A bill to amend the Internal Revenue Code of 1986 to provide for the proper tax treatment of certain disaster mitigation payments.

Amends the Internal Revenue Code to exclude from gross income disaster mitigation payments paid pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 586 Introduced in Senate (IS)]

  1st Session
                                  S. 586

 To amend the Internal Revenue Code of 1986 to provide for the proper 
         tax treatment of certain disaster mitigation payments.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 9, 2005

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

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide for the proper 
         tax treatment of certain disaster mitigation payments.

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

SECTION 1. PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGATION 
              PAYMENTS.

    (a) Qualified Disaster Mitigation Payments Excluded From Gross 
Income.--
            (1) In general.--Section 139 of the Internal Revenue Code 
        of 1986 (relating to disaster relief payments) is amended by 
        adding at the end the following new subsections:
    ``(g) Qualified Disaster Mitigation Payments.--
            ``(1) In general.--Gross income shall not include any 
        amount received as a qualified disaster mitigation payment.
            ``(2) Qualified disaster mitigation payment defined.--For 
        purposes of this section, the term `qualified disaster 
        mitigation payment' means any amount which is paid pursuant to 
        the Robert T. Stafford Disaster Relief and Emergency Assistance 
        Act (as in effect on the date of the enactment of this 
        subsection) or the National Flood Insurance Act (as in effect 
        on such date) to or for the benefit of the owner of any 
        property for hazard mitigation with respect to such property. 
        Such term shall not include any amount received for the sale or 
        disposition of any property.
            ``(3) No increase in basis.--Notwithstanding any other 
        provision of this subtitle, no increase in the basis or 
        adjusted basis of any property shall result from any amount 
        excluded under this subsection with respect to such property.
    ``(h) Denial of Double Benefit.--Notwithstanding any other 
provision of this subtitle, no deduction or credit shall be allowed (to 
the person for whose benefit a qualified disaster relief payment or 
qualified disaster mitigation payment is made) for, or by reason of, 
any expenditure to the extent of the amount excluded under this section 
with respect to such expenditure.''.
            (2) Conforming amendments.--
                    (A) Subsection (d) of section 139 of such Code is 
                amended by striking ``a qualified disaster relief 
                payment'' and inserting ``qualified disaster relief 
                payments and qualified disaster mitigation payments''.
                    (B) Subsection (e) of section 139 of such Code is 
                amended by striking ``and (f)'' and inserting ``, (f), 
                and (g)''.
    (b) Certain Dispositions of Property Under Hazard Mitigation 
Programs Treated as Involuntary Conversions.--Section 1033 of such Code 
(relating to involuntary conversions) is amended by redesignating 
subsection (k) as subsection (l) and by inserting after subsection (j) 
the following new subsection:
    ``(k) Sales or Exchanges Under Certain Hazard Mitigation 
Programs.--For purposes of this subtitle, if property is sold or 
otherwise transferred to the Federal Government, a State or local 
government, or an Indian tribal government to implement hazard 
mitigation under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (as in effect on the date of the enactment of this 
subsection) or the National Flood Insurance Act (as in effect on such 
date), such sale or transfer shall be treated as an involuntary 
conversion to which this section applies.''.
    (c) Effective Date.--
            (1) Qualified disaster mitigation payments.--The amendments 
        made by subsection (a) shall apply to amounts received after 
        the date of the enactment of this Act.
            (2) Dispositions of property under hazard mitigation 
        programs.--The amendments made by subsection (b) shall apply to 
        sales or other dispositions after the date of the enactment of 
        this Act.
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