[DOCID: f:publ073.109]
[[Page 2015]]
KATRINA EMERGENCY TAX RELIEF ACT OF 2005
[[Page 119 STAT. 2016]]
Public Law 109-73
109th Congress
An Act
To provide emergency tax relief for persons affected by Hurricane
Katrina. <<NOTE: Sept. 23, 2005 - [H.R. 3768]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Katrina Emergency Tax
Relief Act of 2005.>> assembled,
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This <<NOTE: 26 USC 1 note.>> Act may be cited as
the ``Katrina Emergency Tax Relief Act of 2005''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title, etc.
Sec. 2. Hurricane Katrina disaster area.
TITLE I--SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING
TO HURRICANE KATRINA
Sec. 101. Tax-favored withdrawals from retirement plans for relief
relating to Hurricane Katrina.
Sec. 102. Recontributions of withdrawals for home purchases cancelled
due to Hurricane Katrina.
Sec. 103. Loans from qualified plans for relief relating to Hurricane
Katrina.
Sec. 104. Provisions relating to plan amendments.
TITLE II--EMPLOYMENT RELIEF
Sec. 201. Work opportunity tax credit for Hurricane Katrina employees.
Sec. 202. Employee retention credit for employers affected by Hurricane
Katrina.
TITLE III--CHARITABLE GIVING INCENTIVES
Sec. 301. Temporary suspension of limitations on charitable
contributions.
Sec. 302. Additional exemption for housing Hurricane Katrina displaced
individuals.
Sec. 303. Increase in standard mileage rate for charitable use of
vehicles.
Sec. 304. Mileage reimbursements to charitable volunteers excluded from
gross income.
Sec. 305. Charitable deduction for contributions of food inventory.
Sec. 306. Charitable deduction for contributions of book inventories to
public schools.
TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS
Sec. 401. Exclusions of certain cancellations of indebtedness by reason
of Hurricane Katrina.
Sec. 402. Suspension of certain limitations on personal casualty losses.
Sec. 403. Required exercise of authority under section 7508A for tax
relief relating to Hurricane Katrina.
Sec. 404. Special rules for mortgage revenue bonds.
Sec. 405. Extension of replacement period for nonrecognition of gain for
property located in Hurricane Katrina disaster area.
Sec. 406. Special rule for determining earned income.
Sec. 407. Secretarial authority to make adjustments regarding taxpayer
and dependency status.
TITLE V--EMERGENCY REQUIREMENT
Sec. 501. Emergency requirement.
[[Page 119 STAT. 2017]]
SEC. 2. HURRICANE KATRINA DISASTER AREA.
For purposes of this Act--
(1) Hurricane katrina disaster area.--The term ``Hurricane
Katrina disaster area'' means an area with respect to which a
major disaster has been declared by the President before
September 14, 2005, under section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act by reason of
Hurricane Katrina.
(2) Core disaster area.--The term ``core disaster area''
means that portion of the Hurricane Katrina disaster area
determined by the President to warrant individual or individual
and public assistance from the Federal Government under such
Act.
TITLE I--SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING
TO HURRICANE KATRINA
SEC. 101. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS FOR RELIEF
RELATING TO HURRICANE KATRINA.
(a) In General.--Section 72(t) of the Internal Revenue Code of 1986
shall not apply to any qualified Hurricane Katrina distribution.
(b) Aggregate Dollar Limitation.--
(1) In general.--For purposes of this section, the aggregate
amount of distributions received by an individual which may be
treated as qualified Hurricane Katrina distributions for any
taxable year shall not exceed the excess (if any) of--
(A) $100,000, over
(B) the aggregate amounts treated as qualified
Hurricane Katrina distributions received by such
individual for all prior taxable years.
(2) Treatment of plan distributions.--If a distribution to
an individual would (without regard to paragraph (1)) be a
qualified Hurricane Katrina distribution, a plan shall not be
treated as violating any requirement of the Internal Revenue
Code of 1986 merely because the plan treats such distribution as
a qualified Hurricane Katrina distribution, unless the aggregate
amount of such distributions from all plans maintained by the
employer (and any member of any controlled group which includes
the employer) to such individual exceeds $100,000.
