[Congressional Record Volume 163, Number 195 (Thursday, November 30, 2017)]
[Senate]
[Pages S7628-S7635]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1791. Mr. MENENDEZ submitted an amendment intended to be proposed
by him to the bill H.R. 1, to provide for reconciliation pursuant to
titles II and V of the concurrent resolution on the budget for fiscal
year 2018; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
DIVISION _--NATIONAL DISASTER TAX RELIEF ACT
SEC. _00. SHORT TITLE.
This division may be cited as the ``National Disaster Tax
Relief Act of 2015''.
TITLE I--TAX RELIEF RELATING TO DISASTERS IN 2012, 2013, 2014, AND 2015
SEC. _01. EXPENSING OF QUALIFIED DISASTER EXPENSES.
(a) In General.--Part VI of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting
after section 198 the following:
``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.
``(a) In General.--A taxpayer may elect to treat any
qualified disaster expenses which are paid or incurred by the
taxpayer as an expense which is not chargeable to capital
account. Any expense which is so treated shall be allowed as
a deduction for the taxable year in which it is paid or
incurred.
``(b) Qualified Disaster Expense.--For purposes of this
section, the term `qualified disaster expense' means any
expenditure--
``(1) which is paid or incurred in connection with a trade
or business or with business-related property,
``(2) which is--
``(A) for the abatement or control of hazardous substances
that were released on account of a federally declared
disaster occurring during the period beginning--
``(i) after December 31, 2007, and before January 1, 2010,
or
``(ii) after December 31, 2011, and before January 1, 2016,
``(B) for the removal of debris from, or the demolition of
structures on, real property which is business-related
property damaged or destroyed as a result of a federally
declared disaster occurring during any such period, or
``(C) for the repair of business-related property damaged
as a result of a federally declared disaster occurring during
any such period, and
``(3) which is otherwise chargeable to capital account.
``(c) Other Definitions.--For purposes of this section--
``(1) Business-related property.--The term `business-
related property' means property--
``(A) held by the taxpayer for use in a trade or business
or for the production of income, or
``(B) described in section 1221(a)(1) in the hands of the
taxpayer.
``(2) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by section
165(i)(5)(A).
``(d) Deduction Recaptured as Ordinary Income on Sale,
etc.--Solely for purposes of section 1245, in the case of
property to which a qualified disaster expense would have
been capitalized but for this section--
``(1) the deduction allowed by this section for such
expense shall be treated as a deduction for depreciation, and
``(2) such property (if not otherwise section 1245
property) shall be treated as section 1245 property solely
for purposes of applying section 1245 to such deduction.
``(e) Coordination With Other Provisions.--Sections 198,
280B, and 468 shall not apply to amounts which are treated as
expenses under this section.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to
section 198 the following item:
``Sec. 198A. Expensing of qualified disaster expenses.''.
(c) Effective Date.--The amendment made by this section
shall apply to amounts paid or incurred after December 31,
2011, in connection with disasters declared after such date.
SEC. _02. INCREASED LIMITATION ON CHARITABLE CONTRIBUTIONS
FOR DISASTER RELIEF.
(a) Individuals.--Paragraph (1) of section 170(b) of the
Internal Revenue Code of 1986 is amended by redesignating
subparagraphs (F) and (G) as subparagraphs (G) and (H),
respectively, and by inserting after subparagraph (E) the
following new subparagraph:
``(F) Qualified disaster contributions.--
``(i) In general.--Any qualified disaster contribution
shall be allowed to the extent that the aggregate of such
contributions does not exceed the excess of 80 percent of the
taxpayer's contribution base over the amount of all other
charitable contributions allowable under this paragraph.
``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the limitation under clause
(i), such excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a charitable
contribution to which clause (i) applies in each of the 5
succeeding years in order of time.
``(iii) Coordination with other subparagraphs.--For
purposes of applying this subsection and subsection (d)(1),
contributions described in clause (i) shall not be treated as
described in subparagraph (A) and such subparagraph shall be
applied without regard to such contributions.
``(iv) Qualified disaster contributions.--For purposes of
this subparagraph, the term `qualified disaster contribution'
means any charitable contribution if--
``(I) such contribution is for relief efforts related to a
federally declared disaster (as defined in section
165(h)(3)(C)(i)),
``(II) such contribution is made during the period
beginning on the applicable disaster date with respect to the
disaster described in subclause (I) and ending on December
31, 2015, and
``(III) such contribution is made in cash to an
organization described in subparagraph (A) (other than an
organization described in section 509(a)(3)).
Such term shall not include a contribution if the
contribution is for establishment of a new, or maintenance in
an existing, donor advised fund (as defined in section
4966(d)(2)).
``(v) Applicable disaster date.--For purposes of clause
(iv)(II), the term `applicable disaster date' means, with
respect to any federally declared disaster described in
clause (iv)(I), the date on which the disaster giving rise to
the Presidential declaration described in section
165(i)(5)(A) occurred.
``(vi) Substantiation requirement.--This paragraph shall
not apply to any qualified disaster contribution unless the
taxpayer obtains from such organization to which the
contribution was made a contemporaneous written
acknowledgment (within the meaning of subsection (f)(8)) that
such contribution was used (or is to be used) for a purpose
described in clause (iv)(III).''.
(b) Corporations.--
(1) In general.--Paragraph (2) of section 170(b) of the
Internal Revenue Code of 1986 is amended by redesignating
subparagraph (C) as subparagraph (D) and by inserting after
subparagraph (B) the following new subparagraph:
``(C) Qualified disaster contributions.--
``(i) In general.--Any qualified disaster contribution
shall be allowed to the extent that the aggregate of such
contributions does not exceed the excess of 20 percent of the
taxpayer's taxable income over the amount of charitable
contributions allowed under subparagraph (A).
``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the limitation under clause
(i), such excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a charitable
contribution to which clause (i) applies in each of the 5
succeeding years in order of time.
``(iii) Qualified disaster contribution.--The term
`qualified disaster contribution' has the meaning given such
term under paragraph (2)(F)(iv).
``(iv) Substantiation requirement.--This paragraph shall
not apply to any qualified disaster contribution unless the
taxpayer obtains from such organization to which the
contribution was made a contemporaneous
[[Page S7629]]
written acknowledgment (within the meaning of subsection
(f)(8)) that such contribution was used (or is to be used)
for a purpose described in paragraph (1)(F)(iv)(III).''.
(2) Conforming amendments.--
(A) Subparagraph (A) of section 170(b)(2) of such Code is
amended by striking ``subparagraph (B) applies'' and
inserting ``subparagraphs (B) and (C) apply''.
(B) Subparagraph (B) of section 170(b)(2) of such Code is
amended by striking ``subparagraph (A)'' and inserting
``subparagraphs (A) and (C)''.
(c) Effective Date.--The amendments made by this section
shall apply to disasters arising in taxable years ending
after December 31, 2011.
SEC. _03. LOSSES ATTRIBUTABLE TO DISASTERS IN 2012, 2013,
2014, AND 2015.
