[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4440 Engrossed in House (EH)]


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
109th CONGRESS
  1st Session
                                H. R. 4440

_______________________________________________________________________

                                 AN ACT


 
To amend the Internal Revenue Code of 1986 to provide tax benefits for 
the Gulf Opportunity Zone and certain areas affected by Hurricanes Rita 
                   and Wilma, and for other purposes.

    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 ``Gulf Opportunity 
Zone 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 of this Act is as 
follows:

Sec. 1. Short title; etc.
            TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE

Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Federal guarantee of certain State bonds.
      TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA

Sec. 201. Extension of certain emergency tax relief for Hurricane 
                            Katrina to Hurricanes Rita and Wilma.
                      TITLE III--OTHER PROVISIONS

Sec. 301. Secretarial authority to extend period during which traveling 
                            expenses are treated as incurred away from 
                            home in case of major disaster.
Sec. 302. Gulf Coast Recovery Bonds.

            TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE

SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.

    (a) In General.--Subchapter Y of chapter 1 is amended by adding at 
the end the following new part:

           ``PART II--TAX BENEFITS FOR GULF OPPORTUNITY ZONE

``Sec. 1400M. Definitions.
``Sec. 1400N. Tax benefits for Gulf Opportunity Zone.

``SEC. 1400M. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Gulf opportunity zone.--The terms `Gulf Opportunity 
        Zone' and `GO Zone' mean 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 the Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act by reason of Hurricane Katrina.
            ``(2) 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 such Act by reason of 
        Hurricane Katrina.
            ``(3) Rita go zone.--The term `Rita GO Zone' means that 
        portion of the Hurricane Rita disaster area determined by the 
        President to warrant individual or individual and public 
        assistance from the Federal Government under such Act by reason 
        of Hurricane Rita.
            ``(4) Hurricane rita disaster area.--The term `Hurricane 
        Rita disaster area' means an area with respect to which a major 
        disaster has been declared by the President, before October 6, 
        2005, under section 401 of such Act by reason of Hurricane 
        Rita.
            ``(5) Wilma go zone.--The term `Wilma GO Zone' means that 
        portion of the Hurricane Wilma disaster area determined by the 
        President to warrant individual or individual and public 
        assistance from the Federal Government under such Act by reason 
        of Hurricane Wilma.
            ``(6) Hurricane wilma disaster area.--The term `Hurricane 
        Wilma disaster area' means an area with respect to which a 
        major disaster has been declared by the President, before 
        November 14, 2005, under section 401 of such Act by reason of 
        Hurricane Wilma.

``SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.