(3) Controlled group.--For purposes of paragraph (2), the
term ``controlled group'' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section 414
of such Code.
(c) Amount Distributed May Be Repaid.--
(1) In general.--Any individual who receives a qualified
Hurricane Katrina distribution may, at any time during the 3-
year period beginning on the day after the date on which such
distribution was received, make one or more contributions in an
aggregate amount not to exceed the amount of such distribution
to an eligible retirement plan of which such individual is a
beneficiary and to which a rollover contribution of such
distribution could be made under section 402(c),
[[Page 119 STAT. 2018]]
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as
the case may be.
(2) Treatment of repayments of distributions from eligible
retirement plans other than iras.--For purposes of such Code, if
a contribution is made pursuant to paragraph (1) with respect to
a qualified Hurricane Katrina distribution from an eligible
retirement plan other than an individual retirement plan, then
the taxpayer shall, to the extent of the amount of the
contribution, be treated as having received the qualified
Hurricane Katrina distribution in an eligible rollover
distribution (as defined in section 402(c)(4) of such Code) and
as having transferred the amount to the eligible retirement plan
in a direct trustee to trustee transfer within 60 days of the
distribution.
(3) Treatment of repayments for distributions from iras.--
For purposes of such Code, if a contribution is made pursuant to
paragraph (1) with respect to a qualified Hurricane Katrina
distribution from an individual retirement plan (as defined by
section 7701(a)(37) of such Code), then, to the extent of the
amount of the contribution, the qualified Hurricane Katrina
distribution shall be treated as a distribution described in
section 408(d)(3) of such Code and as having been transferred to
the eligible retirement plan in a direct trustee to trustee
transfer within 60 days of the distribution.
(d) Definitions.--For purposes of this section--
(1) Qualified hurricane katrina distribution.--Except as
provided in subsection (b), the term ``qualified Hurricane
Katrina distribution'' means any distribution from an eligible
retirement plan made on or after August 25, 2005, and before
January 1, 2007, to an individual whose principal place of abode
on August 28, 2005, is located in the Hurricane Katrina disaster
area and who has sustained an economic loss by reason of
Hurricane Katrina.
(2) Eligible retirement plan.--The term ``eligible
retirement plan'' shall have the meaning given such term by
section 402(c)(8)(B) of such Code.
(e) Income Inclusion Spread Over 3 Year Period for Qualified
Hurricane Katrina Distributions.--
(1) In general.--In the case of any qualified Hurricane
Katrina distribution, unless the taxpayer elects not to have
this subsection apply for any taxable year, any amount required
to be included in gross income for such taxable year shall be so
included ratably over the 3-taxable year period beginning with
such taxable year.
(2) Special rule.--For <<NOTE: Applicability.>> purposes of
paragraph (1), rules similar to the rules of subparagraph (E) of
section 408A(d)(3) of such Code shall apply.
(f) Special Rules.--
(1) Exemption of distributions from trustee to trustee
transfer and withholding rules.--For purposes of sections
401(a)(31), 402(f), and 3405 of such Code, qualified Hurricane
Katrina distributions shall not be treated as eligible rollover
distributions.
(2) Qualified hurricane katrina distributions treated as
meeting plan distribution requirements.--For purposes of such
Code, a qualified Hurricane Katrina distribution shall be
treated as meeting the requirements of sections
[[Page 119 STAT. 2019]]
401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A)
of such Code.
SEC. 102. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED
DUE TO HURRICANE KATRINA.
(a) Recontributions.--
(1) In general.--Any individual who received a qualified
distribution may, during the period beginning on August 25,
2005, and ending on February 28, 2006, make one or more
contributions in an aggregate amount not to exceed the amount of
such qualified distribution to an eligible retirement plan (as
defined in section 402(c)(8)(B) of the Internal Revenue Code of
1986) of which such individual is a beneficiary and to which a
rollover contribution of such distribution could be made under
section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such Code,
as the case may be.
(2) Treatment of repayments.--
Rules <<NOTE: Applicability.>> similar to the rules of
paragraphs (2) and (3) of section 101(c) of this Act shall apply
for purposes of this section.