(a) In General.--Section 165(h) of the Internal Revenue
Code of 1986 is amended by redesignating paragraphs (3) and
(4) as paragraphs (4) and (5), respectively, and by inserting
after paragraph (2) the following:
``(3) Special rule for losses in federally declared
disasters.--
``(A) In general.--If an individual has a net disaster loss
for any taxable year, the amount determined under paragraph
(2)(A)(ii) shall be the sum of--
``(i) such net disaster loss, and
``(ii) so much of the excess referred to in the matter
preceding clause (i) of paragraph (2)(A) (reduced by the
amount in clause (i) of this subparagraph) as exceeds 10
percent of the adjusted gross income of the individual.
``(B) Net disaster loss.--For purposes of subparagraph (A),
the term `net disaster loss' means the excess of--
``(i) the personal casualty losses--
``(I) attributable to a federally declared disaster
occurring during the period beginning after December 31,
2007, and before January 1, 2010, or during the period
beginning after December 31, 2011, and before January 1,
2016, and
``(II) occurring in a disaster area, over
``(ii) personal casualty gains.
``(C) Federally declared disaster.--For purposes of this
paragraph--
``(i) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by
subsection (i)(5)(A).
``(ii) Disaster area.--The term `disaster area' has the
meaning given such term by subsection (i)(5)(B).''.
(b) Conforming Amendment.--Paragraph (4) of section 165(h)
of such Code, as so redesignated, is amended by striking
``paragraph (2)'' and inserting ``paragraphs (2) and (3)''.
(c) Loss Allowed Whether or Not Individual Itemized
Deductions.--Section 62(a) of the Internal Revenue Code of
1986 is amended by inserting after paragraph (21) the
following new paragraph:
``(22) Disaster casualty losses.--Any net disaster loss (as
defined in section 165(h)(3)(B)).''.
(d) Technical Amendment.--Subparagraph (A) of section
165(i)(5) of the Internal Revenue Code of 1986 is amended by
inserting ``major'' after ``means any''.
(e) Effective Date.--The amendments made by this section
shall apply to disasters declared in taxable years beginning
after December 31, 2011.
(f) Use of Amended Income Tax Returns To Take Into Account
Receipt of Certain Casualty Loss Grants by Disallowing
Previously Taken Casualty Loss Deductions.--
(1) In general.--Notwithstanding any other provision of the
Internal Revenue Code of 1986, if a taxpayer--
(A) claims a deduction for any taxable year with respect to
a casualty loss to a principal residence (within the meaning
of section 121 of such Code) resulting from any federally
declared disaster (as defined in section 165(h)(3)(C) of such
Code) occurring during the period beginning after December
31, 2011, and before January 1, 2016, and
(B) in a subsequent taxable year receives a grant under any
Federal or State program as reimbursement for such loss,
such taxpayer may elect to file an amended income tax return
for the taxable year in which such deduction was allowed (and
for any taxable year to which such deduction is carried) and
reduce (but not below zero) the amount of such deduction by
the amount of such reimbursement.
(2) Time of filing amended return.--Paragraph (1) shall
apply with respect to any grant only if any amended income
tax returns with respect to such grant are filed not later
than the later of--
(A) the due date for filing the tax return for the taxable
year in which the taxpayer receives such grant, or
(B) the date which is 1 year after the date of the
enactment of this Act.
(3) Waiver of penalties and interest.--Any underpayment of
tax resulting from the reduction under paragraph (1) of the
amount otherwise allowable as a deduction shall not be
subject to any penalty or interest under such Code if such
tax is paid not later than 1 year after the filing of the
amended return to which such reduction relates.
SEC. _04. NET OPERATING LOSSES ATTRIBUTABLE TO DISASTERS IN
2012, 2013, 2014, AND 2015.
(a) In General.--Section 172(b)(1) of the Internal Revenue
Code of 1986 is amended by adding at the end the following:
``(G) Certain losses attributable federally declared
disasters.--In the case of a taxpayer who has a qualified
disaster loss (as defined in subsection (i)), such loss shall
be a net operating loss carryback to each of the 5 taxable
years preceding the taxable year of such loss.''.
(b) Rules Relating to Qualified Disaster Losses.--Section
172 of the Internal Revenue Code of 1986 is amended by
redesignating subsection (i) a subsection (j) and by
inserting after subsection (h) the following:
``(i) Rules Relating to Qualified Disaster Losses.--For
purposes of this section--
``(1) In general.--The term `qualified disaster loss' means
the lesser of--
``(A) the sum of--
``(i) the losses allowable under section 165 for the
taxable year--
``(I) attributable to a federally declared disaster (as
defined in section 165(i)(5)(A)) occurring during the period
beginning after December 31, 2007, and before January 1,
2010, or during the period beginning after December 31, 2011,
and before January 1, 2016, and
``(II) occurring in a disaster area (as defined in section
165(i)(5)(B)), and
``(ii) the deduction for the taxable year for qualified
disaster expenses which is allowable under section 198A(a) or
which would be so allowable if not otherwise treated as an
expense, or
``(B) the net operating loss for such taxable year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), a qualified disaster loss for any
taxable year shall be treated in a manner similar to the
manner in which a specified liability loss is treated.
``(3) Election.--Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(G) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(G). 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.
``(4) Exclusion.--The term `qualified disaster loss' shall
not include any loss with respect to any property described
in section 1400N(p)(3).''.
(c) Effective Date.--The amendments made by this section
shall apply to losses arising in taxable years beginning
after December 31, 2011, in connection with disasters
declared after such date.
SEC. _05. WAIVER OF CERTAIN MORTGAGE REVENUE BOND
REQUIREMENTS FOLLOWING 2012, 2013, 2014, AND
2015 DISASTERS.
(a) In General.--Paragraph (13) of section 143(k) of the
Internal Revenue Code of 1986 is amended by striking ``before
January 1, 2010'' in subparagraphs (A)(i) and (B)(i) of such
paragraph and inserting ``during the period beginning after
December 31, 2007, and before January 1, 2010, or during the
period beginning after December 31, 2011, and before January
1, 2016''.
(b) Effective Date.--The amendments made by this section
shall apply to disasters occurring after December 31, 2011.
SEC. _06. INCREASED EXPENSING AND BONUS DEPRECIATION FOR
QUALIFIED DISASTER ASSISTANCE PROPERTY
FOLLOWING 2012, 2013, 2014, AND 2015 DISASTERS.
(a) In General.--Subclause (I) of section 168(n)(2)(A)(ii)
of the Internal Revenue Code of 1986 is amended by striking
``before January 1, 2010'' and inserting ``during the period
beginning after December 31, 2007, and before January 1,
2010, or during the period beginning after December 31, 2011,
and before January 1, 2016''.
(b) Removal of Exclusion.--Section 168(n)(2)(B)(i) of such
Code is amended by inserting ``and'' at the end of subclause
(I), by striking ``, and'' at the end of subclause (II) and
inserting a period, and by striking subclause (III).
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after December 31,
2011, with respect to disasters declared after such date.
SEC. _07. INCREASE IN NEW MARKETS TAX CREDIT FOR INVESTMENTS
IN COMMUNITY DEVELOPMENT ENTITIES SERVING 2012,
2013, 2014, AND 2015 DISASTER AREAS.
