Gulf Opportunity Zone Act of 2005 - Amends the Internal Revenue Code to create a Gulf Opportunity Zone (GO Zone) as part of the Hurricane Katrina disaster area to provide tax benefits to businesses and individuals affected by Hurricane Katrina, including: (1) tax-exempt bond financing and additional advance refunding of existing bond obligations in the states of Alabama, Louisiana, or Mississippi; (2) increased depreciation and expensing allowances for GO Zone property; (3) expensing of GO Zone demolition and cleanup costs and environmental remediation costs; (4) increased expensing for GO Zone reforestation expenditures; and (5) carrybacks of net operating losses for certain GO Zone businesses and public utilities.
Provides for federal guarantees of bonds issued in Alabama, Louisiana, or Mississippi for revenue and infrastructure purposes related to Hurricane Katrina.
Establishes a Rita GO Zone as part of the Hurricane Rita disaster area and extends to businesses and individuals in such Zone tax benefits currently available in Hurricane Katrina disaster areas, including: (1) tax-free distributions and loans from retirement plans for disaster relief; (2) suspension of limitations on personal casualty losses; and (3) adjustments to earned income of Hurricane Rita victims in 2005 to preserve eligibility for certain tax benefits.
Allows certain small employers a business tax credit for up to 40 percent of the wages paid to employees in a GO Zone between August 29 and December 31, 2005.
Expresses the sense of Congress that the Secretary of the Treasury should designate Gulf Coast Recovery Bonds in response to Hurricanes Katrina and Rita.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4155 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 4155
To amend the Internal Revenue Code of 1986 to provide tax benefits for
the Gulf Opportunity Zone and certain areas affected by Hurricane Rita,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 27, 2005
Mr. McCrery (for himself, Mr. Jefferson, Mr. Brady of Texas, Mr. Lewis
of Georgia, Mr. Lewis of Kentucky, Mr. Baker, Mr. Alexander, Mr.
Jindal, Mr. Melancon, and Mr. Pickering) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax benefits for
the Gulf Opportunity Zone and certain areas affected by Hurricane Rita,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Gulf Opportunity
Zone Act of 2005''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Federal guarantee of certain State bonds.
TITLE II--TAX BENEFITS RELATED TO HURRICANE RITA
Sec. 201. Extension of certain emergency tax relief for Hurricane
Katrina to Hurricane Rita.
TITLE III--OTHER PROVISIONS
Sec. 301. Secretarial authority to extend period during which traveling
expenses are treated as incurred away from
home in case of major disaster.
Sec. 302. Gulf Coast Recovery Bonds.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
(a) In General.--Subchapter Y of chapter 1 is amended by adding at
the end the following new part:
``PART II--TAX BENEFITS FOR GULF OPPORTUNITY ZONE
``Sec. 1400M. Definitions.
``Sec. 1400N. Tax benefits for Gulf Opportunity Zone.
``SEC. 1400M. DEFINITIONS.
``For purposes of this part--
``(1) Gulf opportunity zone.--The terms `Gulf Opportunity
Zone' and `GO Zone' mean 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 the Robert T. Stafford Disaster Relief and Emergency
Assistance Act by reason of Hurricane Katrina.
``(2) 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 such Act by reason of
Hurricane Katrina.
``(3) Rita go zone.--The term `Rita GO Zone' means that
portion of the Hurricane Rita disaster area determined by the
President to warrant individual or individual and public
assistance from the Federal Government under such Act by reason
of Hurricane Rita.
``(4) Hurricane rita disaster area.--The term `Hurricane
Rita disaster area' means an area with respect to which a major
disaster has been declared by the President, before October 6,
2005, under section 401 of such Act by reason of Hurricane
Rita.
``SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
``(a) Tax-Exempt Bond Financing.--
``(1) In general.--For purposes of this title--
``(A) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(i) shall be treated as an
exempt facility bond, and
``(B) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(ii) shall be treated as a
qualified mortgage bond.
``(2) Qualified gulf opportunity zone bond.--For purposes
of this subsection, the term `qualified Gulf Opportunity Zone
Bond' means any bond issued as part of an issue if--
``(A)(i) 95 percent or more of the net proceeds (as
defined in section 150(a)(3)) of such issue are to be
used for qualified project costs, or
``(ii) such issue meets the requirements of a
qualified mortgage issue, except as otherwise provided
in this subsection,
``(B) such bond is issued by the State of Alabama,
Louisiana, or Mississippi, or any political subdivision
thereof,
``(C) the Governor of such State designates such
bond for purposes of this section, and
``(D) such bond is issued after the date of the
enactment of this section and before January 1, 2011.
``(3) Limitations on amount of bonds.--
``(A) Aggregate amount designated.--The maximum
aggregate face amount of bonds which may be designated
under this subsection with respect to any State shall
not exceed the product of $2,500 multiplied by the
portion of the State population which is in the Gulf
Opportunity Zone (as determined on the basis of the
most recent census estimate of resident population
released by the Bureau of Census before August 28,
2005).
``(B) Movable property.--No bonds shall be issued
which are to be used for movable fixtures and
equipment.
``(4) Qualified project costs.--For purposes of this
subsection, the term `qualified project costs' means the cost
of acquisition, construction, reconstruction, and renovation
of--
``(A) nonresidential real property and qualified
residential rental property (as defined in section
142(d)) located in the Gulf Opportunity Zone, and
``(B) public utility property (as defined in
section 168(i)(10)) located in the Gulf Opportunity
Zone.
``(5) Special rules.--In applying this title to any
qualified Gulf Opportunity Zone Bond, the following
modifications shall apply:
``(A) Section 142(d)(1) (defining qualified
residential rental project) shall be applied--
``(i) by substituting `60 percent' for `50
percent' in subparagraph (A) thereof, and
``(ii) by substituting `70 percent' for `60
percent' in subparagraph (B) thereof.