    ``(a) Tax-Exempt Bond Financing.--
            ``(1) In general.--For purposes of this title--
                    ``(A) any qualified Gulf Opportunity Zone Bond 
                described in paragraph (2)(A)(i) shall be treated as an 
                exempt facility bond, and
                    ``(B) any qualified Gulf Opportunity Zone Bond 
                described in paragraph (2)(A)(ii) shall be treated as a 
                qualified mortgage bond.
            ``(2) Qualified gulf opportunity zone bond.--For purposes 
        of this subsection, the term `qualified Gulf Opportunity Zone 
        Bond' means any bond issued as part of an issue if--
                    ``(A)(i) 95 percent or more of the net proceeds (as 
                defined in section 150(a)(3)) of such issue are to be 
                used for qualified project costs, or
                    ``(ii) such issue meets the requirements of a 
                qualified mortgage issue, except as otherwise provided 
                in this subsection,
                    ``(B) such bond is issued by the State of Alabama, 
                Louisiana, or Mississippi, or any political subdivision 
                thereof,
                    ``(C) such bond is designated for purposes of this 
                section by--
                            ``(i) in the case of a bond which is 
                        required under State law to be approved by the 
                        bond commission of such State, such bond 
                        commission, and
                            ``(ii) in the case of any other bond, the 
                        Governor of such State, and
                    ``(D) such bond is issued after the date of the 
                enactment of this section and before January 1, 2011.
            ``(3) Limitations on bonds.--
                    ``(A) Aggregate amount designated.--The maximum 
                aggregate face amount of bonds which may be designated 
                under this subsection with respect to any State shall 
                not exceed the product of $2,500 multiplied by the 
                portion of the State population which is in the Gulf 
                Opportunity Zone (as determined on the basis of the 
                most recent census estimate of resident population 
                released by the Bureau of Census before August 28, 
                2005).
                    ``(B) Movable property.--No bonds shall be issued 
                which are to be used for movable fixtures and 
                equipment.
            ``(4) Qualified project costs.--For purposes of this 
        subsection, the term `qualified project costs' means the cost 
        of acquisition, construction, reconstruction, and renovation 
        of--
                    ``(A) nonresidential real property and qualified 
                residential rental property (as defined in section 
                142(d)) located in the Gulf Opportunity Zone, and
                    ``(B) public utility property (as defined in 
                section 168(i)(10)) located in the Gulf Opportunity 
                Zone.
            ``(5) Special rules.--In applying this title to any 
        qualified Gulf Opportunity Zone Bond, the following 
        modifications shall apply:
                    ``(A) Section 142(d)(1) (defining qualified 
                residential rental project) shall be applied--
                            ``(i) by substituting `60 percent' for `50 
                        percent' in subparagraph (A) thereof, and
                            ``(ii) by substituting `70 percent' for `60 
                        percent' in subparagraph (B) thereof.
                    ``(B) Section 143 (relating to mortgage revenue 
                bonds: qualified mortgage bond and qualified veterans' 
                mortgage bond) shall be applied--
                            ``(i) by treating only residences in the 
                        Gulf Opportunity Zone as owner-occupied 
                        residences,
                            ``(ii) by treating any residence in the 
                        Gulf Opportunity Zone as a targeted area 
                        residence, and
                            ``(iii) by substituting `$150,000' for 
                        `$15,000' in subsection (k)(4) thereof.
                    ``(C) Except as provided in section 143, repayments 
                of principal on financing provided by the issue of 
                which such bond is a part may not be used to provide 
                financing.
                    ``(D) Section 146 (relating to volume cap) shall 
                not apply.
                    ``(E) Section 147(d)(2) (relating to acquisition of 
                existing property not permitted) shall be applied by 
                substituting `50 percent' for `15 percent' each place 
                it appears.
                    ``(F) Section 148(f)(4)(C) (relating to exception 
                from rebate for certain proceeds to be used to finance 
                construction expenditures) shall apply to the available 
                construction proceeds of bonds which are part of an 
                issue described in paragraph (2)(A)(i).
                    ``(G) Section 57(a)(5) (relating to tax-exempt 
                interest) shall not apply.
            ``(6) Separate issue treatment of portions of an issue.--
        This subsection shall not apply to the portion of an issue 
        which (if issued as a separate issue) would be treated as a 
        qualified bond or as a bond that is not a private activity bond 
        (determined without regard to paragraph (1)), if the issuer 
        elects to so treat such portion.
    ``(b) Advance Refundings of Certain Tax-Exempt Bonds.--
            ``(1) In general.--With respect to a bond described in 
        paragraph (3) which is not a qualified 501(c)(3) bond, one 
        additional advance refunding after the date of the enactment of 
        this section and before January 1, 2011, shall be allowed under 
        the applicable rules of section 149(d) if--
                    ``(A) the Governor of the State designates the 
                advance refunding bond for purposes of this subsection, 
                and
                    ``(B) the requirements of paragraph (5) are met.
            ``(2) Certain private activity bonds.--With respect to a 
        bond described in paragraph (3) which is an exempt facility 
        bond described in paragraph (1) or (2) of section 142(a), one 
        advance refunding after the date of the enactment of this 
        section and before January 1, 2011, shall be allowed under the 
        applicable rules of section 149(d) (notwithstanding paragraph 
        (2) thereof) if the requirements of subparagraphs (A) and (B) 
        of paragraph (1) are met.
            ``(3) Bonds described.--A bond is described in this 
        paragraph if such bond was outstanding on August 28, 2005, and 
        is issued by the State of Alabama, Louisiana, or Mississippi, 
        or a political subdivision thereof.
            ``(4) Aggregate limit.--The maximum aggregate face amount 
        of bonds which may be designated under this subsection by the 
        Governor of a State shall not exceed--
                    ``(A) $4,500,000,000 in the case of the State of 
                Louisiana,
                    ``(B) $2,250,000,000 in the case of the State of 
                Mississippi, and
                    ``(C) $1,125,000,000 in the case of the State of 
                Alabama.
            ``(5) Additional requirements.--The requirements of this 
        paragraph are met with respect to any advance refunding of a 
        bond described in paragraph (3) if--
                    ``(A) no advance refundings of such bond would be 
                allowed under this title on or after August 28, 2005,
                    ``(B) the advance refunding bond is the only other 
                outstanding bond with respect to the refunded bond, and
                    ``(C) the requirements of section 148 are met with 
                respect to all bonds issued under this subsection.
    ``(c) Low-Income Housing Credit.--
            ``(1) Additional housing credit dollar amount.--
                    ``(A) In general.--For purposes of section 42, in 
                the case of calendar years 2006, 2007, and 2008, the 
                State housing credit ceiling of each State, any portion 
                of which is located in the Gulf Opportunity Zone, shall 
                be increased by the lesser of--
                            ``(i) the aggregate housing credit dollar 
                        amount allocated by the State housing credit 
                        agency of such State to buildings located in 
                        the Gulf Opportunity Zone for such calendar 
                        year, or
                            ``(ii) the Gulf Opportunity housing amount 
                        for such State for such calendar year.
                    ``(B) Gulf opportunity housing amount.--For 
                purposes of subparagraph (A), the term `Gulf 
                Opportunity housing amount' means, for any calendar 
                year, the amount equal to the product of $18.00 
                multiplied by the portion of the State population which 
                is in the Gulf Opportunity Zone (as determined on the 
                basis of the most recent census estimate of resident 
                population released by the Bureau of Census before 
                August 28, 2005).
                    ``(C) Allocations treated as made first from 
                additional allocation amount for purposes of 
                determining carryover.--For purposes of determining the 
                unused State housing credit ceiling under section 
                42(h)(3)(C) for any calendar year, any increase in the 
                State housing credit ceiling under subparagraph (A) 
                shall be treated as an amount described in clause (ii) 
                of such section.
            ``(2) Difficult development area.--
                    ``(A) In general.--For purposes of section 42, in 
                the case of property placed in service during 2006, 
                2007, or 2008, the Gulf Opportunity Zone--
                            ``(i) shall be treated as a difficult 
                        development area designated under subclause (I) 
                        of section 42(d)(5)(C)(iii), and
                            ``(ii) shall not be taken into account for 
                        purposes of applying the limitation under 
                        subclause (II) of such section.
                    ``(B) Application.--Subparagraph (A) shall apply 
                only to--
                            ``(i) housing credit dollar amounts 
                        allocated during the period beginning on 
                        January 1, 2006, and ending on December 31, 
                        2008, and
                            ``(ii) buildings placed in service during 
                        such period to the extent that paragraph (1) of 
                        section 42(h) does not apply to any building by 
                        reason of paragraph (4) thereof, but only with 
                        respect to bonds issued after December 31, 
                        2005.
            ``(3) Special rule for applying income tests.--In the case 
        of property placed in service--
                    ``(A) during 2006, 2007, or 2008,
                    ``(B) in the Gulf Opportunity Zone, and
                    ``(C) in a nonmetropolitan area (as defined in 
                section 42(d)(5)(C)(iv)(IV)),
        section 42 shall be applied by substituting `national 
        nonmetropolitan median gross income (determined under rules 
        similar to the rules of section 142(d)(2)(B))' for `area median 
        gross income' in subparagraphs (A) and (B) of section 42(g)(1).
            ``(4) Definitions.--Any term used in this subsection which 
        is also used in section 42 shall have the same meaning as when 
        used in such section.
    ``(d) Special Allowance for Certain Property Acquired on or After 
August 28, 2005.--
            ``(1) Additional allowance.--In the case of any qualified 
        Gulf Opportunity Zone property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 50 percent of the adjusted basis of 
                such property, and
                    ``(B) the adjusted basis of the qualified Gulf 
                Opportunity Zone property shall be reduced by the 
                amount of such deduction before computing the amount 
                otherwise allowable as a depreciation deduction under 
                this chapter for such taxable year and any subsequent 
                taxable year.
            ``(2) Qualified gulf opportunity zone property.-- For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified Gulf 
                Opportunity Zone property' means property--
                            ``(i)(I) which is described in section 
                        168(k)(2)(A)(i), or
                            ``(II) which is nonresidential real 
                        property or residential rental property,
                            ``(ii) substantially all of the use of 
                        which is in the Gulf Opportunity Zone and is in 
                        the active conduct of a trade or business by 
                        the taxpayer in such Zone,
                            ``(iii) the original use of which in the 
                        Gulf Opportunity Zone commences with the 
                        taxpayer on or after August 28, 2005,
                            ``(iv) which is acquired by the taxpayer by 
                        purchase (as defined in section 179(d)) on or 
                        after August 28, 2005, but only if no written 
                        binding contract for the acquisition was in 
                        effect before August 28, 2005, and