(a) In General.--Subsection (f) of section 45D of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(4) Increased special allocation for community
development entities serving disaster areas with respect to
disasters occurring in any of calendar years 2012 through
2015.--
``(A) In general.--In the case of each calendar year which
begins after 2012 and before 2017, the new markets tax credit
limitation shall be increased by an amount equal to
$500,000,000, to be allocated among qualified community
development entities to make qualified low-income community
investments within any covered federally declared disaster
area.
``(B) Allocation of increase.--The amount of the increase
in limitation under subparagraph (A) shall be allocated by
the Secretary under paragraph (2) to qualified community
development entities and shall give priority to such entities
with a record of having successfully provided capital or
technical assistance to businesses or communities within any
covered federally declared disaster area or areas for which
the allocation is requested.
[[Page S7630]]
``(C) Application of carryforward.--Paragraph (3) shall be
applied separately with respect to the amount of any increase
under subparagraph (A).
``(D) Covered federally declared disaster area.--For
purposes of this paragraph, the term `covered federally
declared disaster area' means any disaster area resulting
from any federally declared disaster occurring after December
31, 2011, and before January 1, 2016. For purposes of the
preceding sentence, the terms `federally declared disaster'
and `disaster area' have the meanings given such terms in
section 165(i)(5).''.
(b) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after 2012.
SEC. _08. SPECIAL RULES FOR USE OF RETIREMENT FUNDS IN
CONNECTION WITH FEDERALLY DECLARED DISASTERS IN
2012, 2013, 2014, AND 2015.
(a) Tax-Favored Withdrawals From Retirement Plans.--
(1) In general.--Paragraph (2) of section 72(t) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(H) Distributions from retirement plans in connection
with federally declared disasters during in any calendar
years after 2011.--Any qualified disaster recovery
distribution.''.
(2) Qualified disaster recovery distribution.--Section
72(t) of such Code is amended by adding at the end the
following new paragraph:
``(11) Qualified disaster recovery distribution.--For
purposes of paragraph (2)(H)--
``(A) In general.--Except as provided in subparagraph (B),
the term `qualified disaster recovery distribution' means,
with respect to any federally declared disaster occurring in
any calendar year beginning after 2011 and before January 1,
2016, any distribution from an eligible retirement plan made
on or after the applicable disaster date and before the date
that is 1 year after the applicable disaster date, to an
individual whose principal place of abode on the applicable
disaster date, is located in the disaster area and who has
sustained an economic loss by reason of such federally
declared disaster.
``(B) Dollar limitation.--
``(i) In general.--For purposes of this subsection, the
aggregate amount of distributions received by an individual
with respect to any federally declared disaster occurring
during in any calendar year beginning after 2011 shall not
exceed $100,000.
``(ii) Treatment of plan distributions.--If a distribution
to an individual would (without regard to clause (i)) be a
qualified disaster recovery distribution, a plan shall not be
treated as violating any requirement of this title merely
because the plan treats such distribution as a qualified
disaster recovery 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 with respect to any
federally declared disaster occurring in any calendar year
beginning after 2011 exceeds $100,000.
``(iii) Controlled group.--For purposes of clause (ii), the
term `controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section
414.
``(C) Amount distributed may be repaid.--
``(i) In general.--Any individual who receives a qualified
disaster recovery 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.
``(ii) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For purposes of
this title, if a contribution is made pursuant to clause (i)
with respect to a qualified disaster recovery 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 disaster recovery 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.
``(iii) Treatment of repayments for distributions from
iras.--For purposes of this title, if a contribution is made
pursuant to clause (i) with respect to a qualified disaster
recovery 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 disaster recovery
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.
``(D) Income inclusion spread over 3-year period.--
``(i) In general.--In the case of any qualified disaster
recovery 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.
``(ii) Special rule.--For purposes of clause (i), rules
similar to the rules of subparagraph (E) of section
408A(d)(3) shall apply.
``(E) Other definitions.--
``(i) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(ii) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.
``(iii) Eligible retirement plan.--The term `eligible
retirement plan' shall have the meaning given such term by
section 402(c)(8)(B).
``(F) Special rules.--
``(i) Exemption of distributions from trustee to trustee
transfer and withholding rules.--For purposes of sections
401(a)(31), 402(f), and 3405, qualified disaster recovery
distributions shall not be treated as eligible rollover
distributions.
``(ii) Qualified disaster recovery distributions treated as
meeting plan distribution requirements.--For purposes of this
title, a qualified disaster recovery 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).''.
(3) Effective date.--The amendments made by this subsection
shall apply to distributions with respect to disaster
declared after December 31, 2011.
(b) Loans From Qualified Plans.--
(1) In general.--Subsection (p) of section 72 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(6) Increase in limit on loans not treated as
distributions with respect to disasters in any calendar year
after 2011.--
``(A) In general.--In the case of any loan from a qualified
employer plan to a qualified individual made during the
applicable period--
``(i) clause (i) of paragraph (2)(A) shall be applied by
substituting `$100,000' for `$50,000', and
``(ii) clause (ii) of such paragraph 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 the
applicable disaster date from a qualified employer plan--
``(i) if the due date pursuant to subparagraph (B) or (C)
of paragraph (2) for any repayment with respect to such loan
occurs during the 1-year period beginning on the applicable
disaster date, such due date shall be delayed for 1 year,
``(ii) any subsequent repayments with respect to any such
loan shall be appropriately adjusted to reflect the delay in
the due date under clause (i) and any interest accruing
during such delay, and
``(iii) in determining the 5-year period and the term of a
loan under subparagraph (B) or (C) of paragraph (2), the
period described in clause (i) shall be disregarded.
``(C) Definitions.--For purposes of this paragraph--
``(i) Qualified individual.--The term `qualified
individual' means, with respect to any federally declared
disaster occurring during in any calendar year beginning
after 2011, an individual whose principal place of abode on
the applicable disaster date is located in the disaster area
and who has sustained an economic loss by reason of such
federally declared disaster.
``(ii) Applicable period.--The applicable period is the
period beginning on the applicable disaster date and ending
on December 31, 2016.
``(iii) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(iv) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.''.
(2) Effective date.--The amendment made by this subsection
shall apply to loans made with respect to disaster declared
after December 31, 2011.
(c) 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, or amendment made by,
this section, or pursuant to any regulation issued by the
Secretary or the Secretary of Labor under any provision of,
or amendment made by, this section, and
(ii) on or before the last day of the first plan year
beginning on or after January 1, 2016, 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).
[[Page S7631]]
(B) Conditions.--This subsection shall not apply to any
amendment unless--
(i) during the period--
(I) beginning on the date that the provisions of, and
amendments made by, 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 the provisions of, or
amendments made 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. _09. ADDITIONAL EXEMPTION FOR HOUSING QUALIFIED DISASTER
DISPLACED INDIVIDUALS.
(a) In General.--Section 151 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(f) Additional Exemption for Certain Disaster-Displaced
Individuals.--
``(1) In general.--In the case of any taxable year
beginning in any calendar year beginning after 2011, there
shall be allowed an exemption of $500 for each qualified
disaster-displaced individual with respect to the taxpayer
for the taxable year.