``(B) Section 143 (relating to mortgage revenue
bonds: qualified mortgage bond and qualified veterans'
mortgage bond) shall be applied--
``(i) by treating only residences in the
Gulf Opportunity Zone as owner-occupied
residences,
``(ii) by treating any residence in the
Gulf Opportunity Zone as a targeted area
residence, and
``(iii) by substituting `$150,000' for
`$15,000' in subsection (k)(4) thereof.
``(C) Except as provided in section 143, repayments
of principal on financing provided by the issue of
which such bond is a part may not be used to provide
financing.
``(D) Section 146 (relating to volume cap) shall
not apply.
``(E) Section 147(d)(2) (relating to acquisition of
existing property not permitted) shall be applied by
substituting `50 percent' for `15 percent' each place
it appears.
``(F) 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 which are part of an
issue described in paragraph (2)(A)(i).
``(G) Section 57(a)(5) (relating to tax-exempt
interest) shall not apply.
``(6) Separate issue treatment of portions of an issue.--
This subsection 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.
``(b) Advance Refundings of Certain Tax-Exempt Bonds.--
``(1) In general.--With respect to a bond described in
paragraph (3) which is not a qualified 501(c)(3) bond, one
additional advance refunding after the date of the enactment of
this section and before January 1, 2011, shall be allowed under
the applicable rules of section 149(d) if--
``(A) the Governor of the State designates the
advance refunding bond for purposes of this subsection,
and
``(B) the requirements of paragraph (5) are met.
``(2) Certain private activity bonds.--With respect to a
bond described in paragraph (3) 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
section and before January 1, 2011, shall be allowed under the
applicable rules of section 149(d) (notwithstanding paragraph
(2) thereof) if the requirements of subparagraphs (A) and (B)
of paragraph (1) are met.
``(3) Bonds described.--A bond is described in this
paragraph if such bond was outstanding on August 28, 2005, and
is issued by the State of Alabama, Louisiana, or Mississippi,
or a political subdivision thereof.
``(4) 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--
``(A) $4,500,000,000 in the case of the State of
Louisiana,
``(B) $2,250,000,000 in the case of the State of
Mississippi, and
``(C) $1,125,000,000 in the case of the State of
Alabama.
``(5) Additional requirements.--The requirements of this
paragraph are met with respect to any advance refunding of a
bond described in paragraph (3) if--
``(A) no advance refundings of such bond would be
allowed under this title on or after August 28, 2005,
``(B) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
``(C) the requirements of section 148 are met with
respect to all bonds issued under this subsection.
``(c) Low-Income Housing Credit.--
``(1) Additional housing credit dollar amount.--
``(A) In general.--For purposes of section 42, in
the case of calendar years 2006, 2007, and 2008, the
State housing credit ceiling of each State, any portion
of which is located in the Gulf Opportunity Zone, shall
be increased by the lesser of--
``(i) the aggregate housing credit dollar
amount allocated by the State housing credit
agency of such State to buildings located in
the Gulf Opportunity Zone for such calendar
year, or
``(ii) the Gulf Opportunity housing amount
for such State for such calendar year.
``(B) Gulf opportunity housing amount.--For
purposes of subparagraph (A), the term `Gulf
Opportunity housing amount' means, for any calendar
year, the amount equal to the product of $18.00
multiplied by the portion of the State population which
is in the Gulf Opportunity Zone (as determined on the
basis of the most recent census estimate of resident
population released by the Bureau of Census before
August 28, 2005).
``(C) 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 section
42(h)(3)(C) for any calendar year, any increase in the
State housing credit ceiling under subparagraph (A)
shall be treated as an amount described in clause (ii)
of such section.
``(2) Difficult development area.--
``(A) In general.--For purposes of section 42, in
the case of property placed in service during 2006,
2007, or 2008, the Gulf Opportunity Zone--
``(i) shall be treated as a difficult
development area designated under subclause (I)
of section 42(d)(5)(C)(iii), and
``(ii) shall not be taken into account for
purposes of applying the limitation under
subclause (II) of such section.
``(B) Application.--Subparagraph (A) shall apply
only to--
``(i) housing credit dollar amounts
allocated during the period beginning on
January 1, 2006, and ending on December 31,
2008, and
``(ii) buildings placed in service during
such period to the extent that paragraph (1) of
section 42(h) does not apply to any building by
reason of paragraph (4) thereof, but only with
respect to bonds issued after December 31,
2005.
``(3) Special rule for applying income tests.--In the case
of property placed in service--
``(A) during 2006, 2007, or 2008,
``(B) in the Gulf Opportunity Zone, and
``(C) in a nonmetropolitan area (as defined in
section 42(d)(5)(C)(iv)(IV)),
section 42 shall be applied by substituting `national
nonmetropolitan median gross income (determined under rules
similar to the rules of section 142(d)(2)(B))' for `area median
gross income' in subparagraphs (A) and (B) of section 42(g)(1).
``(4) Definitions.--Any term used in this subsection which
is also used in section 42 shall have the same meaning as when
used in such section.
``(d) Special Allowance for Certain Property Acquired on or After
August 28, 2005.--
``(1) Additional allowance.--In the case of any qualified
Gulf Opportunity Zone property--
``(A) the depreciation deduction provided by
section 167(a) for the taxable year in which such
property is placed in service shall include an
allowance equal to 50 percent of the adjusted basis of
such property, and
``(B) the adjusted basis of the qualified Gulf
Opportunity Zone property shall be reduced by the
amount of such deduction before computing the amount
otherwise allowable as a depreciation deduction under
this chapter for such taxable year and any subsequent
taxable year.
``(2) Qualified gulf opportunity zone property.-- For
purposes of this subsection--
``(A) In general.--The term `qualified Gulf
Opportunity Zone property' means property--
``(i)(I) which is described in section
168(k)(2)(A)(i), or
``(II) which is nonresidential real
property or residential rental property,
``(ii) substantially all of the use of
which is in the Gulf Opportunity Zone and is in
the active conduct of a trade or business by
the taxpayer in such Zone,
``(iii) the original use of which in the
Gulf Opportunity Zone commences with the
taxpayer on or after August 28, 2005,
``(iv) which is acquired by the taxpayer by
purchase (as defined in section 179(d)) on or
after August 28, 2005, but only if no written
binding contract for the acquisition was in
effect before August 28, 2005, and
``(v) which is placed in service by the
taxpayer on or before December 31, 2007
(December 31, 2008, in the case of
nonresidential real property and residential
rental property).