(b) Qualified Distribution Defined.--For purposes of this section,
the term ``qualified distribution'' means any distribution--
(1) described in section 401(k)(2)(B)(i)(IV),
403(b)(7)(A)(ii) (but only to the extent such distribution
relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F) of
such Code,
(2) received after February 28, 2005, and before August 29,
2005, and
(3) which was to be used to purchase or construct a
principal residence in the Hurricane Katrina disaster area, but
which was not so purchased or constructed on account of
Hurricane Katrina.
SEC. 103. LOANS FROM QUALIFIED PLANS FOR RELIEF RELATING TO HURRICANE
KATRINA.
(a) Increase in <<NOTE: Applicability.>> Limit on Loans not Treated
as Distributions.--In the case of any loan from a qualified employer
plan (as defined under section 72(p)(4) of the Internal Revenue Code of
1986) to a qualified individual made after the date of enactment of this
Act and before January 1, 2007--
(1) clause (i) of section 72(p)(2)(A) of such Code shall be
applied by substituting ``$100,000'' for ``$50,000'', and
(2) clause (ii) of such section shall be applied by
substituting ``the present value of the nonforfeitable accrued
benefit of the employee under the plan'' for ``one-half of the
present value of the nonforfeitable accrued benefit of the
employee under the plan''.
(b) Delay of Repayment.--In the case of a qualified individual with
an outstanding loan on or after August 25, 2005, from a qualified
employer plan (as defined in section 72(p)(4) of such Code)--
(1) if the due date pursuant to subparagraph (B) or (C) of
section 72(p)(2) of such Code for any repayment with respect to
such loan occurs during the period beginning on August 25, 2005,
and ending on December 31, 2006, such due date shall be delayed
for 1 year,
(2) any subsequent repayments with respect to any such loan
shall be appropriately adjusted to reflect the delay in the due
date under paragraph (1) and any interest accruing during such
delay, and
[[Page 119 STAT. 2020]]
(3) in determining the 5-year period and the term of a loan
under subparagraph (B) or (C) of section 72(p)(2) of such Code,
the period described in paragraph (1) shall be disregarded.
(c) Qualified Individual.--For purposes of this section, the term
``qualified individual'' means an individual whose principal place of
abode on August 28, 2005, is located in the Hurricane Katrina disaster
area and who has sustained an economic loss by reason of Hurricane
Katrina.
SEC. 104. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any amendment to any
plan or annuity contract, such plan or contract shall be treated as
being operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A).
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any plan or annuity contract which is made--
(A) pursuant to any amendment made by this title, or
pursuant to any regulation issued by the Secretary of
the Treasury or the Secretary of Labor under this title,
and
(B) <<NOTE: Effective date.>> on or before the last
day of the first plan year beginning on or after January
1, 2007, or such later date as the Secretary of the
Treasury may prescribe.
In the case of a governmental plan (as defined in section 414(d)
of the Internal Revenue Code of 1986), subparagraph (B) shall be
applied by substituting the date which is 2 years after the date
otherwise applied under subparagraph (B).
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative or
regulatory amendment described in paragraph (1)(A)
takes effect (or in the case of a plan or contract
amendment not required by such legislative or
regulatory amendment, the effective date specified
by the plan), and
(ii) ending on the date described in paragraph
(1)(B) (or, if earlier, the date the plan or
contract amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect; and
(B) such plan or contract amendment applies
retroactively for such period.
TITLE II--EMPLOYMENT RELIEF
SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEES.
(a) In General.--For purposes of section 51 of the Internal Revenue
Code of 1986, a Hurricane Katrina employee shall be treated as a member
of a targeted group.
(b) Hurricane Katrina Employee.--For purposes of this section, the
term ``Hurricane Katrina employee'' means--
(1) any individual who on August 28, 2005, had a principal
place of abode in the core disaster area and who is hired
[[Page 119 STAT. 2021]]
during the 2-year period beginning on such date for a position
the principal place of employment of which is located in the
core disaster area, and
(2) any individual who on such date had a principal place of
abode in the core disaster area, who is displaced from such
abode by reason of Hurricane Katrina, and who is hired during
the period beginning on such date and ending on December 31,
2005.