                            ``(v) which is placed in service by the 
                        taxpayer on or before December 31, 2007 
                        (December 31, 2008, in the case of 
                        nonresidential real property and residential 
                        rental property).
                    ``(B) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        Such term shall not include any property 
                        described in section 168(k)(2)(D)(i).
                            ``(ii) Tax-exempt bond-financed property.--
                        Such term shall not include any property any 
                        portion of which is financed with the proceeds 
                        of any obligation the interest on which is 
                        exempt from tax under section 103.
                            ``(iii) Qualified revitalization 
                        buildings.--Such term shall not include any 
                        qualified revitalization building with respect 
                        to which the taxpayer has elected the 
                        application of paragraph (1) or (2) of section 
                        1400I(a).
                            ``(iv) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
            ``(3) Special rules.--For purposes of this subsection, 
        rules similar to the rules of subparagraph (E) of section 
        168(k)(2) shall apply, except that such subparagraph shall be 
        applied--
                    ``(A) by substituting `August 27, 2005' for 
                `September 10, 2001' each place it appears therein,
                    ``(B) by substituting `January 1, 2008' for 
                `January 1, 2005' in clause (i) thereof, and
                    ``(C) by substituting `qualified Gulf Opportunity 
                Zone property' for `qualified property' in clause (iv) 
                thereof.
            ``(4) Allowance against alternative minimum tax.--For 
        purposes of this subsection, rules similar to the rules of 
        section 168(k)(2)(G) shall apply.
            ``(5) Recapture.--For purposes of this subsection, rules 
        similar to the rules under section 179(d)(10) shall apply with 
        respect to any qualified Gulf Opportunity Zone property which 
        ceases to be qualified Gulf Opportunity Zone property.
    ``(e) Increase in Expensing Under Section 179.--
            ``(1) In general.--For purposes of section 179--
                    ``(A) the dollar amount in effect under section 
                179(b)(1) for the taxable year shall be increased by 
                the lesser of--
                            ``(i) $100,000, or
                            ``(ii) the cost of qualified section 179 
                        Gulf Opportunity Zone property placed in 
                        service during the taxable year, and
                    ``(B) the dollar amount in effect under section 
                179(b)(2) for the taxable year shall be increased by 
                the lesser of--
                            ``(i) $600,000, or
                            ``(ii) the cost of qualified section 179 
                        Gulf Opportunity Zone property placed in 
                        service during the taxable year.
            ``(2) Qualified section 179 gulf opportunity zone 
        property.--For purposes of this subsection, the term `qualified 
        section 179 Gulf Opportunity Zone property' means section 179 
        property (as defined in section 179(d)) which is qualified Gulf 
        Opportunity Zone property (as defined in subsection (d)(2)).
            ``(3) Coordination with empowerment zones and renewal 
        communities.--For purposes of sections 1397A and 1400J, 
        qualified section 179 Gulf Opportunity Zone property shall not 
        be treated as qualified zone property or qualified renewal 
        property, unless the taxpayer elects not to take such qualified 
        section 179 Gulf Opportunity Zone property into account for 
        purposes of this subsection.
            ``(4) Recapture.--For purposes of this subsection, rules 
        similar to the rules under section 179(d)(10) shall apply with 
        respect to any qualified section 179 Gulf Opportunity Zone 
        property which ceases to be qualified section 179 Gulf 
        Opportunity Zone property.
    ``(f) Expensing for Certain Demolition and Clean-Up Costs.--
            ``(1) In general.--A taxpayer may elect to treat 50 percent 
        of any qualified Gulf Opportunity Zone clean-up cost as an 
        expense which is not chargeable to capital account. Any cost so 
        treated shall be allowed as a deduction for the taxable year in 
        which such cost is paid or incurred.
            ``(2) Qualified gulf opportunity zone clean-up cost.--For 
        purposes of this subsection, the term `qualified Gulf 
        Opportunity Zone clean-up cost' means any amount paid or 
        incurred during the period beginning on August 28, 2005, and 
        ending on December 31, 2007, for the removal of debris from, or 
        the demolition of structures on, real property which is located 
        in the Gulf Opportunity Zone and which is--
                    ``(A) held by the taxpayer for use in a trade or 
                business or for the production of income, or
                    ``(B) property described in section 1221(a)(1) in 
                the hands of the taxpayer.
        For purposes of the preceding sentence, amounts paid or 
        incurred shall be taken into account only to the extent that 
        such amount would (but for paragraph (1)) be chargeable to 
        capital account.
    ``(g) Extension of Expensing for Environmental Remediation Costs.--
With respect to any qualified environmental remediation expenditure (as 
defined in section 198(b)) paid or incurred on or after August 28, 
2005, in connection with a qualified contaminated site located in the 
Gulf Opportunity Zone, section 198 (relating to expensing of 
environmental remediation costs) shall be applied--
            ``(1) in the case of expenditures paid or incurred on or 
        after August 28, 2005, and before January 1, 2008, by 
        substituting `December 31, 2007' for the date contained in 
        section 198(h), and
            ``(2) except as provided in section 198(d)(2), by treating 
        petroleum products (as defined in section 4612(a)(3)) as a 
        hazardous substance.
    ``(h) Increase in Rehabilitation Credit.--In the case of qualified 
rehabilitation expenditures (as defined in section 47(c)) paid or 
incurred during the period beginning on August 28, 2005, and ending on 
December 31, 2008, with respect to any qualified rehabilitated building 
or certified historic structure (as defined in section 47(c)) located 
in the Gulf Opportunity Zone, subsection (a) of section 47 (relating to 
rehabilitation credit) shall be applied--
            ``(1) by substituting `13 percent' for `10 percent' in 
        paragraph (1) thereof, and
            ``(2) by substituting `26 percent' for `20 percent' in 
        paragraph (2) thereof.
    ``(i) Special Rules for Small Timber Producers.--
            ``(1) Increased expensing for qualified timber property.--
        In the case of qualified timber property any portion of which 
        is located in the Gulf Opportunity Zone or in that portion of 
        the Rita GO Zone which is not part of the Gulf Opportunity 
        Zone, the limitation under subparagraph (B) of section 
        194(b)(1) shall be increased by the lesser of--
                    ``(A) the limitation which would (but for this 
                subsection) apply under such subparagraph, or
                    ``(B) the amount of reforestation expenditures (as 
                defined in section 194(c)(3)) paid or incurred by the 
                taxpayer with respect to such qualified timber property 
                during the specified portion of the taxable year.
            ``(2) 5 year nol carryback of certain timber losses.--For 
        purposes of determining farming loss under section 172(i), 
        income and deductions which are allocable to the specified 
        portion of the taxable year and which are attributable to 
        qualified timber property any portion of which is located in 
        the Gulf Opportunity Zone or in that portion of the Rita GO 
        Zone which is not part of the Gulf Opportunity Zone shall be 
        treated as attributable to farming businesses.
            ``(3) Rules not applicable to large timber producers.--
                    ``(A) Expensing.--Paragraph (1) shall not apply to 
                any taxpayer if such taxpayer holds more than 500 acres 
                of qualified timber property at any time during the 
                taxable year.
                    ``(B) NOL carryback.--Paragraph (2) shall not apply 
                with respect to any qualified timber property unless--
                            ``(i) such property was held by the 
                        taxpayer--
                                    ``(I) on August 28, 2005, in the 
                                case of qualified timber property any 
                                portion of which is located in the Gulf 
                                Opportunity Zone, or
                                    ``(II) on September 23, 2005, in 
                                the case of qualified timber property 
                                (other than property described in 
                                subclause (I)) any portion of which is 
                                located in that portion of the Rita GO 
                                Zone which is not part of the Gulf 
                                Opportunity Zone, and
                            ``(ii) such taxpayer held not more than 500 
                        acres of qualified timber property on such 
                        date.
                    ``(C) Aggregation rule.--For purposes of 
                subparagraphs (A) and (B), related persons shall be 
                treated as one taxpayer. For purposes of the preceding 
                sentence, the following shall be treated as related 
                persons--
                            ``(i) 2 or more persons if the relationship 
                        between such persons would result in a 
                        disallowance of losses under section 267 or 
                        707(b), and
                            ``(ii) 2 or more persons which are members 
                        of the same controlled group (within the 
                        meaning of section 194(b)(2)(A)) of 
                        corporations.
                For purposes of clause (i), section 267 shall be 
                applied without regard to subsection (b)(1) thereof.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Specified portion.--The term `specified 
                portion' means--
                            ``(i) in the case of qualified timber 
                        property any portion of which is located in the 
                        Gulf Opportunity Zone, that portion of the 
                        taxable year which is on or after August 28, 
                        2005, and before January 1, 2007, and
                            ``(ii) in the case of qualified timber 
                        property (other than property described in 
                        clause (i)) any portion of which is located in 
                        the Rita GO Zone, that portion of the taxable 
                        year which is on or after September 23, 2005, 
                        and before January 1, 2007.
                    ``(B) Qualified timber property.--The term 
                `qualified timber property' has the meaning given such 
                term in section 194(c)(1).
    ``(j) Special Rule for Gulf Opportunity Zone Public Utility 
Casualty Losses.--
            ``(1) In general.--The amount described in section 
        172(f)(1)(A) for any taxable year shall be increased by the 
        Gulf Opportunity Zone public utility casualty loss for such 
        taxable year.
            ``(2) Gulf opportunity zone public utility casualty loss.--
        For purposes of this subsection, the term `Gulf Opportunity 
        Zone public utility casualty loss' means any casualty loss of 
        public utility property (as defined in section 168(i)(10)) 
        located in the Gulf Opportunity Zone if--
                    ``(A) such loss is allowed as a deduction under 
                section 165 for the taxable year,
                    ``(B) such loss is by reason of Hurricane Katrina, 
                and
                    ``(C) the taxpayer elects the application of this 
                subsection with respect to such loss.
            ``(3) Reduction for gains from involuntary conversion.--The 
        amount of Gulf Opportunity Zone public utility casualty loss 
        which would (but for this paragraph) be taken into account 
        under paragraph (1) for any taxable year shall be reduced by 
        the amount of any gain recognized by the taxpayer for such year 
        from the involuntary conversion by reason of Hurricane Katrina 
        of public utility property (as so defined) located in the Gulf 
        Opportunity Zone.
            ``(4) Coordination with general disaster loss rules.--
        Section 165(i) shall not apply to any Gulf Opportunity Zone 
        public utility casualty loss to the extent such loss is taken 
        into account under paragraph (1).
            ``(5) Election.--Any election under paragraph (2)(C) shall 
        be made in such manner as may be prescribed by the Secretary 
        and shall be made by the due date (including extensions of 
        time) for filing the taxpayer's return for the taxable year of 
        the loss. Such election, once made for any taxable year, shall 
        be irrevocable for such taxable year.
    ``(k) Special NOL Carryback of Cost Recovery Deductions for 
Qualified GO Zone Property.--