``(B) Exceptions.--
``(i) Alternative depreciation property.--
Such term shall not include any property
described in section 168(k)(2)(D)(i).
``(ii) Tax-exempt bond-financed property.--
Such term shall not include any property any
portion of which is financed with the proceeds
of any obligation the interest on which is
exempt from tax under section 103.
``(iii) Qualified revitalization
buildings.--Such term shall not include any
qualified revitalization building with respect
to which the taxpayer has elected the
application of paragraph (1) or (2) of section
1400I(a).
``(iv) Election out.--If a taxpayer makes
an election under this clause with respect to
any class of property for any taxable year,
this subsection shall not apply to all property
in such class placed in service during such
taxable year.
``(3) Special rules.--For purposes of this subsection,
rules similar to the rules of subparagraph (E) of section
168(k)(2) shall apply, except that such subparagraph shall be
applied--
``(A) by substituting `August 27, 2005' for
`September 10, 2001' each place it appears therein,
``(B) by substituting `January 1, 2008' for
`January 1, 2005' in clause (i) thereof, and
``(C) by substituting `qualified Gulf Opportunity
Zone property' for `qualified property' in clause (iv)
thereof.
``(4) Allowance against alternative minimum tax.--For
purposes of this subsection, rules similar to the rules of
section 168(k)(2)(G) shall apply.
``(5) Recapture.--For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified Gulf Opportunity Zone property which
ceases to be qualified Gulf Opportunity Zone property.
``(e) Increase in Expensing Under Section 179.--
``(1) In general.--For purposes of section 179--
``(A) the dollar amount in effect under section
179(b)(1) for the taxable year shall be increased by
the lesser of--
``(i) $100,000, or
``(ii) the cost of qualified section 179
Gulf Opportunity Zone property placed in
service during the taxable year, and
``(B) the the dollar amount in effect under section
179(b)(2) for the taxable year shall be increased by
the lesser of--
``(i) $600,000, or
``(ii) the cost of qualified section 179
Gulf Opportunity Zone property placed in
service during the taxable year.
``(2) Qualified section 179 gulf opportunity zone
property.--For purposes of this subsection, the term `qualified
section 179 Gulf Opportunity Zone property' means section 179
property (as defined in section 179(d)) which is qualified Gulf
Opportunity Zone property (as defined in subsection (d)(2)).
``(3) Coordination with empowerment zones and renewal
communities.--For purposes of sections 1397A and 1400J,
qualified section 179 Gulf Opportunity Zone property shall not
be treated as qualified zone property or qualified renewal
property, unless the taxpayer elects not to take such qualified
section 179 Gulf Opportunity Zone property into account for
purposes of this subsection.
``(4) Recapture.--For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified section 179 Gulf Opportunity Zone
property which ceases to be qualified section 179 Gulf
Opportunity Zone property.
``(f) Expensing for Certain Demolition and Clean-Up Costs.--
``(1) In general.--A taxpayer may elect to treat 50 percent
of any qualified Gulf Opportunity Zone clean-up cost as an
expense which is not chargeable to capital account. Any cost so
treated shall be allowed as a deduction for the taxable year in
which such cost is paid or incurred.
``(2) Qualified gulf opportunity zone clean-up cost.--For
purposes of this subsection, the term `qualified Gulf
Opportunity Zone clean-up cost' means any amount paid or
incurred during the period beginning on August 28, 2005, and
ending on December 31, 2007, for the removal of debris from, or
the demolition of structures on, real property which is located
in the Gulf Opportunity Zone and which is--
``(A) held by the taxpayer for use in a trade or
business or for the production of income, or
``(B) property described in section 1221(a)(1) in
the hands of the taxpayer.
For purposes of the preceding sentence, amounts paid or
incurred shall be taken into account only to the extent that
such amount would (but for paragraph (1)) be chargeable to
capital account.
``(g) Extension of Expensing for Environmental Remediation Costs.--
With respect to any qualified environmental remediation expenditure (as
defined in section 198(b)) paid or incurred on or after August 28,
2005, in connection with a qualified contaminated site located in the
Gulf Opportunity Zone, section 198 (relating to expensing of
environmental remediation costs) shall be applied--
``(1) by substituting `December 31, 2007' for `December 31,
2005', and
``(2) except as provided in section 198(d)(2), by treating
petroleum products (as defined in section 4612(a)(3)) as a
hazardous substance.
``(h) Increase in Rehabilitation Credit.--In the case of qualified
rehabilitation expenditures (as defined in section 47(c)) paid or
incurred during the period beginning on August 28, 2005, and ending on
December 31, 2008, with respect to any qualified rehabilitated building
or certified historic structure (as defined in section 47(c)) located
in the Gulf Opportunity Zone, subsection (a) of section 47 (relating to
rehabilitation credit) shall be applied--
``(1) by substituting `13 percent' for `10 percent' in
paragraph (1) thereof, and
``(2) by substituting `26 percent' for `20 percent' in
paragraph (2) thereof.
``(i) Special Rules for Small Timber Producers.--
``(1) Increased expensing for qualified timber property.--
In the case of qualified timber property any portion of which
is located in the Gulf Opportunity Zone or in that portion of
the Rita GO Zone which is not part of the Gulf Opportunity
Zone, the limitation under subparagraph (B) of section
194(b)(1) shall be increased by the lesser of--
``(A) the limitation which would (but for this
subsection) apply under such subparagraph, or
``(B) the amount of reforestation expenditures (as
defined in section 194(c)(3)) paid or incurred by the
taxpayer with respect to such qualified timber property
during the specified portion of the taxable year.
``(2) 5 year nol carryback of certain timber losses.--For
purposes of determining farming loss under section 172(i),
income and deductions which are allocable to the specified
portion of the taxable year and which are attributable to
qualified timber property any portion of which is located in
the Gulf Opportunity Zone or in that portion of the Rita GO
Zone which is not part of the Gulf Opportunity Zone shall be
treated as attributable to farming businesses.
