[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3934 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3934

 To provide tax relief for persons affected by the discharge of oil in 
 connection with the explosion on, and sinking of, the mobile offshore 
                    drilling unit Deepwater Horizon.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 29, 2010

Mr. Wicker (for himself and Mr. Vitter) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide tax relief for persons affected by the discharge of oil in 
 connection with the explosion on, and sinking of, the mobile offshore 
                    drilling unit Deepwater Horizon.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Gulf Coast Oil Recovery Zone Tax 
Relief and Economic Recovery Act''.

SEC. 2. RECOVERY ZONE; GULF OIL SPILL.

    For purposes of this Act--
            (1) Recovery zone.--The term ``Recovery Zone'' means the 
        following counties and parishes affected by the Gulf oil spill:
                    (A) The counties of Escambia, Santa Rosa, Okaloosa, 
                Walton, Bay, Gulf, Franklin, and Wakulla in the State 
                of Florida.
                    (B) The counties of Hancock, Harrison, and Jackson 
                in the State of Mississippi.
                    (C) The counties of Mobile and Baldwin in the State 
                of Alabama.
                    (D) The parishes of Orleans, St. Tammany, St. 
                Bernard, Plaquemines, Jefferson, Lafourche, Terrebonne, 
                St. Mary, Iberia, Vermilion, and Cameron in the State 
                of Louisiana.
            (2) Gulf oil spill.--The term ``Gulf oil spill'' means the 
        discharge of oil by reason of the explosion on, and sinking of, 
        the mobile offshore drilling unit Deepwater Horizon.

SEC. 3. NON-RECOGNITION OF INCOME FROM INSURANCE PROCEEDS WHICH ARE 
              REINVESTED IN THE RECOVERY ZONE.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
amounts received from any qualified Gulf oil spill payment shall be 
recognized only to the extent that the amount realized exceeds the 
qualified investments made by the taxpayer with respect to such 
qualified Gulf oil spill payment.
    (b) Qualified Gulf Oil Spill Payment.--For purposes of this 
section, the term ``qualified Gulf oil spill payment'' means--
            (1) any proceeds or payments from insurance received in 
        connection with the Gulf oil spill, or
            (2) any payment for damages attributable to the Gulf oil 
        spill under section 1002 of the Oil Pollution Act of 1990 (33 
        U.S.C. 2702).
    (c) Qualified Investment.--For purposes of this section--
            (1) In general.--The term ``qualified investment'' means, 
        with respect to any qualified Gulf oil spill payment, the sum 
        of the qualified recovery zone investments which are made by 
        the taxpayer before the date which is 6 months after the later 
        of--
                    (A) the date of the qualified Gulf oil spill 
                payment, or
                    (B) the date of the enactment of this Act.
            (2) Qualified recovery zone investment.--The term 
        ``qualified recovery zone investment'' means sum of--
                    (A) amounts paid or incurred for tangible property 
                (to which section 168 of the Internal Revenue Code of 
                1986 applies) acquired by purchase (within the meaning 
                of section 179(d)(2) of such Code) for use in the 
                active conduct of an recovery zone trade or business 
                property, plus
                    (B) amounts paid or incurred for start-up 
                expenditures (as defined in section 195(c)) in 
                connection with a qualified recovery zone trade or 
                business.
            (3) Qualified recovery zone trade or business.--The term 
        ``qualified recovery zone trade or business'' means--
                    (A) any commercial or charter fishing business 
                operating in the recovery zone, or
                    (B) any hotel, lodging, recreation, entertainment, 
                or restaurant business located in the recovery zone.
    (d) Reduction in Basis.--For purposes of section 1016 of the 
Internal Revenue Code of 1986, the basis in any qualified investment 
shall be reduced (but not below zero) by an amount equal to the amount 
that bears the same ratio to such basis (determined without regard to 
this subsection) as the amount of qualified Gulf oil spill payments 
received by the taxpayer bears to the amount of qualified investments 
made the by taxpayer with respect to such qualified Gulf oil spill 
payments.