            ``(1) In general.--For purposes of section 172, the GO Zone 
        cost recovery loss for any taxable year ending on or after 
        August 28, 2005, and before January 1, 2009, shall be a net 
        operating loss carryback to each of the 5 taxable years 
        preceding the taxable year of the loss.
            ``(2) GO zone cost recovery loss.--For purposes of this 
        subsection, the term `GO Zone cost recovery loss' means, with 
        respect to any taxable year, the lesser of--
                    ``(A) the aggregate amount of the deductions 
                allowed under sections 167 and 168 with respect to 
                qualified Gulf Opportunity Zone property (as defined in 
                subsection (d)(2), but without regard to subparagraph 
                (B)(iv) thereof) which is placed in service during such 
                taxable year, or
                    ``(B) the excess of--
                            ``(i) the net operating loss for such 
                        taxable year, over
                            ``(ii) the specified liability loss for 
                        such taxable year to which a 10-year carryback 
                        applies under section 172(b)(1)(C).
            ``(3) Coordination with ordering rule.--For purposes of 
        applying section 172(b)(2), a GO Zone cost recovery loss to 
        which paragraph (1) applies shall be treated in a manner 
        similar to the manner in which a specified liability loss is 
        treated.
            ``(4) Election out.--A rule similar to the rule of section 
        172(j) shall apply for purposes of this subsection.
    ``(l) Credit to Holders of Gulf Tax Credit Bonds.--
            ``(1) Allowance of credit.--If a taxpayer holds a Gulf tax 
        credit bond on one or more credit allowance dates of the bond 
        occurring during any taxable year, there shall be allowed as a 
        credit against the tax imposed by this chapter for the taxable 
        year an amount equal to the sum of the credits determined under 
        paragraph (2) with respect to such dates.
            ``(2) Amount of credit.--
                    ``(A) In general.--The amount of the credit 
                determined under this paragraph with respect to any 
                credit allowance date for a Gulf tax credit bond is 25 
                percent of the annual credit determined with respect to 
                such bond.
                    ``(B) Annual credit.--The annual credit determined 
                with respect to any Gulf tax credit bond is the product 
                of--
                            ``(i) the credit rate determined by the 
                        Secretary under subparagraph (C) for the day on 
                        which such bond was sold, multiplied by
                            ``(ii) the outstanding face amount of the 
                        bond.
                    ``(C) Determination.--For purposes of subparagraph 
                (B), with respect to any Gulf tax credit bond, the 
                Secretary shall determine daily or cause to be 
                determined daily a credit rate which shall apply to the 
                first day on which there is a binding, written contract 
                for the sale or exchange of the bond. The credit rate 
                for any day is the credit rate which the Secretary or 
                the Secretary's designee estimates will permit the 
                issuance of Gulf tax credit bonds with a specified 
                maturity or redemption date without discount and 
                without interest cost to the issuer.
                    ``(D) Credit allowance date.--For purposes of this 
                subsection, the term `credit allowance date' means 
                March 15, June 15, September 15, and December 15. Such 
                term also includes the last day on which the bond is 
                outstanding.
                    ``(E) Special rule for issuance and redemption.--In 
                the case of a bond which is issued during the 3-month 
                period ending on a credit allowance date, the amount of 
                the credit determined under this paragraph with respect 
                to such credit allowance date shall be a ratable 
                portion of the credit otherwise determined based on the 
                portion of the 3-month period during which the bond is 
                outstanding. A similar rule shall apply when the bond 
                is redeemed or matures.
            ``(3) Limitation based on amount of tax.--The credit 
        allowed under paragraph (1) for any taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C and this 
                subsection).
            ``(4) Gulf tax credit bond.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `Gulf tax credit bond' 
                means any bond issued as part of an issue if--
                            ``(i) the bond is issued by the State of 
                        Alabama, Louisiana, or Mississippi,
                            ``(ii) 95 percent or more of the proceeds 
                        of such issue are to be used to--
                                    ``(I) pay principal, interest, or 
                                premiums on qualified bonds issued by 
                                such State or any political subdivision 
                                of such State, or
                                    ``(II) make a loan to any political 
                                subdivision of such State to pay 
                                principal, interest, or premiums on 
                                qualified bonds issued by such 
                                political subdivision,
                            ``(iii) the Governor of such State 
                        designates such bond for purposes of this 
                        subsection,
                            ``(iv) the bond is a general obligation of 
                        such State and is in registered form (within 
                        the meaning of section 149(a)),
                            ``(v) the maturity of such bond does not 
                        exceed 2 years, and
                            ``(vi) the bond is issued after December 
                        31, 2005, and before January 1, 2007.
                    ``(B) State matching requirement.--A bond shall not 
                be treated as a Gulf tax credit bond unless--
                            ``(i) the issuer of such bond pledges as of 
                        the date of the issuance of the issue an amount 
                        equal to the face amount of such bond to be 
                        used for payments described in subclause (I) of 
                        subparagraph (A)(ii), or loans described in 
                        subclause (II) of such subparagraph, as the 
                        case may be, with respect to the issue of which 
                        such bond is a part, and
                            ``(ii) any such payment or loan is made in 
                        equal amounts from the proceeds of such issue 
                        and from the amount pledged under clause (i).
                The requirement of clause (ii) shall be treated as met 
                with respect to any such payment or loan made during 
                the 1-year period beginning on the date of the issuance 
                (or any successor 1-year period) if such requirement is 
                met when applied with respect to the aggregate amount 
                of such payments and loans made during such period.
                    ``(C) Aggregate limit on bond designations.--The 
                maximum aggregate face amount of bonds which may be 
                designated under this subsection by the Governor of a 
                State shall not exceed--
                            ``(i) $200,000,000 in the case of the State 
                        of Louisiana,
                            ``(ii) $100,000,000 in the case of the 
                        State of Mississippi, and
                            ``(iii) $50,000,000 in the case of the 
                        State of Alabama.
                    ``(D) Special rules relating to arbitrage.--A bond 
                which is part of an issue shall not be treated as a 
                Gulf tax credit bond unless, with respect to the issue 
                of which the bond is a part, the issuer satisfies the 
                arbitrage requirements of section 148 with respect to 
                proceeds of the issue and any loans made with such 
                proceeds.
            ``(5) Qualified bond.--For purposes of this subsection--
                    ``(A) In general.--The term `qualified bond' means 
                any obligation of a State or political subdivision 
                thereof which was outstanding on August 28, 2005.
                    ``(B) Exception for private activity bonds.--Such 
                term shall not include any private activity bond.
                    ``(C) Exception for advance refundings.--Such term 
                shall not include any bond with respect to which there 
                is any outstanding refunded or refunding bond during 
                the period in which a Gulf tax credit bond is 
                outstanding with respect to such bond.
            ``(6) Credit included in gross income.--Gross income 
        includes the amount of the credit allowed to the taxpayer under 
        this subsection (determined without regard to paragraph (3)) 
        and the amount so included shall be treated as interest income.
            ``(7) Other definitions and special rules.--For purposes of 
        this subsection--
                    ``(A) Bond.--The term `bond' includes any 
                obligation.
                    ``(B)  partnership; s corporation; and other pass-
                thru entities.--
                            ``(i) In general.--Under regulations 
                        prescribed by the Secretary, in the case of a 
                        partnership, trust, S corporation, or other 
                        pass-thru entity, rules similar to the rules of 
                        section 41(g) shall apply with respect to the 
                        credit allowable under paragraph (1).
                            ``(ii) No basis adjustment.--In the case of 
                        a bond held by a partnership or an S 
                        corporation, rules similar to the rules under 
                        section 1397E(i) shall apply.
                    ``(C) Bonds held by regulated investment 
                companies.--If any Gulf tax credit bond is held by a 
                regulated investment company, the credit determined 
                under paragraph (1) shall be allowed to shareholders of 
                such company under procedures prescribed by the 
                Secretary.
                    ``(D) Reporting.--Issuers of Gulf tax credit bonds 
                shall submit reports similar to the reports required 
                under section 149(e).
                    ``(E) Credit treated as nonrefundable bondholder 
                credit.--For purposes of this title, the credit allowed 
                by this subsection shall be treated as a credit 
                allowable under subpart H of part IV of subchapter A of 
                this chapter.
    ``(m) Tax Benefits not Available With Respect to Facilities for 
Gambling, Etc.--
            ``(1) Tax-exempt bond financing.--Subsection (a) shall not 
        apply to any bond issued as part of an issue if any portion of 
        the proceeds of such issue is to be used to provide any 
        property described in section 144(c)(6)(B).
            ``(2) Advance refunding bonds.--Subsection (b) shall not 
        apply to any advance refunding of a bond which is issued as 
        part of an issue if any portion of the proceeds of such issue 
        (or any prior issue) was (or is to be) used to provide any 
        property described in section 144(c)(6)(B).
            ``(3) Low-income housing credit.--For purposes of 
        subsection (c), property shall not be treated as located or 
        placed in service in the Gulf Opportunity Zone if such property 
        is described in section 144(c)(6)(B).
            ``(4) Special allowance for certain property; section 179 
        expensing; carryback of cost recovery deductions.--For purposes 
        of subsections (d), (e), and (k), the term `qualified Gulf 
        Opportunity Zone property' shall not include any property 
        described in section 144(c)(6)(B).
            ``(5) Demolition and clean-up costs; remediation; 
        rehabilitation expenses.--Subsections (f), (g), and (h) shall 
        not apply with respect to any amount paid or incurred with 
        respect to any property described in section 144(c)(6)(B).
            ``(6) Timber producers.--For purposes of subsection (i), 
        qualified timber property shall not include any property 
        described in section 144(c)(6)(B).
            ``(7) Public utility casualty losses.--For purposes of 
        subsection (j), public utility property shall not include any 
        property described in section 144(c)(6)(B).
            ``(8) Gulf tax credit bonds.--Subsection (l) shall not 
        apply to any bond issued as part of an issue if any portion of 
        the proceeds of such issue is to be used to provide any 
        property described in section 144(c)(6)(B).''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 54(c) is amended by inserting 
        ``, section 1400N(l),'' after ``subpart C''.
            (2) Subparagraph (A) of section 6049(d)(8) is amended--
                    (A) by inserting ``or 1400N(l)(6)'' after ``section 
                54(g)'', and
                    (B) by inserting ``or 1400N(l)(2)(D), as the case 
                may be'' after ``section 54(b)(4)''.
            (3) So much of subchapter Y of chapter 1 as precedes 
        section 1400L is amended to read as follows:

              ``Subchapter Y--Short-term Regional Benefits

            ``Part I--Tax benefits for New York Liberty Zone

           ``Part II--Tax benefits for Gulf Opportunity Zone

            ``PART I--TAX BENEFITS FOR NEW YORK LIBERTY ZONE

``Sec. 1400L. Tax benefits for New York Liberty Zone.''.
            (4) The item relating to subchapter Y in the table of 
        subchapters for chapter 1 is amended to read as follows:

            ``subchapter y--short-term regional benefits''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending on or after August 28, 2005.
            (2) Carrybacks.--Subsections (i)(2), (j), and (k) of 
        section 1400N of the Internal Revenue Code of 1986 (as added by 
        this section) shall apply to losses arising in such taxable 
        years.

SEC. 102. FEDERAL GUARANTEE OF CERTAIN STATE BONDS.

    (a) State Bonds Described.--
            (1) In general.--This section shall apply to a bond issued 
        as part of an issue if--
                    (A) the issue of which such bond is part is an 
                issue of the State of Alabama, Louisiana, or 
                Mississippi,
                    (B) the bond is a general obligation of the issuing 
                State and is in registered form,
                    (C) the proceeds of the bond are distributed to one 
                or more political subdivisions of the issuing State,
                    (D) the maturity of such bond does not exceed 5 
                years,
                    (E) the bond is issued after the date of the 
                enactment of this Act and before January 1, 2008, and
                    (F) the bond is designated by the Secretary of the 
                Treasury for purposes of this section.
            (2) Facilities for gambling, etc.--The Secretary of the 
        Treasury may not designate any bond for purposes of this 
        section if such bond is issued as part of an issue any portion 
        of the proceeds of which is to be used to provide any property 
        described in section 144(c)(6)(B).
    (b) Application.--
            (1) In general.--The Secretary of the Treasury may only 
        designate a bond for purposes of this section pursuant to an 
        application submitted to the Secretary by the State which 
        demonstrates the need for such designation on the basis of the 
        criteria specified in paragraph (2).
            (2) Criteria.--For purposes of paragraph (1), the criteria 
        specified in this paragraph are--
                    (A) the loss of revenue base of one or more 
                political subdivisions of the State by reason of 
                Hurricane Katrina,
                    (B) the need for resources to fund infrastructure 
                within, or operating expenses of, any such political 
                subdivision,
                    (C) the lack of access of such political 
                subdivision to capital, and
                    (D) any other criteria as may be determined by the 
                Secretary.
            (3) Guidance for submission and consideration of 
        applications.--The Secretary of the Treasury shall prescribe 
        regulations or other guidance which provide for the time and 
        manner for the submission and consideration of applications 
        under this subsection.
    (c) Federal Guarantee.--A bond described in subsection (a) is 
guaranteed by the United States in an amount equal to 50 percent of the 
outstanding principal with respect to such bond.
    (d) Aggregate Limit on Bond Designations.--The maximum aggregate 
face amount of bonds which may be issued under this section shall not 
exceed $3,000,000,000.

      TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA

SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR HURRICANE 
              KATRINA TO HURRICANES RITA AND WILMA.

    (a) In General.--Part II of subchapter Y of chapter 1 (as added by 
this Act) is amended by adding at the end the following new sections:

``SEC. 1400O. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.