``(3) Rules not applicable to large timber producers.--
``(A) Expensing.--Paragraph (1) shall not apply to
any taxpayer if such taxpayer holds more than 500 acres
of qualified timber property at any time during the
taxable year.
``(B) NOL carryback.--Paragraph (2) shall not apply
with respect to any qualified timber property unless--
``(i) such property was held by the
taxpayer--
``(I) on August 28, 2005, in the
case of qualified timber property any
portion of which is located in the Gulf
Opportunity Zone, or
``(II) on September 23, 2005, in
the case of qualified timber property
(other than property described in
subclause (I)) any portion of which is
located in that portion of the Rita GO
Zone which is not part of the Gulf
Opportunity Zone, and
``(ii) such taxpayer held not more than 500
acres of qualified timber property on such
date.
``(C) Aggregation rule.--For purposes of
subparagraphs (A) and (B), related persons shall be
treated as one taxpayer. For purposes of the preceding
sentence, the following shall be treated as related
persons--
``(i) 2 or more persons if the relationship
between such persons would result in a
disallowance of losses under section 267 or
707(b), and
``(ii) 2 or more persons which are members
of the same controlled group (within the
meaning of section 194(b)(2)(A)) of
corporations.
For purposes of clause (i), section 267 shall be
applied without regard to subsection (b)(1) thereof.
``(4) Definitions.--For purposes of this subsection--
``(A) Specified portion.--The term `specified
portion' means--
``(i) in the case of the Gulf Opportunity
Zone, that portion of the taxable year which is
on or after August 28, 2005, and before January
1, 2007, and
``(ii) in the case of that portion of the
Rita GO Zone which is not part of the Gulf
Opportunity Zone, that portion of the taxable
year which is on or after September 23, 2005,
and before January 1, 2007.
``(B) Qualified timber property.--The term
`qualified timber property' has the meaning given such
term in section 194(c)(1).
``(j) Special Rule for Gulf Opportunity Zone Public Utility
Casualty Losses.--
``(1) In general.--The amount described in section
172(f)(1)(A) for any taxable year shall be increased by the
Gulf Opportunity Zone public utility casualty loss for such
taxable year.
``(2) Gulf opportunity zone public utility casualty loss.--
For purposes of this subsection, the term `Gulf Opportunity
Zone public utility casualty loss' means any casualty loss of
public utility property (as defined in section 168(i)(10))
located in the Gulf Opportunity Zone if--
``(A) such loss is allowed as a deduction under
section 165 for the taxable year,
``(B) such loss is by reason of Hurricane Katrina,
and
``(C) the taxpayer elects the application of this
subsection with respect to such loss.
``(3) Reduction for gains from involuntary conversion.--The
amount of Gulf Opportunity Zone public utility casualty loss
which would (but for this paragraph) be taken into account
under paragraph (1) for any taxable year shall be reduced by
the amount of any gain recognized by the taxpayer for such year
from the involuntary conversion by reason of Hurricane Katrina
of public utility property (as so defined) located in the Gulf
Opportunity Zone.
``(4) Coordination with general disaster loss rules.--
Section 165(i) shall not apply to any Gulf Opportunity Zone
public utility casualty loss to the extent such loss is taken
into account under paragraph (1).
``(5) Election.--Any election under paragraph (2)(C) 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 loss. Such election, once made for any taxable year, shall
be irrevocable for such taxable year.
``(k) Special NOL Carryback of Cost Recovery Deductions for
Qualified GO Zone Property.--
``(1) In general.--For purposes of section 172, the GO Zone
cost recovery loss for any taxable year ending on or after
August 28, 2005, and before January 1, 2009, shall be a net
operating loss carryback to each of the 5 taxable years
preceding the taxable year of the loss.
``(2) GO zone cost recovery loss.--For purposes of this
subsection, the term `GO Zone cost recovery loss' means, with
respect to any taxable year, the lesser of--
``(A) the aggregate amount of the deductions
allowed under sections 167 and 168 with respect to
qualified Gulf Opportunity Zone property (as defined in
subsection (d)(2), but without regard to subparagraph
(B)(iv) thereof) which is placed in service during such
taxable year, or
``(B) the excess of--
``(i) the net operating loss for such
taxable year, over
``(ii) the specified liability loss for
such taxable year to which a 10-year carryback
applies under section 172(b)(1)(C).
``(3) Coordination with ordering rule.--For purposes of
applying section 172(b)(2), a GO Zone cost recovery loss to
which paragraph (1) applies shall be treated in a manner
similar to the manner in which a specified liability loss is
treated.
``(4) Election out.--A rule similar to the rule of section
172(j) shall apply for purposes of this subsection.
``(l) Credit to Holders of Gulf Tax Credit Bonds.--
``(1) Allowance of credit.--If a taxpayer holds a Gulf tax
credit bond on one or more credit allowance dates of the bond
occurring during any taxable year, there shall be allowed as a
credit against the tax imposed by this chapter for the taxable
year an amount equal to the sum of the credits determined under
paragraph (2) with respect to such dates.
``(2) Amount of credit.--
``(A) In general.--The amount of the credit
determined under this paragraph with respect to any
credit allowance date for a Gulf tax credit bond is 25
percent of the annual credit determined with respect to
such bond.
``(B) Annual credit.--The annual credit determined
with respect to any Gulf tax credit bond is the product
of--
``(i) the credit rate determined by the
Secretary under subparagraph (C) for the day on
which such bond was sold, multiplied by
``(ii) the outstanding face amount of the
bond.
``(C) Determination.--For purposes of subparagraph
(B), with respect to any Gulf tax credit bond, the
Secretary shall determine daily or cause to be
determined daily a credit rate which shall apply to the
first day on which there is a binding, written contract
for the sale or exchange of the bond. The credit rate
for any day is the credit rate which the Secretary or
the Secretary's designee estimates will permit the
issuance of Gulf tax credit bonds with a specified
maturity or redemption date without discount and
without interest cost to the issuer.