(c) Reasonable <<NOTE: Applicability.>> Identification Acceptable.--
In lieu of the certification requirement under subparagraph (A) of
section 51(d)(12) of such Code, an individual may provide to the
employer reasonable evidence that the individual is a Hurricane Katrina
employee, and subparagraph (B) of such section shall be applied as if
such evidence were a certification described in such subparagraph.
(d) Special <<NOTE: Applicability.>> Rules for Determining Credit.--
For purposes of applying subpart F of part IV of subchapter A of chapter
1 of such Code to wages paid or incurred to any Hurricane Katrina
employee--
(1) section 51(c)(4) of such Code shall not apply, and
(2) section 51(i)(2) of such Code shall not apply with
respect to the first hire of such employee as a Hurricane
Katrina employee, unless such employee was an employee of the
employer on August 28, 2005.
SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE
KATRINA.
(a) In General.--In the case of an eligible employer, there shall be
allowed as a credit against the tax imposed by chapter 1 of the Internal
Revenue Code of 1986 for the taxable year an amount equal to 40 percent
of the qualified wages with respect to each eligible employee of such
employer for such taxable year. For purposes of the preceding sentence,
the amount of qualified wages which may be taken into account with
respect to any individual shall not exceed $6,000.
(b) Definitions.--For purposes of this section--
(1) Eligible employer.--The term ``eligible employer'' means
any employer--
(A) which conducted an active trade or business on
August 28, 2005, in a core disaster area, and
(B) with respect to whom the trade or business
described in subparagraph (A) is inoperable on any day
after August 28, 2005, and before January 1, 2006, as a
result of damage sustained by reason of Hurricane
Katrina.
(2) Eligible employee.--The term ``eligible employee'' means
with respect to an eligible employer an employee whose principal
place of employment on August 28, 2005, with such eligible
employer was in a core disaster area.
(3) Qualified wages.--The term ``qualified wages'' means
wages (as defined in section 51(c)(1) of such Code, but without
regard to section 3306(b)(2)(B) of such Code) paid or incurred
by an eligible employer with respect to an eligible employee on
any day after August 28, 2005, and before January 1, 2006, which
occurs during the period--
(A) beginning on the date on which the trade or
business described in paragraph (1) first became
inoperable
[[Page 119 STAT. 2022]]
at the principal place of employment of the employee
immediately before Hurricane Katrina, and
(B) ending on the date on which such trade or
business has resumed significant operations at such
principal place of employment.
Such term shall include wages paid without regard to whether the
employee performs no services, performs services at a different
place of employment than such principal place of employment, or
performs services at such principal place of employment before
significant operations have resumed.
(c) Credit not Allowed for Large Businesses.--The term ``eligible
employer'' shall not include any trade or business for any taxable year
if such trade or business employed an average of more than 200 employees
on business days during the taxable year.
(d) Certain Rules to Apply.--For purposes of this section, rules
similar to the rules of sections 51(i)(1), 52, and 280C(a) of such Code
shall apply.
(e) Employee not Taken Into Account More Than Once.--An employee
shall not be treated as an eligible employee for purposes of this
section for any period with respect to any employer if such employer is
allowed a credit under section 51 of such Code with respect to such
employee for such period.
(f) Credit to Be Part of General Business Credit.--The credit
allowed under this section shall be added to the current year business
credit under section 38(b) of such Code and shall be treated as a credit
allowed under subpart D of part IV of subchapter A of chapter 1 of such
Code.
TITLE III--CHARITABLE GIVING INCENTIVES
SEC. 301. TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE
CONTRIBUTIONS.
(a) In General.--Except as otherwise provided in subsection (b),
section 170(b) of the Internal Revenue Code of 1986 shall not apply to
qualified contributions and such contributions shall not be taken into
account for purposes of applying subsections (b) and (d) of section 170
of such Code to other contributions.
(b) Treatment of Excess Contributions.--For purposes of section 170
of such Code--
(1) Individuals.--In the case of an individual--
(A) Limitation.--Any qualified contribution shall be
allowed only to the extent that the aggregate of such
contributions does not exceed the excess of the
taxpayer's contribution base (as defined in subparagraph
(F) of section 170(b)(1) of such Code) over the amount
of all other charitable contributions allowed under such
section 170(b)(1).