    ``(a) Tax-Favored Withdrawals From Retirement Plans.--
            ``(1) In general.--Section 72(t) shall not apply to any 
        qualified hurricane distribution.
            ``(2) Aggregate dollar limitation.--
                    ``(A) In general.--For purposes of this subsection, 
                the aggregate amount of distributions received by an 
                individual which may be treated as qualified hurricane 
                distributions for any taxable year shall not exceed the 
                excess (if any) of--
                            ``(i) $100,000, over
                            ``(ii) the aggregate amounts treated as 
                        qualified hurricane distributions received by 
                        such individual for all prior taxable years.
                    ``(B) Treatment of plan distributions.--If a 
                distribution to an individual would (without regard to 
                subparagraph (A)) be a qualified hurricane 
                distribution, a plan shall not be treated as violating 
                any requirement of this title merely because the plan 
                treats such distribution as a qualified hurricane 
                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.
                    ``(C) Controlled group.--For purposes of 
                subparagraph (B), the term `controlled group' means any 
                group treated as a single employer under subsection 
                (b), (c), (m), or (o) of section 414.
            ``(3) Amount distributed may be repaid.--
                    ``(A) In general.--Any individual who receives a 
                qualified hurricane 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), as the 
                case may be.
                    ``(B) Treatment of repayments of distributions from 
                eligible retirement plans other than iras.--For 
                purposes of this title, if a contribution is made 
                pursuant to subparagraph (A) with respect to a 
                qualified hurricane 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 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.
                    ``(C) Treatment of repayments for distributions 
                from iras.--For purposes of this title, if a 
                contribution is made pursuant to subparagraph (A) with 
                respect to a qualified hurricane distribution from an 
                individual retirement plan (as defined by section 
                7701(a)(37)), then, to the extent of the amount of the 
                contribution, the qualified hurricane 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.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Qualified hurricane distribution.--Except as 
                provided in paragraph (2), the term `qualified 
                hurricane distribution' means--
                            ``(i) 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,
                            ``(ii) any distribution (which is not 
                        described in clause (i)) from an eligible 
                        retirement plan made on or after September 23, 
                        2005, and before January 1, 2007, to an 
                        individual whose principal place of abode on 
                        September 23, 2005, is located in the Hurricane 
                        Rita disaster area and who has sustained an 
                        economic loss by reason of Hurricane Rita, and
                            ``(iii) any distribution (which is not 
                        described in clause (i) or (ii)) from an 
                        eligible retirement plan made on or after 
                        October 23, 2005, and before January 1, 2007, 
                        to an individual whose principal place of abode 
                        on October 23, 2005, is located in the 
                        Hurricane Wilma disaster area and who has 
                        sustained an economic loss by reason of 
                        Hurricane Wilma.
                    ``(B) Eligible retirement plan.--The term `eligible 
                retirement plan' shall have the meaning given such term 
                by section 402(c)(8)(B).
            ``(5) Income inclusion spread over 3-year period.--
                    ``(A) In general.--In the case of any qualified 
                hurricane distribution, unless the taxpayer elects not 
                to have this paragraph 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 rule.--For purposes of subparagraph 
                (A), rules similar to the rules of subparagraph (E) of 
                section 408A(d)(3) shall apply.
            ``(6) Special rules.--
                    ``(A) Exemption of distributions from trustee to 
                trustee transfer and withholding rules.--For purposes 
                of sections 401(a)(31), 402(f), and 3405, qualified 
                hurricane distributions shall not be treated as 
                eligible rollover distributions.
                    ``(B) Qualified hurricane distributions treated as 
                meeting plan distribution requirements.--For purposes 
                this title, a qualified hurricane 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).
    ``(b) Recontributions of Withdrawals for Home Purchases.--
            ``(1) Recontributions.--
                    ``(A) In general.--Any individual who received a 
                qualified distribution may, during the applicable 
                period, 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 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), as the case may be.
                    ``(B) Treatment of repayments.--Rules similar to 
                the rules of subparagraphs (B) and (C) of subsection 
                (a)(3) shall apply for purposes of this subsection.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' means any qualified Katrina distribution, 
                any qualified Rita distribution, and any qualified 
                Wilma distribution.
                    ``(B) Qualified katrina distribution.--The term 
                `qualified Katrina distribution' means any 
                distribution--
                            ``(i) 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),
                            ``(ii) received after February 28, 2005, 
                        and before August 29, 2005, and
                            ``(iii) 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.
                    ``(C) Qualified rita distribution.--The term 
                `qualified Rita distribution' means any distribution 
                (other than a qualified Katrina distribution)--
                            ``(i) 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),
                            ``(ii) received after February 28, 2005, 
                        and before September 24, 2005, and
                            ``(iii) which was to be used to purchase or 
                        construct a principal residence in the 
                        Hurricane Rita disaster area, but which was not 
                        so purchased or constructed on account of 
                        Hurricane Rita.
                    ``(D) Qualified wilma distribution.--The term 
                `qualified Wilma distribution' means any distribution 
                (other than a qualified Katrina distribution or a 
                qualified Rita distribution)--
                            ``(i) 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),
                            ``(ii) received after February 28, 2005, 
                        and before October 24, 2005, and
                            ``(iii) which was to be used to purchase or 
                        construct a principal residence in the 
                        Hurricane Wilma disaster area, but which was 
                        not so purchased or constructed on account of 
                        Hurricane Wilma.
            ``(3) Applicable period.--For purposes of this subsection, 
        the term `applicable period' means--
                    ``(A) with respect to any qualified Katrina 
                distribution, the period beginning on August 25, 2005, 
                and ending on February 28, 2006,
                    ``(B) with respect to any qualified Rita 
                distribution, the period beginning on September 23, 
                2005, and ending on February 28, 2006, and
                    ``(C) with respect to any qualified Wilma 
                distribution, the period beginning on October 23, 2005, 
                and ending on February 28, 2006.
    ``(c) Loans From Qualified Plans.--
            ``(1) 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)) to a 
        qualified individual made during the applicable period--
                    ``(A) clause (i) of section 72(p)(2)(A) shall be 
                applied by substituting `$100,000' for `$50,000', and
                    ``(B) 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'.
            ``(2) Delay of repayment.--In the case of a qualified 
        individual with an outstanding loan on or after the qualified 
        beginning date from a qualified employer plan (as defined in 
        section 72(p)(4))--
                    ``(A) if the due date pursuant to subparagraph (B) 
                or (C) of section 72(p)(2) for any repayment with 
                respect to such loan occurs during the period beginning 
                on the qualified beginning date and ending on December 
                31, 2006, such due date shall be delayed for 1 year,
                    ``(B) 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
                    ``(C) in determining the 5-year period and the term 
                of a loan under subparagraph (B) or (C) of section 
                72(p)(2), the period described in subparagraph (A) 
                shall be disregarded.
            ``(3) Qualified individual.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified individual' 
                means any qualified Hurricane Katrina individual, any 
                qualified Hurricane Rita individual, and any qualified 
                Hurricane Wilma individual.
                    ``(B) Qualified hurricane katrina individual.--The 
                term `qualified Hurricane Katrina 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.
                    ``(C) Qualified hurricane rita individual.--The 
                term `qualified Hurricane Rita individual' means an 
                individual (other than a qualified Hurricane Katrina 
                individual) whose principal place of abode on September 
                23, 2005, is located in the Hurricane Rita disaster 
                area and who has sustained an economic loss by reason 
                of Hurricane Rita.
                    ``(D) Qualified hurricane wilma individual.--The 
                term `qualified Hurricane Wilma individual' means an 
                individual (other than a qualified Hurricane Katrina 
                individual or a qualified Hurricane Rita individual) 
                whose principal place of abode on October 23, 2005, is 
                located in the Hurricane Wilma disaster area and who 
                has sustained an economic loss by reason of Hurricane 
                Wilma.
            ``(4) Applicable period; qualified beginning date.--For 
        purposes of this subsection--
                    ``(A) Hurricane katrina.--In the case of any 
                qualified Hurricane Katrina individual--
                            ``(i) the applicable period is the period 
                        beginning on September 24, 2005, and ending on 
                        December 31, 2006, and
                            ``(ii) the qualified beginning date is 
                        August 25, 2005.
                    ``(B) Hurricane rita.--In the case of any qualified 
                Hurricane Rita individual--
                            ``(i) the applicable period is the period 
                        beginning on the date of the enactment of this 
                        subsection and ending on December 31, 2006, and
                            ``(ii) the qualified beginning date is 
                        September 23, 2005.
                    ``(C) Hurricane wilma.--In the case of any 
                qualified Hurricane Wilma individual--
                            ``(i) the applicable period is the period 
                        beginning on the date of the enactment of this 
                        subparagraph and ending on December 31, 2006, 
                        and
                            ``(ii) the qualified beginning date is 
                        October 23, 2005.
    ``(d) Provisions Relating to Plan Amendments.--
            ``(1) In general.--If this subsection 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 paragraph 
        (2)(B)(i).
            ``(2) Amendments to which subsection applies.--
                    ``(A) In general.--This subsection shall apply to 
                any amendment to any plan or annuity contract which is 
                made--
                            ``(i) pursuant to any provision of this 
                        section, or pursuant to any regulation issued 
                        by the Secretary or the Secretary of Labor 
                        under any provision of this section, and
                            ``(ii) 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 
                        may prescribe.
                In the case of a governmental plan (as defined in 
                section 414(d)), clause (ii) shall be applied by 
                substituting the date which is 2 years after the date 
                otherwise applied under clause (ii).
                    ``(B) Conditions.--This subsection shall not apply 
                to any amendment unless--
                            ``(i) during the period--
                                    ``(I) beginning on the date that 
                                this section or the regulation 
                                described in subparagraph (A)(i) takes 
                                effect (or in the case of a plan or 
                                contract amendment not required by this 
                                section or such regulation, the 
                                effective date specified by the plan), 
                                and
                                    ``(II) ending on the date described 
                                in subparagraph (A)(ii) (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
                            ``(ii) such plan or contract amendment 
                        applies retroactively for such period.