``(D) Credit allowance date.--For purposes of this
subsection, the term `credit allowance date' means
March 15, June 15, September 15, and December 15. Such
term also includes the last day on which the bond is
outstanding.
``(E) Special rule for issuance and redemption.--In
the case of a bond which is issued during the 3-month
period ending on a credit allowance date, the amount of
the credit determined under this paragraph with respect
to such credit allowance date shall be a ratable
portion of the credit otherwise determined based on the
portion of the 3-month period during which the bond is
outstanding. A similar rule shall apply when the bond
is redeemed or matures.
``(3) Limitation based on amount of tax.--The credit
allowed under paragraph (1) for any taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under part
IV of subchapter A (other than subpart C and this
subsection).
``(4) Gulf tax credit bond.--For purposes of this
subsection--
``(A) In general.--The term `Gulf tax credit bond'
means any bond issued as part of an issue if--
``(i) the bond is issued by the State of
Alabama, Louisiana, or Mississippi,
``(ii) 95 percent or more of the proceeds
of such issue are to be used to--
``(I) pay principal, interest, or
premiums on qualified bonds issued by
such State or any political subdivision
of such State, or
``(II) make a loan to any political
subdivision of such State to pay
principal, interest, or premiums on
qualified bonds issued by such
political subdivision,
``(iii) the Governor of such State
designates such bond for purposes of this
subsection,
``(iv) the bond is a general obligation of
such State and is in registered form (within
the meaning of section 149(a)),
``(v) the maturity of such bond does not
exceed 2 years, and
``(vi) the bond is issued after December
31, 2005, and before January 1, 2007.
``(B) State matching requirement.--A bond shall not
be treated as a Gulf tax credit bond unless--
``(i) the issuer of such bond pledges as of
the date of the issuance of the issue an amount
equal to the face amount of such bond to be
used for payments described in subclause (I) of
subparagraph (A)(ii), or loans described in
subclause (II) of such subparagraph, as the
case may be, with respect to the issue of which
such bond is a part, and
``(ii) any such payment or loan is made in
equal amounts from the proceeds of such issue
and from the amount pledged under clause (i).
The requirement of clause (ii) shall be treated as met
with respect to any such payment or loan made during
the 1-year period beginning on the date of the issuance
(or any successor 1-year period) if such requirement is
met when applied with respect to the aggregate amount
of such payments and loans made during such period.
``(C) Aggregate limit on bond designations.--The
maximum aggregate face amount of bonds which may be
designated under this subsection by the Governor of a
State shall not exceed--
``(i) $200,000,000 in the case of the State
of Louisiana,
``(ii) $100,000,000 in the case of the
State of Mississippi, and
``(iii) $50,000,000 in the case of the
State of Alabama.
``(D) Special rules relating to arbitrage.--A bond
which is part of an issue shall not be treated as a
Gulf tax credit bond unless, with respect to the issue
of which the bond is a part, the issuer satisfies the
arbitrage requirements of section 148 with respect to
proceeds of the issue and any loans made with such
proceeds.
``(5) Qualified bond.--For purposes of this subsection--
``(A) In general.--The term `qualified bond' means
any obligation of a State or political subdivision
thereof which was outstanding on August 28, 2005.
``(B) Exception for private activity bonds.--Such
term shall not include any private activity bond.
``(C) Exception for advance refundings.--Such term
shall not include any bond--
``(i) which is designated as an advance
refunding bond under subsection (b)(1), or
``(ii) with respect to which there is any
outstanding bond to refund such bond.
``(6) Credit included in gross income.--Gross income
includes the amount of the credit allowed to the taxpayer under
this subsection (determined without regard to paragraph (3))
and the amount so included shall be treated as interest income.
``(7) Other definitions and special rules.--For purposes of
this subsection--
``(A) Bond.--The term `bond' includes any
obligation.
``(B) partnership; s corporation; and other pass-
thru entities.--
``(i) In general.--Under regulations
prescribed by the Secretary, in the case of a
partnership, trust, S corporation, or other
pass-thru entity, rules similar to the rules of
section 41(g) shall apply with respect to the
credit allowable under paragraph (1).
``(ii) No basis adjustment.--In the case of
a bond held by a partnership or an S
corporation, rules similar to the rules under
section 1397E(i) shall apply.
``(C) Bonds held by regulated investment
companies.--If any Gulf tax credit bond is held by a
regulated investment company, the credit determined
under paragraph (1) shall be allowed to shareholders of
such company under procedures prescribed by the
Secretary.
``(D) Reporting.--Issuers of Gulf tax credit bonds
shall submit reports similar to the reports required
under section 149(e).
``(E) Credit treated as nonrefundable bondholder
credit.--For purposes of this title, the credit allowed
by this subsection shall be treated as a credit
allowable under subpart H of part IV of subchapter A of
this chapter.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 54(c) is amended by inserting
``, section 1400N(l),'' after ``subpart C''.
(2) Subparagraph (A) of section 6049(d)(8) is amended--
(A) by inserting ``or 1400N(l)(6)'' after ``section
54(g)'', and
(B) by inserting ``or 1400N(l)(2)(D), as the case
may be'' after ``section 54(b)(4)''.
(3) So much of subchapter Y of chapter 1 as precedes
section 1400L is amended to read as follows:
``Subchapter Y--Short-term Regional Benefits
``Part I--Tax benefits for New York Liberty Zone
``Part II--Tax benefits for Gulf Opportunity Zone
``PART I--TAX BENEFITS FOR NEW YORK LIBERTY ZONE
``Sec. 1400L. Tax benefits for New York Liberty Zone.''.
(4) The item relating to subchapter Y in the table of
subchapters for chapter 1 is amended to read as follows:
``subchapter y--short-term regional benefits''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending on or after August 28, 2005.
(2) Carrybacks.--Subsections (i)(2), (j), and (k) of
section 1400N of the Internal Revenue Code of 1986 (as added by
this section) shall apply to losses arising in such taxable
years.
SEC. 102. FEDERAL GUARANTEE OF CERTAIN STATE BONDS.