(B) Carryover.--If the aggregate amount of qualified
contributions made in the contribution year (within the
meaning of section 170(d)(1) of such Code) exceeds the
limitation of subparagraph (A), such excess shall be
added to the excess described in the portion of
subparagraph (A) of such section which precedes clause
(i) thereof for purposes of applying such section.
(2) Corporations.--In the case of a corporation--
[[Page 119 STAT. 2023]]
(A) Limitation.--Any qualified contribution shall be
allowed only to the extent that the aggregate of such
contributions does not exceed the excess of the
taxpayer's taxable income (as determined under paragraph
(2) of section 170(b) of such Code) over the amount of
all other charitable contributions allowed under such
paragraph.
(B) Carryover.--
Rules <<NOTE: Applicability.>> similar to the rules of
paragraph (1)(B) shall apply for purposes of this
paragraph.
(c) Exception to Overall Limitation on Itemized Deductions.--So much
of any deduction allowed under section 170 of such Code as does not
exceed the qualified contributions paid during the taxable year shall
not be treated as an itemized deduction for purposes of section 68 of
such Code.
(d) Qualified Contributions.--
(1) In general.--For purposes of this section, the term
``qualified contribution'' means any charitable contribution (as
defined in section 170(c) of such Code)--
(A) paid during the period beginning on August 28,
2005, and ending on December 31, 2005, in cash to an
organization described in section 170(b)(1)(A) of such
Code (other than an organization described in section
509(a)(3) of such Code),
(B) in the case of a contribution paid by a
corporation, such contribution is for relief efforts
related to Hurricane Katrina, and
(C) with respect to which the taxpayer has elected
the application of this section.
(2) Exception.--Such term shall not include a contribution
if the contribution is for establishment of a new, or
maintenance in an existing, segregated fund or account with
respect to which the donor (or any person appointed or
designated by such donor) has, or reasonably expects to have,
advisory privileges with respect to distributions or investments
by reason of the donor's status as a donor.
(3) Application of election to partnerships and s
corporations.--In the case of a partnership or S corporation,
the election under paragraph (1)(C) shall be made separately by
each partner or shareholder.
SEC. 302. ADDITIONAL EXEMPTION FOR HOUSING HURRICANE KATRINA DISPLACED
INDIVIDUALS.
(a) In General.--In the case of taxable years of a natural person
beginning in 2005 or 2006, for purposes of the Internal Revenue Code of
1986, taxable income shall be reduced by $500 for each Hurricane Katrina
displaced individual of the taxpayer for the taxable year.
(b) Limitations.--
(1) Dollar limitation.--The reduction under subsection (a)
shall not exceed $2,000, reduced by the amount of the reduction
under this section for all prior taxable years.
(2) Individuals taken into account only once.--An individual
shall not be taken into account under subsection (a) if such
individual was taken into account under such subsection by the
taxpayer for any prior taxable year.
(3) Identifying information required.--An individual shall
not be taken into account under subsection (a) for a taxable
year unless the taxpayer identification number of such
[[Page 119 STAT. 2024]]
individual is included on the return of the taxpayer for such
taxable year.
(c) Hurricane Katrina Displaced Individual.--For purposes of this
section, the term ``Hurricane Katrina displaced individual'' means, with
respect to any taxpayer for any taxable year, any natural person if--
(1) such person's principal place of abode on August 28,
2005, was in the Hurricane Katrina disaster area,
(2)(A) in the case of such an abode located in the core
disaster area, such person is displaced from such abode, or
(B) in the case of such an abode located outside of the core
disaster area, such person is displaced from such abode, and
(i) such abode was damaged by Hurricane Katrina, or
(ii) such person was evacuated from such abode by
reason of Hurricane Katrina, and
(3) such person is provided housing free of charge by the
taxpayer in the principal residence of the taxpayer for a period
of 60 consecutive days which ends in such taxable year.
Such term shall not include the spouse or any dependent of the taxpayer.
(d) Compensation for Housing.--No deduction shall be allowed under
this section if the taxpayer receives any rent or other amount (from any
source) in connection with the providing of such housing.
SEC. 303. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE USE OF
VEHICLES.