``SEC. 1400P. EMPLOYMENT RELIEF.

    ``(a) Employee Retention Credit for Employers Affected by Hurricane 
Katrina.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Katrina employee 
        retention credit for any taxable year is 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.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                            ``(i) which conducted an active trade or 
                        business on August 28, 2005, in the GO Zone, 
                        and
                            ``(ii) with respect to whom the trade or 
                        business described in clause (i) 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.
                    ``(B) 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 the GO 
                Zone.
                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but 
                without regard to section 3306(b)(2)(B)) 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--
                            ``(i) beginning on the date on which the 
                        trade or business described in subparagraph (A) 
                        first became inoperable at the principal place 
                        of employment of the employee immediately 
                        before Hurricane Katrina, and
                            ``(ii) 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.
            ``(3) 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.
            ``(4) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1), 
        52, and 280C(a) shall apply.
            ``(5) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under section 51 
        with respect to such employee for such period.
    ``(b) Employee Retention Credit for Employers Affected by Hurricane 
Rita.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Rita employee retention 
        credit for any taxable year is 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.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                            ``(i) which conducted an active trade or 
                        business on September 23, 2005, in the Rita GO 
                        Zone, and
                            ``(ii) with respect to whom the trade or 
                        business described in clause (i) is inoperable 
                        on any day after September 23, 2005, and before 
                        January 1, 2006, as a result of damage 
                        sustained by reason of Hurricane Rita.
                    ``(B) Eligible employee.--The term `eligible 
                employee' means with respect to an eligible employer an 
                employee whose principal place of employment on 
                September 23, 2005, with such eligible employer was in 
                the Rita GO Zone.
                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but 
                without regard to section 3306(b)(2)(B)) paid or 
                incurred by an eligible employer with respect to an 
                eligible employee on any day after September 23, 2005, 
                and before January 1, 2006, which occurs during the 
                period--
                            ``(i) beginning on the date on which the 
                        trade or business described in subparagraph (A) 
                        first became inoperable at the principal place 
                        of employment of the employee immediately 
                        before Hurricane Rita, and
                            ``(ii) 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.
            ``(3) 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.
            ``(4) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1), 
        52, and 280C(a) shall apply.
            ``(5) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under subsection 
        (a) or section 51 with respect to such employee for such 
        period.
    ``(c) Employee Retention Credit for Employers Affected by Hurricane 
Wilma.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the Hurricane Wilma employee retention 
        credit for any taxable year is 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.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Eligible employer.--The term `eligible 
                employer' means any employer--
                            ``(i) which conducted an active trade or 
                        business on October 23, 2005, in the Wilma GO 
                        Zone, and
                            ``(ii) with respect to whom the trade or 
                        business described in clause (i) is inoperable 
                        on any day after October 23, 2005, and before 
                        January 1, 2006, as a result of damage 
                        sustained by reason of Hurricane Wilma.
                    ``(B) Eligible employee.--The term `eligible 
                employee' means with respect to an eligible employer an 
                employee whose principal place of employment on October 
                23, 2005, with such eligible employer was in the Wilma 
                GO Zone.
                    ``(C) Qualified wages.--The term `qualified wages' 
                means wages (as defined in section 51(c)(1), but 
                without regard to section 3306(b)(2)(B)) paid or 
                incurred by an eligible employer with respect to an 
                eligible employee on any day after October 23, 2005, 
                and before January 1, 2006, which occurs during the 
                period--
                            ``(i) beginning on the date on which the 
                        trade or business described in subparagraph (A) 
                        first became inoperable at the principal place 
                        of employment of the employee immediately 
                        before Hurricane Wilma, and
                            ``(ii) 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.
            ``(3) 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.
            ``(4) Certain rules to apply.--For purposes of this 
        subsection, rules similar to the rules of sections 51(i)(1), 
        52, and 280C(a) shall apply.
            ``(5) Employee not taken into account more than once.--An 
        employee shall not be treated as an eligible employee for 
        purposes of this subsection for any period with respect to any 
        employer if such employer is allowed a credit under subsection 
        (a) or (b) or section 51 with respect to such employee for such 
        period.

``SEC. 1400Q. ADDITIONAL TAX RELIEF PROVISIONS.