``(2) Limitations.--
``(A) Dollar limitation.--The exemption under paragraph (1)
shall not exceed $2,000, reduced by the amount of the
exemption under this subsection for all prior taxable years.
``(B) Individuals taken into account only once.--An
individual shall not be taken into account under paragraph
(1) if such individual was taken into account under this
subsection by the taxpayer for any prior taxable year.
``(C) Identifying information required.--An individual
shall not be taken into account under paragraph (1) for a
taxable year unless the taxpayer identification number of
such individual is included on the return of the taxpayer for
such taxable year.
``(3) Qualified disaster-displaced individual.--
``(A) In general.--For purposes of this subsection, the
term `qualified disaster-displaced individual' means, with
respect to any taxpayer for any taxable year, any qualified
individual if such individual is provided housing free of
charge by the taxpayer in the principal residence of the
taxpayer for a period of 60 consecutive days which ends in
such taxable year. Such term shall not include the spouse or
any dependent of the taxpayer.
``(B) Qualified individual.--The term `qualified
individual' means any individual who--
``(i) on the date of a federally declared disaster
occurring in calendar years beginning after 2011 and before
2016 maintained such individual's principal place of abode in
the disaster area declared with respect to such disaster, and
``(ii) was displaced from such principal place of abode by
reason of the federally declared disaster.
For purposes of the preceding sentence, the terms `federally
declared disaster' and `disaster area' have the meanings
given such terms in section 165(i)(5).
``(4) Compensation for housing.--No deduction shall be
allowed under this subsection if the taxpayer receives any
rent or other amount (from any source) in connection with the
providing of such housing.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2011.
SEC. _10. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS
BY REASON OF 2012, 2013, 2014, AND 2015
DISASTERS.
(a) In General.--Section 108 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(j) Discharge of Indebtedness for Individuals Affected by
Disasters in Any Calendar Year After 2011.--
``(1) In general.--Except as provided in paragraph (2),
gross income shall not include any amount which (but for this
subsection) would be includible in gross income by reason of
any discharge (in whole or in part) of indebtedness of a
natural person described in paragraph (3) by an applicable
entity (as defined in section 6050P(c)(1)) during the
applicable period.
``(2) Exceptions for business indebtedness.--Paragraph (1)
shall not apply to any indebtedness incurred in connection
with a trade or business.
``(3) Persons described.--A natural person is described in
this paragraph if the principal place of abode of such person
on the applicable disaster date was located in the disaster
area with respect to any federally declared disaster
occurring during any calendar year beginning after 2011 and
before 2016.
``(4) Applicable period.--For purposes of this subsection,
the term `applicable period' means the period beginning on
the applicable disaster date and ending on the date which is
14 months after such date.
``(5) Other definitions.--For purposes of this subsection--
``(A) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(B) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.''.
(b) Effective Date.--The amendment made by this section
shall apply to discharges made on or after December 31, 2011.
SEC. _11. SPECIAL RULE FOR DETERMINING EARNED INCOME OF
INDIVIDUALS AFFECTED BY FEDERALLY DECLARED
DISASTERS.
(a) In General.--Section 32 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(n) Special Rule for Determining Earned Income of
Taxpayers Affected by Federally Declared Disasters.--
``(1) In general.--In the case of a qualified individual
with respect to any federally declared disaster occurring
during any calendar year beginning after 2011, if the earned
income of the taxpayer for the taxable year which includes
the applicable disaster date is less than the earned income
of the taxpayer for the preceding taxable year, the credit
allowed under this section and section 24(d) 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, the term `qualified individual' means, with
respect to any federally declared disaster occurring during
in any calendar year beginning after 2011 and before 2016,
any individual whose principal place of abode on the
applicable disaster date, was located--
``(A) in any portion of a disaster area determined by the
President to warrant individual or individual and public
assistance under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act by reason of the federally declared
disaster, or
``(B) in any portion of the disaster area not described in
subparagraph (A) and such individual was displaced from such
principal place of abode by reason of the federally declared
disaster.
``(3) Other definitions.--For purposes of this paragraph--
``(A) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(B) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.
``(4) 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 disaster 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 this section.
``(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).''.
(b) Child Tax Credit.--Section 24(d) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(5) Special rule for determining earned income of
taxpayers affected by federally declared disasters.--For
election by qualified individuals with respect to certain
federally declared disasters to substitute earned income from
the preceding taxable year, see section 32(n).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2011.
SEC. _12. INCREASE IN REHABILITATION CREDIT FOR BUILDINGS IN
2012, 2013, 2014, AND 2015 DISASTER AREAS.
(a) In General.--Section 47 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(e) Special Rule for Expenditures Made in Connection With
Certain Disasters.--
``(1) In general.--In the case of qualified rehabilitation
expenditures paid or incurred during the applicable period
with respect to any qualified rehabilitated building or
certified historic structure located in a disaster area with
respect to any federally declared disaster occurring in,
subsection (a) shall be applied--
``(A) by substituting `13 percent' for `10 percent' in
paragraph (1) thereof, and
``(B) by substituting `26 percent' for `20 percent' in
paragraph (2) thereof.
``(2) Definitions.--For purposes of this subsection--
``(A) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(B) Applicable period.--The term `applicable period'
means the period beginning on the applicable disaster date
and ending on December 31, 2015.
[[Page S7632]]
``(C) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.''.
(b) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred after December 31,
2011.
SEC. _13. ADVANCED REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.
(a) In General.--Section 149(d) of the Internal Revenue
Code of 1986 is amended by redesignating paragraph (7) as
paragraph (8) and by inserting after paragraph (6) the
following new paragraph:
``(7) Special rule with respect to certain natural
disasters.--
``(A) In general.--With respect to a bond described in
subparagraph (C), one additional advance refunding after the
date of the enactment of this paragraph and before January 1,
2018, shall be allowed under the rules of this subsection
if--
``(i) the Governor of the State designates the advance
refunding bond for purposes of this subsection, and
``(ii) the requirements of subparagraph (E) are met.
``(B) Certain private activity bonds.--With respect to a
bond described in subparagraph (C) 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 paragraph and before January 1, 2018, shall be
allowed under the applicable rules of this subsection
(notwithstanding paragraph (2) thereof) if the requirements
of clauses (i) and (ii) of subparagraph (A) are met.
``(C) Bonds described.--A bond is described in this
paragraph if, with respect to any federally declared
disaster, such bond--
``(i) was outstanding on the applicable disaster date, and
``(ii) is issued by an applicable State or a political
subdivision thereof.
``(D) 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 $4,500,000,000.
``(E) Additional requirements.--The requirements of this
subparagraph are met with respect to any advance refunding of
a bond described in subparagraph (C) if--
``(i) no advance refundings of such bond would be allowed
under this title on or after the applicable disaster date,
``(ii) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
``(iii) the requirements of section 148 are met with
respect to all bonds issued under this paragraph.