Notwithstanding section 170(i) of the Internal Revenue Code of 1986,
for purposes of computing the deduction under section 170 of such Code
for use of a vehicle described in subsection (f)(12)(E)(i) of such
section for provision of relief related to Hurricane Katrina during the
period beginning on August 25, 2005, and ending on December 31, 2006,
the standard mileage rate shall be 70 percent of the standard mileage
rate in effect under section 162(a) of such Code at the time of such
use. Any increase under this section shall be rounded to the next
highest cent.
SEC. 304. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS EXCLUDED FROM
GROSS INCOME.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
gross income of an individual for taxable years ending on or after
August 25, 2005, does not include amounts received, from an organization
described in section 170(c) of such Code, as reimbursement of operating
expenses with respect to use of a passenger automobile for the benefit
of such organization in connection with providing relief relating to
Hurricane Katrina during the period beginning on August 25, 2005, and
ending on December 31, 2006. <<NOTE: Applicability.>> The preceding
sentence shall apply only to the extent that the expenses which are
reimbursed would be deductible under chapter 1 of such Code if section
274(d) of such Code were applied--
(1) by using the standard business mileage rate in effect
under section 162(a) at the time of such use, and
(2) as if the individual were an employee of an organization
not described in section 170(c) of such Code.
[[Page 119 STAT. 2025]]
(b) Application to Volunteer Services Only.--Subsection (a) shall
not apply with respect to any expenses relating to the performance of
services for compensation.
(c) No Double Benefit.--No deduction or credit shall be allowed
under any other provision of such Code with respect to the expenses
excludable from gross income under subsection (a).
SEC. 305. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.
(a) In General.--Paragraph (3) of section 170(e) of the Internal
Revenue Code of <<NOTE: 26 USC 170.>> 1986 (relating to special rule for
certain contributions of inventory and other property) is amended by
redesignating subparagraph (C) as subparagraph (D) and by inserting
after subparagraph (B) the following new subparagraph:
``(C) Special rule for contributions of food
inventory.--
``(i) General rule.--
In <<NOTE: Applicability.>> the case of a
charitable contribution of food from any trade or
business of the taxpayer, this paragraph shall be
applied--
``(I) without regard to whether the
contribution is made by a C corporation,
and
``(II) only to food that is
apparently wholesome food.
``(ii) Limitation.--In the case of a taxpayer
other than a C corporation, the aggregate amount
of such contributions for any taxable year which
may be taken into account under this section shall
not exceed 10 percent of the taxpayer's aggregate
net income for such taxable year from all trades
or businesses from which such contributions were
made for such year, computed without regard to
this section.
``(iii) Apparently wholesome food.--For
purposes of this subparagraph, the term
`apparently wholesome food' has the meaning given
to such term by section 22(b)(2) of the Bill
Emerson Good Samaritan Food Donation Act (42
U.S.C. 1791(b)(2)), as in effect on the date of
the enactment of this subparagraph.
``(iv) Termination.--This subparagraph shall
not apply to contributions made after December 31,
2005.''.
(b) Effective Date.--The <<NOTE: 26 USC 170 note.>> amendment made
by this section shall apply to contributions made on or after August 28,
2005, in taxable years ending after such date.
SEC. 306. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES TO
PUBLIC SCHOOLS.
(a) In General.--Paragraph (3) of section 170(e) of the Internal
Revenue Code of 1986 (relating to certain contributions of ordinary
income and capital gain property), as amended by section 305, is amended
by redesignating subparagraph (D) as subparagraph (E) and by inserting
after subparagraph (C) the following new subparagraph:
``(D) Special rule for contributions of book
inventory to public schools.--
``(i) Contributions
of <<NOTE: Applicability.>> book inventory.--In
determining whether a qualified book contribution
is a qualified contribution, subparagraph (A)
shall be applied without regard to whether the
donee is an organization
[[Page 119 STAT. 2026]]
described in the matter preceding clause (i) of
subparagraph (A).
``(ii) Qualified book contribution.--For
purposes of this paragraph, the term `qualified
book contribution' means a charitable contribution
of books to a public school which is an
educational organization described in subsection
(b)(1)(A)(ii) and which provides elementary
education or secondary education (kindergarten
through grade 12).