(a) State Bonds Described.--This section shall apply to a bond
issued as part of an issue if--
(1) the issue of which such bond is part is an issue of the
State of Alabama, Louisiana, or Mississippi,
(2) the bond is a general obligation of the issuing State
and is in registered form,
(3) the proceeds of the bond are distributed to one or more
political subdivisions of the issuing State,
(4) the maturity of such bond does not exceed 5 years,
(5) the bond is issued after the date of the enactment of
this Act and before January 1, 2008, and
(6) the bond is designated by the Secretary of the Treasury
for purposes of this section.
(b) Application.--
(1) In general.--The Secretary of the Treasury may only
designate a bond for purposes of this section pursuant to an
application submitted to the Secretary by the State which
demonstrates the need for such designation on the basis of the
criteria specified in paragraph (2).
(2) Criteria.--For purposes of paragraph (1), the criteria
specified in this paragraph are--
(A) the loss of revenue base of one or more
political subdivisions of the State by reason of
Hurricane Katrina,
(B) the need for resources to fund infrastructure
within, or operating expenses of, any such political
subdivision,
(C) the lack of access of such political
subdivision to capital, and
(D) any other criteria as may be determined by the
Secretary.
(3) Guidance for submission and consideration of
applications.--The Secretary of the Treasury shall prescribe
regulations or other guidance which provide for the time and
manner for the submission and consideration of applications
under this subsection.
(c) Federal Guarantee.--A bond described in subsection (a) is
guaranteed by the United States in an amount equal to 50 percent of the
outstanding principal with respect to such bond.
(d) Aggregate Limit on Bond Designations.--The maximum aggregate
face amount of bonds which may be issued under this section shall not
exceed $3,000,000,000.
TITLE II--TAX BENEFITS RELATED TO HURRICANE RITA
SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR HURRICANE
KATRINA TO HURRICANE RITA.
(a) In General.--Part II of subchapter Y of chapter 1 (as added by
this Act) is amended by adding at the end the following new sections:
``SEC. 1400O. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.
``(a) Tax-Favored Withdrawals From Retirement Plans.--
``(1) In general.--Section 72(t) shall not apply to any
qualified hurricane distribution.
``(2) Aggregate dollar limitation.--
``(A) In general.--For purposes of this subsection,
the aggregate amount of distributions received by an
individual which may be treated as qualified hurricane
distributions for any taxable year shall not exceed the
excess (if any) of--
``(i) $100,000, over
``(ii) the aggregate amounts treated as
qualified hurricane distributions received by
such individual for all prior taxable years.
``(B) Treatment of plan distributions.--If a
distribution to an individual would (without regard to
subparagraph (A)) be a qualified hurricane
distribution, a plan shall not be treated as violating
any requirement of this title merely because the plan
treats such distribution as a qualified hurricane
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.
``(C) Controlled group.--For purposes of
subparagraph (B), the term `controlled group' means any
group treated as a single employer under subsection
(b), (c), (m), or (o) of section 414.
``(3) Amount distributed may be repaid.--
``(A) In general.--Any individual who receives a
qualified hurricane 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.
``(B) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For
purposes of this title, if a contribution is made
pursuant to subparagraph (A) with respect to a
qualified hurricane 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 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.
``(C) Treatment of repayments for distributions
from iras.--For purposes of this title, if a
contribution is made pursuant to subparagraph (A) with
respect to a qualified hurricane 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 hurricane 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.
``(4) Definitions.--For purposes of this subsection--
``(A) Qualified hurricane distribution.--Except as
provided in paragraph (2), the term `qualified
hurricane distribution' means--
``(i) 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,
and
``(ii) any distribution (which is not
described in clause (i)) from an eligible
retirement plan made on or after September 23,
2005, and before January 1, 2007, to an
individual whose principal place of abode on
September 23, 2005, is located in the Hurricane
Rita disaster area and who has sustained an
economic loss by reason of Hurricane Rita.
``(B) Eligible retirement plan.--The term `eligible
retirement plan' shall have the meaning given such term
by section 402(c)(8)(B).
``(5) Income inclusion spread over 3-year period.--
``(A) In general.--In the case of any qualified
hurricane 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.
``(B) Special rule.--For purposes of subparagraph
(A), rules similar to the rules of subparagraph (E) of
section 408A(d)(3) shall apply.
``(6) Special rules.--
``(A) Exemption of distributions from trustee to
trustee transfer and withholding rules.--For purposes
of sections 401(a)(31), 402(f), and 3405, qualified
hurricane distributions shall not be treated as
eligible rollover distributions.
``(B) Qualified hurricane distributions treated as
meeting plan distribution requirements.--For purposes
this title, a qualified hurricane 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).
``(b) Recontributions of Withdrawals for Home Purchases.--
``(1) Recontributions.--
``(A) In general.--Any individual who received a
qualified distribution may, during the applicable
period, 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 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), as the case may be.
``(B) Treatment of repayments.--Rules similar to
the rules of subparagraphs (B) and (C) of subsection
(a)(3) shall apply for purposes of this subsection.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified
distribution' means any qualified Katrina distribution
and any qualified Rita distribution.
``(B) Qualified katrina distribution.--The term
`qualified Katrina distribution' means any
distribution--
``(i) 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),
``(ii) received after February 28, 2005,
and before August 29, 2005, and
``(iii) 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.
``(C) Qualified rita distribution.--The term
`qualified Rita distribution' means any distribution
(other than a qualified Katrina distribution)--
``(i) 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),
``(ii) received after February 28, 2005,
and before September 24, 2005, and
``(iii) which was to be used to purchase or
construct a principal residence in the
Hurricane Rita disaster area, but which was not
so purchased or constructed on account of
Hurricane Rita.
``(3) Applicable period.--For purposes of this subsection,
the term `applicable period' means--
``(A) with respect to any qualified Katrina
distribution, the period beginning on August 25, 2005,
and ending on February 28, 2006, and
``(B) with respect to any qualified Rita
distribution, the period beginning on September 23,
2005, and ending on February 28, 2006.
