[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.