REASON
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 described in
subsection (b) by an applicable entity (as defined in section
6050P(c)(1) of such Code).
(b) Persons Described.--A natural person is described in this
subsection if the principal place of abode of such person on August 25,
2005, was located--
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside the
core disaster area) and such person suffered economic loss by
reason of Hurricane Katrina.
(c) Exceptions.--
(1) Business indebtedness.--Subsection (a) shall not apply to
any indebtedness incurred in connection with a trade or business.
(2) Real property outside core disaster area.--Subsection (a)
shall not apply to any discharge of indebtedness to the extent that
real property constituting security for such indebtedness is
located outside of the Hurricane Katrina disaster area.
(d) Denial of Double Benefit.--For purposes of the Internal Revenue
Code of 1986, the amount excluded from gross income under subsection
(a) shall be treated in the same manner as an amount excluded under
section 108(a) of such Code.
(e) Effective Date.--This section shall apply to discharges made on
or after August 25, 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 arise in the Hurricane Katrina disaster area on or
after August 25, 2005, and 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 RELATING TO HURRICANE KATRINA.
(a) Authority Includes Suspension of Payment of Employment and
Excise Taxes.--Subparagraphs (A) and (B) of section 7508(a)(1) of the
Internal Revenue Code of 1986 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 With Respect to 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 25, 2005.
SEC. 404. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
(a) In General.--In the case of financing provided with respect to
a qualified Hurricane Katrina recovery residence, subsection (d) of
section 143 of the Internal Revenue Code of 1986 shall be applied as if
such residence were a targeted area residence.
(b) Qualified Hurricane Katrina Recovery Residence.--For purposes
of this section, the term ``qualified Hurricane Katrina recovery
residence'' means--
(1) any residence in the core disaster area, and
(2) any other residence if--
(A) such other residence is located in the same State as
the principal residence referred to in subparagraph (B), and
(B) the mortgagor with respect to such other residence
owned a principal residence on August 28, 2005, which--
(i) was located in the Hurricane Katrina disaster area,
and
(ii) was rendered uninhabitable by reason of Hurricane
Katrina.
(c) Special Rule for Home Improvement Loans.--In the case of any
loan with respect to a residence in the Hurricane Katrina disaster
area, section 143(k)(4) of such Code shall be applied by substituting
$150,000 for the dollar amount contained therein to the extent such
loan is for the repair of damage by reason of Hurricane Katrina.
(d) Application.--Subsection (a) shall not apply to financing
provided after December 31, 2007.
SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN
FOR PROPERTY LOCATED IN HURRICANE KATRINA DISASTER AREA.
Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code of
1986 shall be applied by substituting ``5 years'' for ``2 years'' with
respect to property in the Hurricane Katrina disaster area which is
compulsorily or involuntarily converted on or after August 25, 2005, by
reason of Hurricane Katrina, 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 which includes
August 25, 2005, is less than the earned income of 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 25, 2005.
(b) Qualified Individual.--For purposes of this section, the term
``qualified individual'' means any individual whose principal place of
abode on August 25, 2005, was located--
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside the
core disaster area) and such individual was displaced from such
principal place of abode by reason of Hurricane Katrina.
(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 purposes of subsection
(a), in the case of a joint return for a taxable year which
includes August 25, 2005--
(A) such subsection shall apply if either spouse is a
qualified individual, and
(B) the earned income of the taxpayer for the preceding
taxable year shall be the sum of the earned income of each
spouse for such preceding taxable year.
(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, etc.--Except as
otherwise provided in this section, the Internal Revenue Code of
1986 shall be applied 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 by reason of Hurricane Katrina. 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).
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.