II 109th CONGRESS 2d Session S. 3782 IN THE SENATE OF THE UNITED STATES August 3, 2006 Mr. Vitter introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide a credit against the income tax for expenses incurred in any hurricane or flood protection project.

1.

Short title

This Act may be cited as the Hurricane and Flood Protection Tax Credit Act.

2.

Credit for expenses incurred in hurricane or flood protection projects

(a)

In general

Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

30D.

Credit for expenses incurred in hurricane or flood protection projects

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the qualified expenditures of the taxpayer for the taxable year. (b)

Limitation based on amount of tax

The credit allowed under subsection (a) for the taxable year shall not exceed the excess of— (1)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (2)the sum of the credits allowable under subpart A and sections 27 and 30A for the taxable year. (c)

Qualified expenditures

For purposes of this section— (1)

In general

The term qualified expenditures means amounts paid or incurred by the taxpayer for an unfunded authorized project, but only to the extent— (A)such amounts are paid or incurred after a request by the taxpayer to expend such amounts has been approved by the Federal agency administering the unfunded authorized project or after a 90-day period following such request (plus an additional 30-day period if requested by such agency within the 90-day period) during which no decision regarding such request is made by such agency, and (B)such amounts are applied proportionally to the Federal and non-Federal share of the total amount authorized to be appropriated for such project. (2)

Unfunded authorized project

The term unfunded authorized project means any project— (A)authorized by Federal law to provide hurricane or flood protection in the United States, and (B)with respect to which no or only partial Federal funding has been appropriated prior to the request described in paragraph (1)(A). (d)

Carryovers allowed

(1)

In general

If the credit amount allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (b) for such taxable year (referred to as the ‘unused credit year’ in this paragraph), such excess shall be allowed as a credit carryforward for each of the taxable years following the unused credit year or as a credit carryback for each of the taxable years preceding the unused credit year. (2)

Rules

For purposes of paragraph (1), rules similar to the rules of section 39 shall apply, except that— (A)subsection (a)(1) shall be applied— (i)by substituting 3 taxable years for 1 taxable years in subparagraph (A) thereof, and (ii)by substituting 5 taxable years for 20 taxable years in subparagraph (B) thereof, and (B)subsection (a)(2) shall be applied— (i)by substituting 8 taxable years for 21 taxable years in subparagraph (A) thereof, and (ii)by substituting 7 taxable years for 20 taxable years in subparagraph (B). (e)

Special rules

(1)

Basis reduction

The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit (determined without regard to subsection (b)). (2)

No double benefit

The amount of any deduction or credit allowable under this chapter (other than the credit allowable under subsection (a)), shall be reduced by the amount of credit allowed under subsection (a) (determined without regard to subsection (b)) for the taxable year. (3)

Reduction for assistance

The amount taken into account under subsection (a) with respect to any project shall be reduced by the amount of any Federal, State, or local grant or other assistance received by the taxpayer during such taxable year or any prior taxable year which was used to make qualified expenditures and which was not included in the gross income of such taxpayer.

. (b)

Basis adjustment

Section 1016(a) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by adding at the end the following new paragraph: (38)to the extent provided in section 30D(e)(1). . (c)

Clerical amendment

The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30A the following new item: Sec. 3DB. Credit for expenses incurred in hurricane or flood protection projects. . (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2005.