SEC. 4. 5-YEAR NET OPERATING LOSS CARRYBACK FOR CERTAIN OIL SPILL-
              RELATED LOSSES.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
in the case of a taxpayer which has a qualified oil spill loss (as 
defined in subsection (b)) for a taxable year, such qualified oil spill 
loss shall be a net operating loss carryback under section 172 of such 
Code to each of the 5 taxable years preceding the taxable year of such 
loss.
    (b) Qualified Oil Spill Losses.--For purposes of this section--
            (1) Definition.--
                    (A) In general.--Except as otherwise provided in 
                this paragraph, the term ``qualified oil spill loss'' 
                means the lesser of--
                            (i) the excess of--
                                    (I) the amount of losses in a 
                                taxable year ending after April 20, 
                                2010, and before October 1, 2011, 
                                incurred by any trade or business 
                                operating in the recovery zone and 
                                attributable to the Gulf oil spill, 
                                over
                                    (II) amounts received during such 
                                taxable year as payments for lost 
                                profits and earning capacity under 
                                section 1002(b)(2)(E) of the Oil 
                                Pollution Act of 1990 (33 U.S.C. 
                                2702(b)(2)(E)), or
                            (ii) the amount of the net operating loss 
                        (as defined in section 172(c) of the Internal 
                        Revenue Code of 1986) for such taxable year.
                    (B) Safe harbor for certain small businesses.--In 
                the case of any taxpayer the gross revenues of whom for 
                any taxable year ending after April 20, 2010, and 
                before October 1, 2011, do not exceed $5,000,000, such 
                term means the amount of the net operating loss (as so 
                defined) of such business for such taxable year.
                    (C) Coordination with qualified disaster losses.--
                Such term shall not include any qualified disaster loss 
                (as defined in section 172(j) of the Internal Revenue 
                Code of 1986).
            (2) Coordination with subsection (b)(2).--For purposes of 
        applying section 172(b)(2) of such Code, a qualified oil spill 
        loss for any taxable year shall be treated in a manner similar 
        to the manner in which a specified liability loss (as defined 
        in section 172(f) of such Code) is treated.
            (3) Election.--Any taxpayer entitled to a 5-year carryback 
        under subsection (a) from any loss year may elect to have the 
        carryback period with respect to such loss year determined 
        without regard to subsection (a). Such election 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 net 
        operating loss. Such election, once made for any taxable year, 
        shall be irrevocable for such taxable year.
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, this section shall apply to net operating losses 
        (as so defined) arising in taxable years ending after April 20, 
        2010.
            (2) Transition rule.--In the case of a net operating loss 
        (as so defined) for a taxable year ending before the date of 
        the enactment of this Act--
                    (A) notwithstanding subsection (b)(1)(H)(iii)(II) 
                or (b)(3) of section 172 of the Internal Revenue Code 
                of 1986, any election made under such subsections with 
                respect to such loss may be revoked before the 
                applicable date,
                    (B) any election made under subsection (a) with 
                respect to such loss shall (notwithstanding such 
                section) be treated as timely made if made before the 
                applicable date, and
                    (C) any application under section 6411(a) of such 
                Code with respect to such loss shall be treated as 
                timely filed if filed before the applicable date.
        For purposes of this paragraph, the term ``applicable date'' 
        means the date which is 60 days after the date of the enactment 
        of this Act.

SEC. 5. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS FOR RELIEF 
              RELATING TO THE GULF OIL SPILL.