    ``(a) Temporary Suspension of Limitations on Charitable 
Contributions.--
            ``(1) In general.--Except as otherwise provided in 
        paragraph (2), section 170(b) 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 to other contributions.
            ``(2) Treatment of excess contributions.--For purposes of 
        section 170--
                    ``(A) Individuals.--In the case of an individual--
                            ``(i) 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)) over the amount of 
                        all other charitable contributions allowed 
                        under section 170(b)(1).
                            ``(ii) Carryover.--If the aggregate amount 
                        of qualified contributions made in the 
                        contribution year (within the meaning of 
                        section 170(d)(1)) exceeds the limitation of 
                        clause (i), 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.
                    ``(B) Corporations.--In the case of a corporation--
                            ``(i) 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)) over the amount of all 
                        other charitable contributions allowed under 
                        such paragraph.
                            ``(ii) Carryover.--Rules similar to the 
                        rules of subparagraph (A)(ii) shall apply for 
                        purposes of this subparagraph.
            ``(3) Exception to overall limitation on itemized 
        deductions.--So much of any deduction allowed under section 170 
        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.
            ``(4) Qualified contributions.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified contribution' means any charitable 
                contribution (as defined in section 170(c)) if--
                            ``(i) such contribution is 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) 
                        (other than an organization described in 
                        section 509(a)(3)),
                            ``(ii) in the case of a contribution paid 
                        by a corporation, such contribution is for 
                        relief efforts related to Hurricane Katrina, 
                        Hurricane Rita, or Hurricane Wilma, and
                            ``(iii) the taxpayer has elected the 
                        application of this subsection with respect to 
                        such contribution.
                    ``(B) 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.
                    ``(C) Application of election to partnerships and s 
                corporations.--In the case of a partnership or S 
                corporation, the election under subparagraph (A)(iii) 
                shall be made separately by each partner or 
                shareholder.
    ``(b) Suspension of Certain Limitations on Personal Casualty 
Losses.--Paragraphs (1) and (2)(A) of section 165(h) shall not apply to 
losses described in section 165(c)(3)--
            ``(1) which arise in the Hurricane Katrina disaster area on 
        or after August 25, 2005, and which are attributable to 
        Hurricane Katrina,
            ``(2) which arise in the Hurricane Rita disaster area on or 
        after September 23, 2005, and which are attributable to 
        Hurricane Rita, or
            ``(3) which arise in the Hurricane Wilma disaster area on 
        or after October 23, 2005, and which are attributable to 
        Hurricane Wilma.
In the case of any other losses, section 165(h)(2)(A) shall be applied 
without regard to the losses referred to in the preceding sentence.
    ``(c) Required Exercise of Authority Under Section 7508a.--In the 
case of any taxpayer determined by the Secretary to be affected by the 
Presidentially declared disaster relating to Hurricane Katrina, 
Hurricane Rita, or Hurricane Wilma, any relief provided by the 
Secretary under section 7508A shall be for a period ending not earlier 
than February 28, 2006.
    ``(d) Special Rule for Determining Earned Income.--
            ``(1) In general.--In the case of a qualified individual, 
        if the earned income of the taxpayer for the taxable year which 
        includes the applicable date is less than the earned income of 
        the taxpayer for the preceding taxable year, the credits 
        allowed under sections 24(d) and 32 may, at the election of the 
        taxpayer, be determined by substituting--
                    ``(A) such earned income for the preceding taxable 
                year, for
                    ``(B) such earned income for the taxable year which 
                includes the applicable date.
            ``(2) Qualified individual.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified individual' 
                means any qualified Hurricane Katrina individual, any 
                qualified Hurricane Rita individual, and any qualified 
                Hurricane Wilma individual.
                    ``(B) Qualified hurricane katrina individual.--The 
                term `qualified Hurricane Katrina individual' means any 
                individual whose principal place of abode on August 25, 
                2005, was located--
                            ``(i) in the GO Zone, or
                            ``(ii) in the Hurricane Katrina disaster 
                        area (but outside the GO Zone) and such 
                        individual was displaced from such principal 
                        place of abode by reason of Hurricane Katrina.
                    ``(C) Qualified hurricane rita individual.--The 
                term `qualified Hurricane Rita individual' means any 
                individual (other than a qualified Hurricane Katrina 
                individual) whose principal place of abode on September 
                23, 2005, was located--
                            ``(i) in the Rita GO Zone, or
                            ``(ii) in the Hurricane Rita disaster area 
                        (but outside the Rita GO Zone) and such 
                        individual was displaced from such principal 
                        place of abode by reason of Hurricane Rita.
                    ``(D) Qualified hurricane wilma individual.--The 
                term `qualified Hurricane Wilma individual' means any 
                individual whose principal place of abode on October 
                23, 2005, was located--
                            ``(i) in the Wilma GO Zone, or
                            ``(ii) in the Hurricane Wilma disaster area 
                        (but outside the Wilma GO Zone) and such 
                        individual was displaced from such principal 
                        place of abode by reason of Hurricane Wilma.
            ``(3) Applicable date.--For purposes of this subsection, 
        the term `applicable date' means--
                    ``(A) in the case of a qualified Hurricane Katrina 
                individual, August 25, 2005,
                    ``(B) in the case of a qualified Hurricane Rita 
                individual, September 23, 2005, and
                    ``(C) in the case of a qualified Hurricane Wilma 
                individual, October 23, 2005.
            ``(4) Earned income.--For purposes of this subsection, the 
        term `earned income' has the meaning given such term under 
        section 32(c).
            ``(5) Special rules.--
                    ``(A) Application to joint returns.--For purposes 
                of paragraph (1), in the case of a joint return for a 
                taxable year which includes the applicable date--
                            ``(i) such paragraph shall apply if either 
                        spouse is a qualified individual, and
                            ``(ii) 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.
                    ``(B) Uniform application of election.--Any 
                election made under paragraph (1) shall apply with 
                respect to both section 24(d) and section 32.
                    ``(C) Errors treated as mathematical error.--For 
                purposes of section 6213, an incorrect use on a return 
                of earned income pursuant to paragraph (1) shall be 
                treated as a mathematical or clerical error.
                    ``(D) No effect on determination of gross income, 
                etc.--Except as otherwise provided in this subsection, 
                this title shall be applied without regard to any 
                substitution under paragraph (1).
    ``(e) Secretarial Authority to Make Adjustments Regarding Taxpayer 
and Dependency Status.--With respect to taxable years beginning in 2005 
or 2006, the Secretary 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, Hurricane Rita, or Hurricane Wilma. 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.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38 is amended by striking 
        ``and'' at the end of paragraph (25), by striking the period at 
        the end of paragraph (26) and inserting a comma, and by adding 
        at the end the following new paragraphs:
            ``(27) the Hurricane Katrina employee retention credit 
        determined under section 1400P(a),
            ``(28) the Hurricane Rita employee retention credit 
        determined under section 1400P(b), and
            ``(29) the Hurricane Wilma employee retention credit 
        determined under section 1400P(c).''.
            (2) The table of sections for part II of subchapter Y of 
        chapter 1 is amended by adding at the end the following new 
        items:

``Sec. 1400O. Special rules for use of retirement funds.
``Sec. 1400P. Employment relief.
``Sec. 1400Q. Additional tax relief provisions.''.
            (3) The heading for such part is amended by striking ``GULF 
        OPPORTUNITY ZONE'' and inserting ``HURRICANE RELIEF''.
            (4) The following provisions of the Katrina Emergency Tax 
        Relief Act of 2005 are hereby repealed:
                    (A) Title I.
                    (B) Sections 202, 301, 402, 403(b), 406, and 407.

                      TITLE III--OTHER PROVISIONS

SEC. 301. SECRETARIAL AUTHORITY TO EXTEND PERIOD DURING WHICH TRAVELING 
              EXPENSES ARE TREATED AS INCURRED AWAY FROM HOME IN CASE 
              OF MAJOR DISASTER.

    (a) In General.--Section 162 (relating to trade or business 
expenses) is amended by redesignating subsection (q) as subsection (r) 
and by inserting after subsection (p) the following new subsection:
    ``(q) Limitation on Traveling Expenses.--
            ``(1) In general.--For purposes of subsection (a)(2), the 
        taxpayer shall not be treated as being temporarily away from 
        home during any period of employment if such period exceeds 1 
        year.
            ``(2) Authority to extend in case of major disaster.--In 
        the case of a taxpayer who is away from home in pursuit of a 
        trade or business by reason of a disaster which the President 
        has declared to be a major disaster under section 401 of the 
        Robert T. Stafford Disaster Relief and Emergency Assistance 
        Act, the Secretary may extend the 1-year period referred to in 
        paragraph (1) for a period not exceeding 1 additional year.
            ``(3) Exception for certain federal employees designated by 
        the attorney general.--Paragraph (1) shall not apply to any 
        Federal employee during any period for which such employee is 
        certified by the Attorney General (or the designee thereof) as 
        traveling on behalf of the United States in temporary duty 
        status to investigate or prosecute, or provide support services 
        for the investigation or prosecution of, a Federal crime.''.
    (b) Conforming Amendment.--Subsection (a) of section 162 is amended 
by striking the last two sentences.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

SEC. 302. GULF COAST RECOVERY BONDS.

    It is the sense of the Congress that the Secretary of the Treasury, 
or the Secretary's delegate, should designate one or more series of 
bonds or certificates (or any portion thereof) issued under section 
3105 of title 31, United States Code, as ``Gulf Coast Recovery Bonds'' 
in response to Hurricanes Katrina, Rita, and Wilma.

            Passed the House of Representatives December 7, 2005.

            Attest:

                                                                 Clerk.
109th CONGRESS

  1st Session

                               H. R. 4440

_______________________________________________________________________

                                 AN ACT

To amend the Internal Revenue Code of 1986 to provide tax benefits for 
the Gulf Opportunity Zone and certain areas affected by Hurricanes Rita 
                   and Wilma, and for other purposes.