``(c) Loans From Qualified Plans.--
``(1) Increase in limit on loans not treated as
distributions.--In the case of any loan from a qualified
employer plan (as defined under section 72(p)(4)) to a
qualified individual made during the applicable period--
``(A) clause (i) of section 72(p)(2)(A) shall be
applied by substituting `$100,000' for `$50,000', and
``(B) 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'.
``(2) Delay of repayment.--In the case of a qualified
individual with an outstanding loan on or after the qualified
beginning date from a qualified employer plan (as defined in
section 72(p)(4))--
``(A) if the due date pursuant to subparagraph (B)
or (C) of section 72(p)(2) for any repayment with
respect to such loan occurs during the period beginning
on the qualified beginning date and ending on December
31, 2006, such due date shall be delayed for 1 year,
``(B) 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
``(C) in determining the 5-year period and the term
of a loan under subparagraph (B) or (C) of section
72(p)(2), the period described in subparagraph (A)
shall be disregarded.
``(3) Qualified individual.--For purposes of this
subsection--
``(A) In general.--The term `qualified individual'
means any qualified Hurricane Katrina individual and
any qualified Hurricane Rita individual.
``(B) Qualified hurricane katrina individual.--The
term `qualified Hurricane Katrina 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.
``(C) Qualified hurricane rita individual.--The
term `qualified Hurricane Rita individual' means an
individual (other than a qualified Hurricane Katrina
individual) whose principal place of abode on September
23, 2005, is located in the Hurricane Rita disaster
area and who has sustained an economic loss by reason
of Hurricane Rita.
``(4) Applicable period; qualified beginning date.--For
purposes of this subsection--
``(A) Hurricane katrina.--In the case of any
qualified Hurricane Katrina individual--
``(i) the applicable period is the period
beginning on September 24, 2005, and ending on
December 31, 2006, and
``(ii) the qualified beginning date is
August 25, 2005.
``(B) Hurricane rita.--In the case of any qualified
Hurricane Rita individual--
``(i) the applicable period is the period
beginning on the date of the enactment of this
subsection and ending on December 31, 2006, and
``(ii) the qualified beginning date is
September 23, 2005.
``(d) 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 this section, or pursuant
to any regulation issued by the Secretary or
the Secretary of Labor under this section, and
``(ii) 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
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).
``(B) Conditions.--This subsection shall not apply
to any amendment unless--
``(i) during the period--
``(I) beginning on the date that
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 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. 1400P. EMPLOYMENT RELIEF.
``(a) Employee Retention Credit for Employers Affected by Hurricane
Katrina.--
``(1) In general.--For purposes of section 38, in the case
of an eligible employer, the Hurricane Katrina employee
retention credit for any taxable year is 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.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible employer.--The term `eligible
employer' means any employer--
``(i) which conducted an active trade or
business on August 28, 2005, in the GO Zone,
and
``(ii) with respect to whom the trade or
business described in clause (i) 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.
``(B) 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 the GO
Zone.
``(C) Qualified wages.--The term `qualified wages'
means wages (as defined in section 51(c)(1), but
without regard to section 3306(b)(2)(B)) 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--
``(i) beginning on the date on which the
trade or business described in subparagraph (A)
first became inoperable at the principal place
of employment of the employee immediately
before Hurricane Katrina, and
``(ii) 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.
``(3) 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.
``(4) Certain rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1),
52, and 280C(a) shall apply.
``(5) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under section 51
with respect to such employee for such period.
``(b) Employee Retention Credit for Employers Affected by Hurricane
Rita.--
``(1) In general.--For purposes of section 38, in the case
of an eligible employer, the Hurricane Rita employee retention
credit for any taxable year is 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.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible employer.--The term `eligible
employer' means any employer--
``(i) which conducted an active trade or
business on September 23, 2005, in the Rita GO
Zone, and
``(ii) with respect to whom the trade or
business described in clause (i) is inoperable
on any day after September 23, 2005, and before
January 1, 2006, as a result of damage
sustained by reason of Hurricane Rita.
``(B) Eligible employee.--The term `eligible
employee' means with respect to an eligible employer an
employee whose principal place of employment on
September 23, 2005, with such eligible employer was in
the Rita GO Zone.
``(C) Qualified wages.--The term `qualified wages'
means wages (as defined in section 51(c)(1), but
without regard to section 3306(b)(2)(B)) paid or
incurred by an eligible employer with respect to an
eligible employee on any day after September 23, 2005,
and before January 1, 2006, which occurs during the
period--
``(i) beginning on the date on which the
trade or business described in subparagraph (A)
first became inoperable at the principal place
of employment of the employee immediately
before Hurricane Rita, and
``(ii) 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.
``(3) 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.
``(4) Certain rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1),
52, and 280C(a) shall apply.
``(5) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under subsection
(a) or section 51 with respect to such employee for such
period.
``SEC. 1400Q. ADDITIONAL TAX RELIEF PROVISIONS.
``(a) Temporary Suspension of Limitations on Charitable
Contributions.--
``(1) In general.--Except as otherwise provided in
paragraph (2), section 170(b) 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 to other contributions.
``(2) Treatment of excess contributions.--For purposes of
section 170--
``(A) Individuals.--In the case of an individual--
``(i) 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)) over the amount of
all other charitable contributions allowed
under section 170(b)(1).
``(ii) Carryover.--If the aggregate amount
of qualified contributions made in the
contribution year (within the meaning of
section 170(d)(1)) exceeds the limitation of
clause (i), 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.
``(B) Corporations.--In the case of a corporation--
``(i) 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)) over the amount of all
other charitable contributions allowed under
such paragraph.
``(ii) Carryover.--Rules similar to the
rules of subparagraph (A)(ii) shall apply for
purposes of this subparagraph.
``(3) Exception to overall limitation on itemized
deductions.--So much of any deduction allowed under section 170
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.