    (a) In General.--Section 72(t) of the Internal Revenue Code of 1986 
shall not apply to any qualified Gulf Coast oil spill distribution.
    (b) Aggregate Dollar Limitation.--
            (1) In general.--For purposes of this section, the 
        aggregate amount of distributions received by an individual 
        which may be treated as qualified Gulf Coast oil spill 
        distributions for any taxable year shall not exceed the excess 
        (if any) of--
                    (A) $100,000, over
                    (B) the aggregate amounts treated as qualified Gulf 
                Coast oil spill distributions received by such 
                individual for all prior taxable years.
            (2) Treatment of plan distributions.--If a distribution to 
        an individual would (without regard to paragraph (1)) be a 
        qualified Gulf Coast oil spill distribution, a plan shall not 
        be treated as violating any requirement of the Internal Revenue 
        Code of 1986 merely because the plan treats such distribution 
        as a qualified Gulf Coast oil spill distribution, unless the 
        aggregate amount of such distributions from all plans 
        maintained by the employer (and any member of any controlled 
        group which includes the employer) to such individual exceeds 
        $100,000.
            (3) Controlled group.--For purposes of paragraph (2), the 
        term ``controlled group'' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of such Code.
    (c) Amount Distributed May Be Repaid.--
            (1) In general.--Any individual who receives a qualified 
        Gulf Coast oil spill distribution may, at any time during the 
        3-year period beginning on the day after the date on which such 
        distribution was received, make one or more contributions in an 
        aggregate amount not to exceed the amount of such distribution 
        to an eligible retirement plan of which such individual is a 
        beneficiary and to which a rollover contribution of such 
        distribution could be made under section 402(c), 403(a)(4), 
        403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as the case 
        may be.
            (2) Treatment of repayments of distributions from eligible 
        retirement plans other than iras.--For purposes of such Code, 
        if a contribution is made pursuant to paragraph (1) with 
        respect to a qualified Gulf Coast oil spill 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 
        Gulf Coast oil spill distribution in an eligible rollover 
        distribution (as defined in section 402(c)(4) of such Code) and 
        as having transferred the amount to the eligible retirement 
        plan in a direct trustee to trustee transfer within 60 days of 
        the distribution.
            (3) Treatment of repayments for distributions from iras.--
        For purposes of such Code, if a contribution is made pursuant 
        to paragraph (1) with respect to a qualified Gulf Coast oil 
        spill distribution from an individual retirement plan (as 
        defined by section 7701(a)(37) of such Code), then, to the 
        extent of the amount of the contribution, the qualified Gulf 
        Coast oil spill distribution shall be treated as a distribution 
        described in section 408(d)(3) of such Code and as having been 
        transferred to the eligible retirement plan in a direct trustee 
        to trustee transfer within 60 days of the distribution.
    (d) Definitions.--For purposes of this section--
            (1) Qualified gulf coast oil spill distribution.--Except as 
        provided in subsection (b), the term ``qualified Gulf Coast oil 
        spill distribution'' means any distribution from an eligible 
        retirement plan made on or after April 20, 2010, and before 
        January 1, 2012, to an individual whose principal place of 
        abode on April 20, 2010, is located in the recovery zone and 
        who has sustained an economic loss by reason of the Gulf oil 
        spill.
            (2) Eligible retirement plan.--The term ``eligible 
        retirement plan'' shall have the meaning given such term by 
        section 402(c)(8)(B) of such Code.
    (e) Income Inclusion Spread Over 3-Year Period for Qualified Gulf 
Coast Oil Spill Distributions.--
            (1) In general.--In the case of any qualified Gulf Coast 
        oil spill distribution, unless the taxpayer elects not to have 
        this subsection apply for any taxable year, any amount required 
        to be included in gross income for such taxable year shall be 
        so included ratably over the 3-taxable year period beginning 
        with such taxable year.
            (2) Special rule.--For purposes of paragraph (1), rules 
        similar to the rules of subparagraph (E) of section 408A(d)(3) 
        of such Code shall apply.
    (f) Special Rules.--
            (1) Exemption of distributions from trustee to trustee 
        transfer and withholding rules.--For purposes of sections 
        401(a)(31), 402(f), and 3405 of such Code, qualified Gulf Coast 
        oil spill distributions shall not be treated as eligible 
        rollover distributions.
            (2) Qualified gulf coast oil spill distributions treated as 
        meeting plan distribution requirements.--For purposes of such 
        Code, a qualified Gulf Coast oil spill distribution shall be 
        treated as meeting the requirements of sections 
        401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) 
        of such Code.

SEC. 6. LOANS FROM QUALIFIED PLANS FOR RELIEF RELATING TO THE GULF OIL 
              SPILL.