``(F) Definitions.--For purposes of this subsection--
``(i) Federally declared disaster; disaster area.--The
terms `federally declared disaster' and `disaster area' have
the meanings given such terms under section 165(i)(5).
``(ii) Applicable disaster date.--The term `applicable
disaster date' means, with respect to any federally declared
disaster, the date on which such federally declared disaster
occurs.
``(iii) Applicable state.--The term `applicable State'
means, with respect to any federally declared disaster, any
State in which a portion of the disaster area is located.''.
(b) Effective Date.--The amendment made by this section
shall apply to bonds issued after the date of the enactment
of this Act.
SEC. _14. QUALIFIED DISASTER AREA RECOVERY BONDS.
(a) In General.--Subpart A of part IV of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 146 the following new section:
``SEC. 146A. QUALIFIED DISASTER AREA RECOVERY BONDS.
``(a) In General.--For purposes of this title, any
qualified disaster area recovery bond shall--
``(1) be treated as an exempt facility bond, and
``(2) not be subject to section 146.
``(b) Qualified Disaster Area Recovery Bond.--For purposes
of this section, the term `qualified disaster area recovery
bond' means any bond issued as part of an issue if--
``(1) 95 percent or more of the net proceeds of such issue
are to be used for qualified project costs,
``(2) such bond is issued by a State or any political
subdivision thereof any part of which is in a qualified
disaster area,
``(3) the Governor of the issuing State designates such
bond for purposes of this section, and
``(4) such bond is issued after the date of the enactment
of this section and before January 1, 2017.
``(c) Limitation on Amount of Bonds.--
``(1) In general.--The maximum aggregate face amount of
bonds which may be designated under this section by any State
shall not exceed $10,000,000,000.
``(2) Movable property.--No bonds shall be issued which are
to be used for movable fixtures and equipment.
``(3) Treatment of current refunding bonds.--Paragraph (1)
shall not apply to any bond (or series of bonds) issued to
refund a qualified disaster area recovery bond, if--
``(A) the average maturity date of the issue of which the
refunding bond is a part is not later than the average
maturity date of the bonds to be refunded by such issue,
``(B) the amount of the refunding bond does not exceed the
outstanding amount of the refunded bond, and
``(C) the net proceeds of the refunding bond are used to
redeem the refunded bond not later than 90 days after the
date of the issuance of the refunding bond.
For purposes of subparagraph (A), average maturity shall be
determined in accordance with section 147(b)(2)(A).
``(d) Qualified Project Costs.--For purposes of this
section, the term `qualified project costs' means the cost of
acquisition, construction, reconstruction, and renovation
of--
``(1) residential rental property (as defined in section
142(d)),
``(2) nonresidential real property (including fixed
improvements associated with such property),
``(3) a facility described in paragraph (2) or (3) of
section 142(a), or
``(4) public utility property (as defined in section
168(i)(10)),
which is located in a qualified disaster area and was damaged
or destroyed by reason of a federally declared disaster.
``(e) Special Rules.--In applying this title to any
qualified disaster area recovery bond, the following
modifications shall apply:
``(1) Section 147(d) (relating to acquisition of existing
property not permitted) shall be applied by substituting `50
percent' for `15 percent' each place it appears.
``(2) 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 issued under this section. For
purposes of the preceding sentence, the following spending
requirements shall apply in lieu of the requirements in
clause (ii) of such section:
``(A) 40 percent of such available construction proceeds
are spent for the governmental purposes of the issue within
the 2-year period beginning on the date the bonds are issued,
``(B) 60 percent of such proceeds are spent for such
purposes within the 3-year period beginning on such date,
``(C) 80 percent of such proceeds are spent for such
purposes within the 4-year period beginning on such date, and
``(D) 100 percent of such proceeds are spent for such
purposes within the 5-year period beginning on such date.
``(3) Repayments of principal on financing provided by the
issue--
``(A) may not be used to provide financing, and
``(B) must be used not later than the close of the first
semiannual period beginning after the date of the repayment
to redeem bonds which are part of such issue.
The requirement of subparagraph (B) shall be treated as met
with respect to amounts received within 5 years after the
date of issuance of the issue (or, in the case of a refunding
bond, the date of issuance of the original bond) if such
amounts are used by the close of such 5 years to redeem bonds
which are part of such issue.
``(4) Section 57(a)(5) 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 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.
``(g) Qualified Disaster Area; Federally Declared
Disaster.--
``(1) Qualified disaster area.--The term `qualified
disaster area' means any area determined 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 a federally
declared disaster occurring during the period beginning after
December 31, 2011, and before January 1, 2016.
``(2) Federally declared disaster.--The term `federally
declared disaster' has the meaning given to such term under
section 165(i)(5).''.
(b) Clerical Amendment.--The table of sections for subpart
A of part IV of subchapter B of chapter 1 of such Code is
amended by inserting after the item relating to section 146
the following new item:
``Sec. 146A. Qualified disaster area recovery bonds.''.
(c) Effective Date.--The amendments made by this section
shall apply to obligations issued after December 31, 2015.
SEC. _15. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS.
(a) In General.--Paragraph (3) of section 42(h) of the
Internal Revenue Code of 1986 (relating to limitation on
aggregate credit allowable with respect to projects located
in a State) is amended by adding at the end the following new
subparagraph:
``(J) Increase in state housing credit for states damaged
by natural disasters.--
``(i) In general.--In the case of calendar year 2016, the
State housing credit ceiling of each State any portion of
which includes any portion of a qualifying disaster area
shall be increased by so much of the aggregate housing credit
dollar amount as does not exceed the applicable limitation
allocated by the State housing credit agency of such State
for such calendar year to buildings located in qualifying
disaster areas.
``(ii) Applicable limitation.--For purposes of clause (i),
the applicable limitation is the greater of--
``(I) $8 multiplied by the population of the qualifying
disaster areas in such State, or
[[Page S7633]]
``(II) 50 percent of the State housing credit ceiling
(determined without regard to this subparagraph) for 2015.
``(iii) Applicable percentage.--For purposes of this
section, the applicable percentage with respect to any
building to which amounts allocated under clause (i) shall be
determined under subsection (b)(2), except that subparagraph
(A) thereof shall be applied by substituting `January 1,
2016' for `January 1, 2015'.
``(iv) 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 subparagraph (C) for any calendar year, any
increase in the State housing credit ceiling under clause (i)
shall be treated as an amount described in clause (ii) of
such subparagraph.
``(v) Qualifying disaster area.--For purposes of this
subparagraph, the term `qualifying federally declared
disaster area' means--
``(I) each county which is determined to warrant individual
or individual and public assistance from the Federal
Government under a qualifying natural disaster declaration
described in clause (vi)(I), and
``(II) each county not described in subclause (I) which is
included in the geographical area covered by a qualifying
natural disaster declaration described in subclause (II) or
(III) of clause (vi).