``(iii) Certification by donee.--Subparagraph
(A) shall not apply to any contribution unless (in
addition to the certifications required by
subparagraph (A) (as modified by this
subparagraph)), the donee certifies in writing
that--
``(I) the books are suitable, in
terms of currency, content, and
quantity, for use in the donee's
educational programs, and
``(II) the donee will use the books
in its educational programs.
``(iv) Termination.--This subparagraph shall
not apply to contributions made after December 31,
2005.''.
(b) Effective Date.--The <<NOTE: 26 USC 170 note.>> amendments made
by this section shall apply to contributions made on or after August 28,
2005, in taxable years ending after such date.
TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS
SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS BY REASON
OF HURRICANE KATRINA.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
gross income shall not include any amount which (but for this section)
would be includible in gross income by reason of the discharge (in whole
or in part) of indebtedness of a natural person described in subsection
(b) by an applicable entity (as defined in section 6050P(c)(1) of such
Code).
(b) Persons Described.--A natural person is described in this
subsection if the principal place of abode of such person on August 25,
2005, was located--
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside the
core disaster area) and such person suffered economic loss by
reason of Hurricane Katrina.
(c) Exceptions.--
(1) Business indebtedness.--Subsection (a) shall not apply
to any indebtedness incurred in connection with a trade or
business.
(2) Real property outside core disaster area.--Subsection
(a) shall not apply to any discharge of indebtedness to the
extent that real property constituting security for such
indebtedness is located outside of the Hurricane Katrina
disaster area.
(d) Denial of Double Benefit.--For purposes of the Internal Revenue
Code of 1986, the amount excluded from gross income under subsection (a)
shall be treated in the same manner as an amount excluded under section
108(a) of such Code.
[[Page 119 STAT. 2027]]
(e) Effective Date.--This section shall apply to discharges made on
or after August 25, 2005, and before January 1, 2007.
SEC. 402. SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CASUALTY LOSSES.
Paragraphs (1) and (2)(A) of section 165(h) of the Internal Revenue
Code of 1986 shall not apply to losses described in section 165(c)(3) of
such Code which arise in the Hurricane Katrina disaster area on or after
August 25, 2005, and which are attributable to Hurricane
Katrina. <<NOTE: Applicability.>> In the case of any other losses,
section 165(h)(2)(A) of such Code shall be applied without regard to the
losses referred to in the preceding sentence.
SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SECTION 7508A FOR TAX
RELIEF RELATING TO HURRICANE KATRINA.
(a) Authority Includes Suspension of Payment of Employment and
Excise Taxes.--Subparagraphs (A) and (B) of section 7508(a)(1) of the
Internal Revenue Code of 1986 <<NOTE: 26 USC 7508.>> are amended to read
as follows:
``(A) Filing any return of income, estate, gift,
employment, or excise tax;
``(B) Payment of any income, estate, gift,
employment, or excise tax or any installment thereof or
of any other liability to the United States in respect
thereof;''.
(b) Application With Respect to Hurricane Katrina.--In the case of
any taxpayer determined by the Secretary of the Treasury to be affected
by the Presidentially declared disaster relating to Hurricane Katrina,
any relief provided by the Secretary of the Treasury under section 7508A
of the Internal Revenue Code of 1986 shall be for a period ending not
earlier than February 28, 2006, and shall be treated as applying to the
filing of returns relating to, and the payment of, employment and excise
taxes.
(c) Effective Date.--The <<NOTE: 26 USC 7508 note.>> amendment made
by subsection (a) shall apply for any period for performing an act which
has not expired before August 25, 2005.
SEC. 404. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
(a) In General.--In <<NOTE: Applicability.>> the case of financing
provided with respect to a qualified Hurricane Katrina recovery
residence, subsection (d) of section 143 of the Internal Revenue Code of
1986 shall be applied as if such residence were a targeted area
residence.
(b) Qualified Hurricane Katrina Recovery Residence.--For purposes of
this section, the term ``qualified Hurricane Katrina recovery
residence'' means--
(1) any residence in the core disaster area, and
(2) any other residence if--
(A) such other residence is located in the same
State as the principal residence referred to in
subparagraph (B), and
(B) the mortgagor with respect to such other
residence owned a principal residence on August 28,
2005, which--
(i) was located in the Hurricane Katrina
disaster area, and
(ii) was rendered uninhabitable by reason of
Hurricane Katrina.