    (a) Increase in Limit on Loans Not Treated as Distributions.--In 
the case of any loan from a qualified employer plan (as defined under 
section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified 
individual made after the date of enactment of this Act and before 
January 1, 2012--
            (1) clause (i) of section 72(p)(2)(A) of such Code shall be 
        applied by substituting ``$100,000'' for ``$50,000'', and
            (2) clause (ii) of such section shall be applied by 
        substituting ``the present value of the nonforfeitable accrued 
        benefit of the employee under the plan'' for ``one-half of the 
        present value of the nonforfeitable accrued benefit of the 
        employee under the plan''.
    (b) Delay of Repayment.--In the case of a qualified individual with 
an outstanding loan on or after April 20, 2010, from a qualified 
employer plan (as defined in section 72(p)(4) of such Code)--
            (1) if the due date pursuant to subparagraph (B) or (C) of 
        section 72(p)(2) of such Code for any repayment with respect to 
        such loan occurs during the period beginning on April 20, 2010, 
        and ending on December 31, 2011, such due date shall be delayed 
        for 1 year,
            (2) any subsequent repayments with respect to any such loan 
        shall be appropriately adjusted to reflect the delay in the due 
        date under paragraph (1) and any interest accruing during such 
        delay, and
            (3) in determining the 5-year period and the term of a loan 
        under subparagraph (B) or (C) of section 72(p)(2) of such Code, 
        the period described in paragraph (1) shall be disregarded.
    (c) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means an individual whose principal place of 
abode on April 20, 2005, is located in the recovery zone and who has 
sustained an economic loss by reason of the Gulf oil spill.

SEC. 7. WORK OPPORTUNITY TAX CREDIT FOR QUALIFIED RECOVERY ZONE 
              EMPLOYEES.

    (a) In General.--For purposes of section 51 of the Internal Revenue 
Code of 1986, a qualified recovery zone employee shall be treated as a 
member of a targeted group.
    (b) Qualified Recovery Zone Employee.--For purposes of this 
section, the term ``Qualified recovery zone employee'' means any 
individual who on April 20, 2010, had a principal place of abode in the 
recovery zone and who is hired during the 2-year period beginning on 
such date for a position the principal place of employment of which is 
located in the recovery zone.
    (c) Reasonable Identification Acceptable.--In lieu of the 
certification requirement under subparagraph (A) of section 51(d)(12) 
of such Code, an individual may provide to the employer reasonable 
evidence that the individual is a qualified recovery zone employee, and 
subparagraph (B) of such section shall be applied as if such evidence 
were a certification described in such subparagraph.
    (d) Special Rules for Determining Credit.--For purposes of applying 
subpart F of part IV of subchapter A of chapter 1 of such Code to wages 
paid or incurred to any Hurricane Katrina employee--
            (1) section 51(c)(4) of such Code shall not apply, and
            (2) section 51(i)(2) of such Code shall not apply with 
        respect to the first hire of such employee as a qualified 
        recovery zone employee, unless such employee was an employee of 
        the employer on April 20, 2010.

SEC. 8. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED ON OR AFTER 
              APRIL 20, 2010.

    (a) Additional Allowance.--For purposes of the Internal Revenue 
Code of 1986, any qualified recovery zone property shall be treated as 
qualified property under section 168(k) of such Code.
    (b) Qualified Recovery Zone Property.--For purposes of this 
section--
            (1) In general.--The term ``qualified recovery zone 
        property'' means property--
                    (A) which is described in section 168(k)(2)(A)(i) 
                of the Internal Revenue Code of 1986,
                    (B) substantially all of the use of which is in the 
                recovery zone and is in the active conduct of a trade 
                or business by the taxpayer in such Zone,
                    (C) the original use of which in the recovery zone 
                commences with the taxpayer on or after April 20, 2010,
                    (D) which is acquired by the taxpayer by purchase 
                (as defined in section 179(d)) on or after April 20, 
                2010, but only if no written binding contract for the 
                acquisition was in effect before April 20, 2010, and
                    (E) which is placed in service by the taxpayer on 
                or before January 1, 2013.
            (2) Exceptions.--
                    (A) Alternative depreciation property.--Such term 
                shall not include any property described in section 
                168(k)(2)(D)(i) of the Internal Revenue Code of 1986.
                    (B) 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 
                of such Code.
                    (C) 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) 
                of such Code.
                    (D) Election out.--If a taxpayer makes an election 
                under this subparagraph with respect to any class of 
                property for any taxable year, this section shall not 
                apply to all property in such class placed in service 
                during such taxable year.
                    (E) Bonus depreciation property under section 
                168(k).--Such term shall not include any property to 
                which section 168(k) applies.
    (c) Special Rules.--For purposes of this section, rules similar to 
the rules of subparagraph (E) of section 168(k)(2) of the Internal 
Revenue Code of 1986 shall apply to qualified recovery zone property, 
except that such subparagraph shall be applied--
            (1) by substituting ``April 20, 2010'' for ``December 31, 
        2007'' each place it appears therein,
            (2) by substituting ``January 1, 2013'' for ``January 1, 
        2011'' in clause (i) thereof, and
            (3) by substituting ``qualified recovery zone property'' 
        for ``qualified property'' in clause (iv) thereof.