``(vi) Qualifying natural disaster declaration.--For
purposes of clause (v), the term `qualifying natural disaster
declaration' means--
``(I) a federally declared disaster (as defined in section
165(i)(5)) occurring during the period beginning after
December 31, 2011, and before January 1, 2016,
``(II) a natural disaster declared by the Secretary of
Agriculture in 2011 due to damaging weather and other
conditions relating to Hurricane Irene or Tropical Storm Lee
under section 321(a) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1961(a)), or
``(III) a major disaster or emergency designated by the
President in 2011 due to damaging weather and other
conditions relating to Hurricane Irene or Tropical Storm Lee
under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.).''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. _16. FACILITATION OF TRANSFER OF WATER LEASING AND WATER
BY MUTUAL DITCH OR IRRIGATION COMPANIES IN
DISASTER AREAS.
(a) In General.--Paragraph (12) of section 501(c) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(I) Treatment of mutual ditch or irrigation companies in
certain disaster areas.--
``(i) In general.--In the case of a qualified mutual ditch
or irrigation company or like organization, subparagraph (A)
shall be applied without taking into account any income
received or accrued during the applicable period--
``(I) from the sale, lease, or exchange of fee or other
interests in real property, including interests in water,
``(II) from the sale or exchange of stock in a mutual ditch
or irrigation company or like organization or contract rights
for the delivery or use of water,
``(III) from the investment of proceeds from sales, leases,
or exchanges under subclauses (I) and (II), or
``(IV) from the United States, or a State or local
government, resulting from the federally declared disaster.
except that any income received under subclause (I), (II),
(III), or (IV) which is distributed or expended for expenses
(other than for operations, maintenance, and capital
improvements) of the qualified mutual ditch or irrigation
company or like organization shall be treated as nonmember
income in the year in which it is distributed or expended.
``(ii) Qualified mutual ditch or irrigation company or like
organization.--For purposes of this paragraph--
``(I) In general.--The term `qualified mutual ditch or
irrigation company or like organization' means any mutual
ditch or irrigation company or like organization that
diverted, delivered, transported, stored, or used its water
for agricultural irrigation purposes on its own or through
its shareholders in a qualified disaster area during any of
calendar years 2012 through 2015.
``(II) Qualified asset.--The term `qualified asset' means
any real property or tangible personal property used in the
mutual ditch or irrigation company's (or like organization's)
system.
``(III) Multiple areas.--Under regulations, if the
qualified assets of any mutual ditch or irrigation company or
like organization are located in more than 1 qualified
disaster area, all such areas shall be treated as 1 area and
if more than 1 federally declared disaster is involved, the
date on which the last of such disasters occurred shall be
the date used for purposes of this paragraph.
``(iii) Applicable period.--For purposes of this paragraph,
the term `applicable period' means the taxable year in which
the federally declared disaster occurred and the 5 following
taxable years.
``(iv) Other definitions.--
``(I) Qualified disaster area.--The term `qualified
disaster area' means any area determined 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 a federally
declared disaster occurring during the period beginning on
January 1, 2012, and ending on December 31, 2015.
``(II) Federally declared disaster.--The term `federally
declared disaster' has the meaning given to such term under
section 165(i)(5).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years ending after December 31, 2011.
TITLE II--OTHER DISASTER TAX RELIEF PROVISIONS
SEC. _01. EXCLUSION FOR DISASTER MITIGATION PAYMENTS RECEIVED
FROM STATE AND LOCAL GOVERNMENTS.
(a) In General.--Paragraph (2) of section 139(g) of the
Internal Revenue Code of 1986 is amended by inserting ``, or
any other amount which is paid by a State or local government
or agency or instrumentality thereof,'' after ``(as in effect
on such date)''.
(b) Effective Date.--The amendment made by this section
shall apply to payments received after the date of the
enactment of this Act.
SEC. _02. NATURAL DISASTER FUNDS.
(a) Natural Disaster Fund.--Subpart C of part II of
subchapter E of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 468B the following
new section:
``SEC. 468C. SPECIAL RULES FOR NATURAL DISASTER FUNDS.
``(a) In General.--If a qualified taxpayer elects the
application of this section, there shall be allowed as a
deduction for any taxable year the amount of payments made by
the taxpayer to a natural disaster fund during such taxable
year.
``(b) Natural Disaster Fund.--The term `natural disaster
fund' means a fund meeting the following requirements:
``(1) Designation.--The taxpayer designates--
``(A) the fund as a natural disaster fund in the manner
prescribed by the Secretary, and
``(B) the line or lines of business to which the fund
applies.
``(2) Segregation.--The assets of the fund are segregated
from other assets of the taxpayer.
``(3) Investments.--
``(A) The assets of the fund are maintained in one or more
qualified accounts and are invested only in--
``(i) deposits with banks whose deposits are insured
subject to applicable limits by the Federal Deposit Insurance
Corporation, or
``(ii) in stock or other securities in which the fund would
be permitted to invest if it were a capital construction fund
subject to the investment limitations of paragraphs (2) and
(3) of section 7518(b)(2).
``(B) All investment earnings (including gains and losses)
from investments of the fund become part of the fund.
``(4) Contributions to the fund.--The fund does not accept
any deposits (or other amounts) other than cash payments with
respect to which a deduction is allowable under subsection
(a) and earnings (including gains and losses) from fund
investments.
``(5) Purpose.--The fund is established and maintained for
the purposes of covering costs, expenses, and losses
(including business interruption losses) resulting from a
Federally declared natural disaster to the extent such costs
are not covered by insurance.
``(6) Maximum balance.--The balance of the fund does not
exceed the lesser of--
``(A) the sum of--
``(i) 150 percent of the maximum deductible, and
``(ii) 100 percent of the maximum co-insurance (to the
extent not taken into account in clause (i)),
that, in the case of a Federally declared natural disaster
resulting in losses, the taxpayer could be expected to pay
with respect to property and business interruption insurance
maintained by the taxpayer for the line of business to which
the fund applies and that would cover losses resulting from a
Federally declared natural disaster, and
``(B) the maximum loss under any insurance coverage that
the taxpayer could reasonably expect to occur for the line of
business in the case of a severe natural disaster.
``(7) Financial statements.--The fund or the balance of the
fund is recorded in the taxpayer's financial statements in
accordance with generally accepted accounting principles and
not as a current asset and the footnotes to the taxpayer's
financial statements include a short description of the fund
and its purposes.
``(8) Insurance.--The taxpayer property insurance
maintained by the qualified taxpayer applies to 75 percent or
more of the property used--
``(A) in the qualified taxpayer's line of business to which
the fund relates, and
``(B) in the United States.
``(c) Qualified Taxpayer.--For purposes of this section,
the term `qualified taxpayer' means any taxpayer that--
``(1) actively conducts a trade or business, and
``(2) maintains property insurance with respect to such
trade or business that insures against losses in natural
disasters.
``(d) Failure To Meet Requirements.--If a fund that was a
natural disaster fund ceases to meet any of the requirements
of subsection (b) or a taxpayer who has a natural disaster
fund ceases to meet the requirement
[[Page S7634]]
of subsection (c), the entire balance of the fund shall be
deemed distributed in a nonqualified distribution at the time
the fund ceases to meet such requirements.
``(e) Taxation of Fund.--
``(1) In general.--The earnings (including gains and
losses) from the investment and reinvestment of amounts held
in the fund shall not be taken into account in determining
the gross income of the taxpayer that owns the fund.