``(4) Qualified contributions.--
``(A) In general.--For purposes of this subsection,
the term `qualified contribution' means any charitable
contribution (as defined in section 170(c)) if--
``(i) such contribution is 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)
(other than an organization described in
section 509(a)(3)),
``(ii) in the case of a contribution paid
by a corporation, such contribution is for
relief efforts related to Hurricane Katrina or
Hurricane Rita, and
``(iii) the taxpayer has elected the
application of this subsection with respect to
such contribution.
``(B) 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.
``(C) Application of election to partnerships and s
corporations.--In the case of a partnership or S
corporation, the election under subparagraph (A)(iii)
shall be made separately by each partner or
shareholder.
``(b) Suspension of Certain Limitations on Personal Casualty
Losses.--Paragraphs (1) and (2)(A) of section 165(h) shall not apply to
losses described in section 165(c)(3)--
``(1) which arise in the Hurricane Katrina disaster area on
or after August 25, 2005, and which are attributable to
Hurricane Katrina, or
``(2) which arise in the Hurricane Rita disaster area on or
after September 23, 2005, and which are attributable to
Hurricane Rita.
In the case of any other losses, section 165(h)(2)(A) shall be applied
without regard to the losses referred to in the preceding sentence.
``(c) Required Exercise of Authority Under Section 7508a.--In the
case of any taxpayer determined by the Secretary to be affected by the
Presidentially declared disaster relating to Hurricane Katrina or
Hurricane Rita, any relief provided by the Secretary under section
7508A shall be for a period ending not earlier than February 28, 2006.
``(d) Special Rule for Determining Earned Income.--
``(1) In general.--In the case of a qualified individual,
if the earned income of the taxpayer for the taxable year which
includes the applicable date is less than the earned income of
the taxpayer for the preceding taxable year, the credits
allowed under sections 24(d) and 32 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--
``(A) In general.--The term `qualified individual'
means any qualified Hurricane Katrina individual and
any qualified Hurricane Rita individual.
``(B) Qualified hurricane katrina individual.--The
term `qualified Hurricane Katrina individual' means any
individual whose principal place of abode on August 25,
2005, was located--
``(i) in the GO Zone, or
``(ii) in the Hurricane Katrina disaster
area (but outside the GO Zone) and such
individual was displaced from such principal
place of abode by reason of Hurricane Katrina.
``(C) Qualified hurricane rita individual.--The
term `qualified Hurricane Rita individual' means any
individual (other than a qualified Hurricane Katrina
individual) whose principal place of abode on September
23, 2005, was located--
``(i) in the Rita GO Zone, or
``(ii) in the Hurricane Rita disaster area
(but outside the Rita GO Zone) and such
individual was displaced from such principal
place of abode by reason of Hurricane Rita.
``(3) Applicable date.--For purposes of this subsection,
the term `applicable date' means--
``(A) in the case of a qualified Hurricane Katrina
individual, August 25, 2005, and
``(B) in the case of a qualified Hurricane Rita
individual, September 23, 2005.
``(4) Earned income.--For purposes of this subsection, the
term `earned income' has the meaning given such term under
section 32(c).
``(5) 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 applicable 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 section 32.
``(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).
``(e) Secretarial Authority to Make Adjustments Regarding Taxpayer
and Dependency Status.--With respect to taxable years beginning in 2005
or 2006, the Secretary 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 or Hurricane Rita. 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.''.
(b) Conforming Amendments.--
(1) Subsection (b) of section 38 is amended by striking
``and'' at the end of paragraph (25), by striking the period at
the end of paragraph (26) and inserting a comma, and by adding
at the end the following new paragraphs:
``(27) the Hurricane Katrina employee retention credit
determined under section 1400P(a), and
``(28) the Hurricane Rita employee retention credit
determined under section 1400P(b).''.
(2) The table of sections for part II of subchapter Y of
chapter 1 is amended by adding at the end the following new
items:
``Sec. 1400O. Special rules for use of retirement funds.
``Sec. 1400P. Employment relief.
``Sec. 1400Q. Additional tax relief provisions.''.
(3) The heading for such part is amended by striking ``GULF
OPPORTUNITY ZONE'' and inserting ``HURRICANE RELIEF''.
(4) The following provisions of the Katrina Emergency Tax
Relief Act of 2005 are hereby repealed:
(A) Title I.
(B) Sections 202, 301, 402, 403(b), 406, and 407.
TITLE III--OTHER PROVISIONS
SEC. 301. SECRETARIAL AUTHORITY TO EXTEND PERIOD DURING WHICH TRAVELING
EXPENSES ARE TREATED AS INCURRED AWAY FROM HOME IN CASE
OF MAJOR DISASTER.
(a) In General.--Section 162 (relating to trade or business
expenses) is amended by redesignating subsection (q) as subsection (r)
and by inserting after subsection (p) the following new subsection:
``(q) Limitation on Traveling Expenses.--
``(1) In general.--For purposes of subsection (a)(2), the
taxpayer shall not be treated as being temporarily away from
home during any period of employment if such period exceeds 1
year.
``(2) Authority to extend in case of major disaster.--In
the case of a taxpayer who is away from home in pursuit of a
trade or business by reason of a disaster which the President
has declared to be a major disaster under section 401 of the
Robert T. Stafford Disaster Relief and Emergency Assistance
Act, the Secretary may extend the 1-year period referred to in
paragraph (1) for a period not exceeding 1 additional year.
``(3) Exception for certain federal employees designated by
the attorney general.--Paragraph (1) shall not apply to any
Federal employee during any period for which such employee is
certified by the Attorney General (or the designee thereof) as
traveling on behalf of the United States in temporary duty
status to investigate or prosecute, or provide support services
for the investigation or prosecution of, a Federal crime.''.
(b) Conforming Amendment.--Subsection (a) of section 162 is amended
by striking the last two sentences.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after the date of the enactment of
this Act.
SEC. 302. GULF COAST RECOVERY BONDS.
It is the sense of the Congress that the Secretary of the Treasury,
or the Secretary's delegate, should designate one or more series of
bonds or certificates (or any portion thereof) issued under section
3105 of title 31, United States Code, as ``Gulf Coast Recovery Bonds''
in response to Hurricanes Katrina and Rita.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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