SEC. 9. EXTENSION OF 15-YEAR RECOVERY PERIOD FOR CERTAIN PROPERTY 
              PLACED IN SERVICE IN THE RECOVERY ZONE.

    For purposes of section 168 of the Internal Revenue Code of 1986, 
the term ``15-year property'' shall include qualified leasehold 
improvement property (as defined by section 168(e)(6) of such Code), 
qualified restaurant property (as defined by section 168(e)(7) of such 
Code), and qualified retail improvement property (as defined by section 
168(e)(8) of such Code, determined without regard to subclause (E) 
thereof) which is placed in service in the recovery zone after April 
20, 2010, and before January 1, 2013.

SEC. 10. TAX-EXEMPT BOND FINANCING.

    (a) In General.--For purposes of the Internal Revenue Code of 
1986--
            (1) any qualified recovery zone bond described in 
        subsection (b)(1)(A) shall be treated as an exempt facility 
        bond under section 142 of such Code, and
            (2) any qualified recovery zone bond described in 
        subsection (b)(1)(B) shall be treated as a qualified mortgage 
        bond under section 143(a) of such Code.
    (b) Qualified Recovery Zone Bond.--For purposes of this section, 
the term ``qualified recovery zone bond'' means any bond issued as part 
of an issue if--
            (1)(A) 95 percent or more of the net proceeds (as defined 
        in section 150(a)(3) of the Internal Revenue Code of 1986) of 
        such issue are to be used for qualified project costs, or
            (B) such issue meets the requirements of a qualified 
        mortgage issue (as defined in section 143(a)(2) of such Code), 
        except as otherwise provided in this subsection,
            (2) such bond is issued by the State of Florida, Alabama, 
        Louisiana, or Mississippi, or any political subdivision 
        thereof,
            (3) such bond is designated for purposes of this section 
        by--
                    (A) 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
                    (B) in the case of any other bond, the Governor of 
                such State,
            (4) such bond is issued after the date of the enactment of 
        this Act and before January 1, 2016, and
            (5) no portion of the proceeds of such issue is to be used 
        to provide any property described in section 144(c)(6)(B) of 
        the Internal Revenue Code of 1986.
    (c) Limitations on Bonds.--The maximum aggregate face amount of 
bonds which may be designated under this section 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 recovery zone (as determined on 
the basis of the most recent census estimate of resident population 
released by the Bureau of Census before April 20, 2010).
    (d) Qualified Project Costs.--For purposes of this section, the 
term ``qualified project costs'' means--
            (1) the cost of any qualified residential rental project 
        (as defined in section 142(d) of the Internal Revenue Code of 
        1986) located in the recovery zone, and
            (2) the cost of acquisition, construction, reconstruction, 
        and renovation of--
                    (A) nonresidential real property (including fixed 
                improvements associated with such property) located in 
                the recovery zone, and
                    (B) public utility property (as defined in section 
                168(i)(10) of such Code) located in the recovery zone.
    (e) Special Rules.--In applying the Internal Revenue Code of 1986 
to any qualified recovery zone bond, the following modifications shall 
apply:
            (1) Section 142(d)(1) of such Code (defining qualified 
        residential rental project) shall be applied--
                    (A) by substituting ``60 percent'' for ``50 
                percent'' in subparagraph (A) thereof, and
                    (B) by substituting ``70 percent'' for ``60 
                percent'' in subparagraph (B) thereof.
            (2) Section 143 of such Code (relating to mortgage revenue 
        bonds: qualified mortgage bond and qualified veterans' mortgage 
        bond) shall be applied--
                    (A) only with respect to owner-occupied residences 
                in the recovery zone,
                    (B) by treating any such residence in the recovery 
                zone as a targeted area residence,
                    (C) by applying subsection (f)(3) thereof without 
                regard to subparagraph (A) thereof, and
                    (D) by substituting ``$150,000'' for ``$15,000'' in 
                subsection (k)(4) thereof.
            (3) Except as provided in section 143 of such Code, 
        repayments of principal on financing provided by the issue of 
        which such bond is a part may not be used to provide financing.
            (4) Section 146 of such Code (relating to volume cap) shall 
        not apply.
            (5) Section 147(d)(2) of such Code (relating to acquisition 
        of existing property not permitted) shall be applied by 
        substituting ``50 percent'' for ``15 percent'' each place it 
        appears.
            (6) Section 148(f)(4)(C) of such Code (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 subsection (b)(1)(A).
            (7) Section 57(a)(5) of such Code (relating to tax-exempt 
        interest) shall not apply.
    (f) Separate Issue Treatment of Portions of an Issue.--This section 
shall not apply to the portion of an issue which (if issued as a 
separate issue) would be treated as a qualified bond (within the 
meaning of section 141 of the Internal Revenue Code of 1986) or as a 
bond that is not a private activity bond (within the meaning of such 
section 141 and determined without regard to subsection (a)), if the 
issuer elects to so treat such portion.