``(2) Not a separate taxpayer.--A natural disaster fund
shall not be considered a separate taxpayer for purposes of
this subtitle.
``(f) Taxation of Distributions From the Fund.--
``(1) Qualified distributions.--For purposes of this
chapter, qualified distributions shall be treated in the same
manner as proceeds from property or business interruption
insurance.
``(2) Nonqualified distributions.--
``(A) In general.--In the case of any taxable year for
which there is a nonqualified distribution--
``(i) such nonqualified distributions shall be excluded
from the gross income of the taxpayer, and
``(ii) the tax imposed by this chapter (determined without
regard to this subsection) shall be increased by the product
of the amount of such nonqualified distribution and the
highest rate of tax specified in section 1 (section 11 in the
case of a corporation).
``(B) Tax benefit rule; coordination with deduction for net
operating losses.--Rules similar to the rules of
subparagraphs (B) and (C) of section 7518(g)(6) shall apply
for purposes of this paragraph.
``(3) Additional tax.--The tax imposed by this chapter for
any taxable year on any taxpayer that a owns natural disaster
fund shall be increased by the greater of--
``(A) 20 percent of the amount of any non-qualified
distributions from the fund in the taxable year, and
``(B) an amount equal to interest, at the underpayment rate
established under section 6621, on the nonqualified
distribution from the time the amount is added to the fund to
the time the amount is distributed.
``(4) Interest calculation.--For purposes of calculating
interest under paragraph (3)(B)--
``(A) all investment earnings (including gains or losses)
in taxable year shall be treated as added to the fund on the
last day of the taxable year, and
``(B) amounts distributed from the fund shall be treated as
distributed on a first-in, first-out basis.
``(g) Definitions.--For purposes of this section--
``(1) Federally declared natural disaster.--The term
`Federally declared natural disaster' means a natural
disaster that is determined by Presidential declaration under
the Robert T. Stafford Disaster Relief and Emergency
Assistance Act to warrant individual or individual and public
assistance under such Act.
``(2) Nonqualified distribution.--The term `nonqualified
distribution' means a distribution from a natural disaster
fund other than a qualified distribution.
``(3) Qualified account.--The term `qualified account'
means an account with a bank (as defined in section 581) or a
brokerage account but only if the investments of such
accounts are limited to those permitted by subsection (b)(3)
and no investments are made in a related person (as defined
in section 465(b)(3)(C)) to the taxpayer.
``(4) Qualified distribution.--
``(A) In general.--The term `qualified distribution' means
with respect to natural disaster fund an amount equal to the
excess of--
``(i) costs, expenses, and losses (including losses of a
type reimbursable by proceeds of business interruption
insurance) incurred by the taxpayer as a result of the
Federally declared natural disaster with respect to the line
or lines of business for which the fund was designated, over
``(ii) the proceeds of property and business interruption
insurance paid for the benefit of the taxpayer with respect
to costs, expenses, and losses described in clause (i).
``(B) Limitation.--A distribution from a natural disaster
fund shall not be treated as a qualified distribution if such
distribution is allocated to a Federally declared natural
disaster occurring more than 3 years before the date of such
distribution.
``(h) Special Rules.--For purposes of this section--
``(1) No double counting.--Any portion of any deductible or
coinsurance taken into account under subsection (b)(6) in
determining the maximum balance for a natural disaster fund
shall not be taken into account in determining the maximum
balance for another natural disaster fund.
``(2) Excess balance.--
``(A) In general.--If the balance of a natural disaster
fund exceeds the maximum balance permitted by subsection
(b)(6) by reason of investment earnings or a reduction in the
maximum balance, the account shall not cease to be a natural
disaster fund as the result of exceeding such limit if the
excess is distributed within 120 days of the date that such
excess first occurred.
``(B) Treatment of distributions of excess balance.--In the
case of any distribution of the excess balance of a natural
disaster fund within 120 days of the date that such excess
first occurred--
``(i) paragraphs (2) and (3) of subsection (f) shall not
apply to the distribution of such excess if distributed
within such period, and
``(ii) the amount of such distribution shall be included in
the gross income of the taxpayer in the year such
distribution was made.
``(C) Anti-abuse rule.--Subparagraph (B) shall not apply in
the case of any reduction in the maximum balance resulting
from any action of the taxpayer the primary purpose of which
was to reduce the maximum balance to enable a distribution
that would not be subject to the maximum tax rate calculation
or the additional tax.
``(3) Certain asset acquisitions.--The transfer of a
natural disaster fund (or the portion of a natural disaster
fund) from one person to another person shall not constitute
a nonqualified distribution if--
``(A) such transfer is part of a transaction--
``(i) to which section 381 applies,
``(ii) the transferee acquires substantially all of the
assets of the transferor used in the line or lines of
business for which the fund was designated,
``(iii) the transferee acquires substantially all of the
assets of the transferor used in one, but not all, of the
lines of business for which the fund was designated, or
``(iv) the transferee acquires substantially all of the
transferor's assets located in a geographical area and used
in a line of business for which the fund was designated, and
``(B) the transferee elects to treat the acquired natural
disaster fund (or portion thereof) as a natural disaster fund
for the line of business for which the transferor had
previously designated the fund and as a continuation of the
fund (or pro rata portion thereof) for purposes of
determining the additional tax imposed by subsection (f)(4).
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the provisions of this section.''.
(b) Clerical Amendment.--The table of sections for subpart
C of part II of subchapter E of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 468B the following new item:
``Sec. 468C. Special rules for natural disaster funds.''.
(c) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2014.
TITLE III--PERMANENT DISASTER TAX RELIEF PROVISIONS
SEC. _01. INCREASE PROPERTY REPLACEMENT PERIOD TO 5 YEARS.
(a) In General.--Section 1033(a)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following:
``(F) Federally declared disaster.--
``(i) In general.--In the case of converted property that
is located in the disaster area of a federally declared
disaster occurring during a calendar year beginning after
2011 and that is damaged or destroyed by the federally
declared disaster, subparagraph (B)(i) shall be applied by
substituting `5 years' for `2 years'.
``(ii) Federally declared disaster and disaster area.--For
purposes of clause (i), the terms `federally declared
disaster' and `disaster area' have the meanings given such
terms under section 165(i)(5).''.
(b) Conforming Amendment.--Section 1033(h)(1)(B) of the
Internal Revenue Code of 1986 is amended by striking ``4
years'' and inserting ``5 years''.
(c) Effective Date.--The amendments made by this section
shall apply to disasters declared after December 31, 2015.
SEC. _02. WAGE CREDIT FOR SPECIFIED DISASTER-DAMAGED
BUSINESSES.
(a) In General.--Subpart D 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:
``SEC. 45S. WAGE CREDIT FOR SPECIFIED DISASTER-DAMAGED
BUSINESSES.
``(a) General Rule.--For purposes of section 38, in the
case of an eligible employer, the specified disaster-damaged
business wage credit for any taxable year is an amount equal
to 40 percent of the qualified wages for such year.