(c) Special <<NOTE: Applicability.>> Rule for Home Improvement
Loans.--In the case of any loan with respect to a residence in the
Hurricane Katrina disaster area, section 143(k)(4) of such Code shall be
applied
[[Page 119 STAT. 2028]]
by substituting $150,000 for the dollar amount contained therein to the
extent such loan is for the repair of damage by reason of Hurricane
Katrina.
(d) Application.--Subsection (a) shall not apply to financing
provided after December 31, 2007.
SEC. 405. <<NOTE: Applicability.>> EXTENSION OF REPLACEMENT PERIOD FOR
NONRECOGNITION OF GAIN FOR PROPERTY LOCATED IN HURRICANE
KATRINA DISASTER AREA.
Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code of
1986 shall be applied by substituting ``5 years'' for ``2 years'' with
respect to property in the Hurricane Katrina disaster area which is
compulsorily or involuntarily converted on or after August 25, 2005, by
reason of Hurricane Katrina, but only if substantially all of the use of
the replacement property is in such area.
SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME.
(a) In General.--In the case of a qualified individual, if the
earned income of the taxpayer for the taxable year which includes August
25, 2005, is less than the earned income of the taxpayer for the
preceding taxable year, the credits allowed under sections 24(d) and 32
of the Internal Revenue Code of 1986 may, at the election of the
taxpayer, be determined by substituting--
(1) such earned income for the preceding taxable year, for
(2) such earned income for the taxable year which includes
August 25, 2005.
(b) Qualified Individual.--For purposes of this section, the term
``qualified individual'' means any individual whose principal place of
abode on August 25, 2005, was located--
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside the
core disaster area) and such individual was displaced from such
principal place of abode by reason of Hurricane Katrina.
(c) Earned Income.--For purposes of this section, the term ``earned
income'' has the meaning given such term under section 32(c) of such
Code.
(d) Special Rules.--
(1) Application to joint returns.--For purposes of
subsection (a), in the case of a joint return for a taxable year
which includes August 25, 2005--
(A) such subsection shall apply if either spouse is
a qualified individual, and
(B) the earned income of the taxpayer for the
preceding taxable year shall be the sum of the earned
income of each spouse for such preceding taxable year.
(2) Uniform application of election.--Any election made
under subsection (a) shall apply with respect to both section
24(d) and section 32 of such Code.
(3) Errors treated as mathematical error.--For purposes of
section 6213 of such Code, an incorrect use on a return of
earned income pursuant to subsection (a) shall be treated as a
mathematical or clerical error.
(4) No effect on <<NOTE: Applicability.>> determination of
gross income, etc.--Except as otherwise provided in this
section, the Internal Revenue Code of 1986 shall be applied
without regard to any substitution under subsection (a).
[[Page 119 STAT. 2029]]
SEC. 407. SECRETARIAL AUTHORITY TO MAKE ADJUSTMENTS REGARDING TAXPAYER
AND DEPENDENCY STATUS.
With respect to taxable years beginning in 2005 or 2006, the
Secretary of the Treasury or the Secretary's delegate may make such
adjustments in the application of the internal revenue laws as may be
necessary to ensure that taxpayers do not lose any deduction or credit
or experience a change of filing status by reason of temporary
relocations by reason of Hurricane Katrina. Any adjustments made under
the preceding sentence shall ensure that an individual is not taken into
account by more than one taxpayer with respect to the same tax benefit.
TITLE V--EMERGENCY REQUIREMENT
SEC. 501. EMERGENCY REQUIREMENT.
Any provision of this Act causing an effect on receipts, budget
authority, or outlays is designated as an emergency requirement pursuant
to section 402 of H. Con. Res. 95 (109th Congress).
Approved September 23, 2005.
LEGISLATIVE HISTORY--H.R. 3768 (S. 1696):
---------------------------------------------------------------------------
CONGRESSIONAL RECORD, Vol. 151 (2005):
Sept. 15, considered and passed House. Considered and passed
Senate, amended.
Sept. 21, House agreed to Senate amendment with an amendment
pursuant
to H. Res. 454. Senate concurred in House amendment.
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