SEC. 11. ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.

    (a) In General.--With respect to a bond described in subsection 
(c), one additional advance refunding after the date of the enactment 
of this Act and before January 1, 2016, shall be allowed under the 
applicable rules of section 149(d) of the Internal Revenue Code of 1986 
if--
            (1) the Governor of the State designates the advance 
        refunding bond for purposes of this subsection, and
            (2) the requirements of subsection (e) are met.
    (b) Certain Private Activity Bonds.--With respect to a bond 
described in subsection (c) which is an exempt facility bond described 
in paragraph (1) or (2) of section 142(a) of the Internal Revenue Code 
of 1986, one advance refunding after the date of the enactment of this 
Act and before January 1, 2016, shall be allowed under the applicable 
rules of section 149(d) of such Code (notwithstanding paragraph (2) 
thereof) if the requirements of paragraphs (1) and (2) of subsection 
(a) are met.
    (c) Bonds Described.--A bond is described in this subsection if 
such bond was outstanding on April 20, 2010, and is issued by the State 
of Florida, Alabama, Louisiana, or Mississippi, or a political 
subdivision thereof.
    (d) Aggregate Limit.--The maximum aggregate face amount of bonds 
which may be designated under this section by the Governor of a State 
shall not exceed--
            (1) $4,500,000,000 in the case of the State of Florida,
            (2) $4,500,000,000 in the case of the State of Louisiana,
            (3) $4,500,000,000 in the case of the State of Mississippi, 
        and
            (4) $4,500,000,000 in the case of the State of Alabama.
    (e) Additional Requirements.--The requirements of this subsection 
are met with respect to any advance refunding of a bond described in 
subsection (c) if--
            (1) no advance refundings of such bond would be allowed 
        under the Internal Revenue Code of 1986 on or after April 20, 
        2010,
            (2) the advance refunding bond is the only other 
        outstanding bond with respect to the refunded bond, and
            (3) the requirements of section 148 of such Code are met 
        with respect to all bonds issued under this subsection.
    (f) Use of Proceeds Requirement.--This section 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) of the Internal Revenue Code of 1986.

SEC. 12. DE MINIMUS SAFE HARBOR EXCEPTION FOR CERTAIN TAX-EXEMPT 
              INTEREST EXPENSE OF FINANCIAL INSTITUTIONS.

    (a) In General.--For purposes of section 265(b)(2)(A) of the 
Internal Revenue Code of 1986, there shall not be taken into account 
any qualified recovery zone bond (as defined in section 10(b)) or any 
advanced refunding bond issued pursuant to section 11.
    (b) Limitation.--The amount of obligations not taken into account 
under subsection (a) shall not exceed the excess of--
            (1) 2 percent of the amount determined under paragraph 
        (2)(B) of section 265(b) such Code, over
            (2) any amount taken into account under paragraph (7) of 
        such section.
    (c) Treatment as Financial Institution Preference Item.--The 
portion of any obligation not taken into account under paragraph (2)(A) 
of section 265(b) of the Internal Revenue Code of 1986 by reason of 
subsection (a) shall be treated for purposes of section 291 of such 
Code as having been acquired on August 7, 1986.
                                 <all>