``(b) Qualified Wages Defined.--For purposes of this
section--
``(1) In general.--The term `qualified wages' means, with
respect to any covered employee, wages paid or incurred by
the eligible employer to the employee who is not able to work
at the disaster-damaged business of the employer during an
inoperability period because of a federally declared
disaster. Such term shall not include amounts paid or
incurred for overtime compensation.
``(2) Limitations.--
``(A) Limitation on wages taken into account.--The amount
of the qualified wages with respect to any individual which
may be taken into account with respect to a federally
declared disaster shall not exceed $6,000.
``(B) Inoperability period.--The inoperability period with
respect to a federally declared disaster is the period
beginning with the first day the trade or business is
rendered inoperable due to damage from the federally declared
disaster and ending on the earlier of--
``(i) the last day on which the trade or business is
inoperable, or
``(ii) 16 weeks after the first day of such disaster.
``(c) Definitions.--For purposes of this section--
``(1) Eligible employer.--
``(A) In general.--The term `eligible employer' means, with
respect to any taxable year, any employer which--
[[Page S7635]]
``(i) employed an average of less than 200 employees on
business days during such taxable year, and
``(ii) has a disaster-damaged business.
``(B) Disaster-damaged business.--The term `disaster-
damaged business' means a place of business within a disaster
area which is rendered inoperable due to damage from the
federally declared disaster.
``(C) Controlled groups.--For purposes of this section, all
persons treated as a single employer under subsection (b),
(c), (m), or (o) of section 414 shall be treated as a single
employer.
``(2) Covered employee.--The term `covered employee' means,
with respect to an eligible employer, an individual--
``(A) whose principal place of employment is in a disaster
area with respect to a federally declared disaster, and
``(B) who has been employed by the employer for more than
30 days before the first day of the federally declared
disaster.
``(3) Federally declared disaster and disaster area.--For
purposes of clause (i), the terms `federally declared
disaster' and `disaster area' have the meanings given such
terms under section 165(i)(5).''.
(b) Allowance as General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 is amended by striking
``plus'' at the end of paragraph (35), by striking the period
at the end of paragraph (36) and inserting ``, plus'', and by
adding at the end the following:
``(37) the specified disaster-damaged business wage credit
determined under section 45S(a).''.
(c) Denial of Double Benefit.--Subsection (a) of section
280C of the Internal Revenue Code of 1986 is amended by
inserting ``45S(a),'' after ``45P(a)''.
(d) Clerical Amendment.--The table of contents for subpart
D 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 item:
``Sec. 45S. Wage credit for specified disaster-damaged businesses.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2015.
SEC. _03. DISASTER-RELATED MEDICAL EXPENSES.
(a) In General.--Section 213 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(g) Disaster-Related Medical Expenses.--
``(1) In general.--In the case of expenses directly related
to an injury caused by a federally declared disaster
occurring during the taxable year or the preceding taxable
year, there shall be allowed a separate deduction under this
section, which shall be determined under this section
(without regard to this subsection), except that--
``(A) subsection (a) shall be applied by substituting `zero
percent' for `10 percent', and
``(B) subsection (f) shall be applied by substituting `zero
percent' for `7.5 percent'.
``(2) Coordination.--Any expense taken into account under
paragraph (1) shall not be treated as an expense taken into
account under this section (without regard to this section).
``(3) Federally declared disaster.--For purposes of this
subsection, the term `federally declared disaster' shall have
the meaning given such term under section 165(i)(5).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to disasters occurring after the
date of the enactment of this Act.
SEC. _04. EXPENSING OF QUALIFIED DISASTER EXPENSES.
(a) In General.--Section 198A(b)(2)(A)(ii) of the Internal
Revenue Code of 1986, as added by section _01 of this
division, is amended by striking ``and before January 1,
2016,''.
(b) Effective Date.--The amendment made by this section
shall apply to amounts paid or incurred after December 31,
2015.
SEC. _05. LOSSES ATTRIBUTABLE TO DISASTERS.
(a) In General.--Section 165(h)(3)(B)(i)(I) of the Internal
Revenue Code of 1986, as amended by section _03 of this
division, is amended by striking ``the period beginning after
December 31, 2011, and before January 1, 2016,'' and
inserting ``any period beginning after December 31, 2011,''.
(b) Effective Date.--The amendment made by this section
shall apply to disasters declared in taxable years beginning
after December 31, 2015.
SEC. _06. NET OPERATING LOSSES ATTRIBUTABLE TO DISASTERS.
(a) In General.--Section 172(i)(1)(A)(i)(I) of the Internal
Revenue Code of 1986 is amended by striking ``and before
January 1, 2016,''.
(b) Effective Date.--The amendment made by this section
shall apply to disasters declared in taxable years beginning
after December 31, 2015.
SEC. _07. SPECIAL RULES FOR USE OF RETIREMENT FUNDS IN
CONNECTION WITH FEDERALLY DECLARED DISASTERS.
(a) Withdrawals.--Section 72(t)(11)(A) of the Internal
Revenue Code of 1986, as amended by section _08 of this
division, is amended by striking ``2011 and before January 1,
2016,'' and inserting ``2011,''.
(b) Loans.--Section 72(p)(6)(C)(ii) of such Code is amended
by striking ``and ending on December 31, 2016''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions with respect to disaster
declared after December 31, 2015.
SEC. _08. ADDITIONAL EXEMPTION FOR HOUSING QUALIFIED DISASTER
DISPLACED INDIVIDUALS.
(a) In General.--Section 151(f)(3)(B)(i) of the Internal
Revenue Code of 1986, as amended by section _09 of this
division, is amended by striking ``and before 2016''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2015.
SEC. _09. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS
BY REASON OF DISASTERS.
(a) In General.--Section 108(j)(3) of the Internal Revenue
Code of 1986, as amended by section _10 of this division, is
amended by striking ``and before 2016''.
(b) Effective Date.--The amendment made by this section
shall apply to discharges made on or after December 31, 2015.
SEC. _10. SPECIAL RULE FOR DETERMINING EARNED INCOME OF
INDIVIDUALS AFFECTED BY FEDERALLY DECLARED
DISASTERS.
(a) In General.--Section 32(n)(2) of the Internal Revenue
Code of 1986, as amended by section _11 of this division, is
amended by striking ``and before 2016''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2015.
SEC. _11. QUALIFIED DISASTER AREA RECOVERY BONDS.
(a) In General.--Section 146A(b)(4) of the Internal Revenue
Code of 1986, as amended by section _14 of this division, is
further amended by striking ``and before January 1, 2017''.
(b) Effective Date.--The amendment made by this section
shall apply to obligations issued after December 31, 2015.
SEC. _12. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS.
(a) In General.--Section 42(h)(3)(J) of the Internal
Revenue Code of 1986, as amended by section _15 of this
division, is amended--
(1) in clause (i) by striking ``In the case of calendar
year 2016,'' and inserting ``In the case of a calendar year
beginning after 2015,'',
(2) in clause (ii)(II) by striking ``2015'' and inserting
``the preceding calendar year'', and
(3) in clause (iii) by striking ``substituting `January 1
of the calendar year in which the taxable year ends' for
`January 1, 2015' ''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
______