Text: H.R.3768 — 109th Congress (2005-2006)All Bill Information (Except Text)

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Public Law No: 109-73 (09/23/2005)

 
[109th Congress Public Law 73]
[From the U.S. Government Printing Office]


[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.

                                  <all>