A bill to amend the Internal Revenue Code of 1986 to provide a credit against the income tax for expenses incurred in any hurricane or flood protection project.

Summary: Hurricane and Flood Protection Tax Credit Act - Amends the Internal Revenue Code to allow a tax credit for 30% of expenditures for a hurricane or flood protection project which is authorized but unfunded (or partially funded) under federal law.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Hurricane and Flood Protection Tax 
Credit Act''.

SEC. 2. CREDIT FOR EXPENSES INCURRED IN HURRICANE OR FLOOD PROTECTION 
              PROJECTS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 30D. CREDIT FOR EXPENSES INCURRED IN HURRICANE OR FLOOD 
              PROTECTION PROJECTS.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 30 percent of the qualified expenditures of the taxpayer for 
the taxable year.
    ``(b) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for the taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under subpart A and 
        sections 27 and 30A for the taxable year.
    ``(c) Qualified Expenditures.--For purposes of this section--
            ``(1) In general.--The term `qualified expenditures' means 
        amounts paid or incurred by the taxpayer for an unfunded 
        authorized project, but only to the extent--
                    ``(A) such amounts are paid or incurred after a 
                request by the taxpayer to expend such amounts has been 
                approved by the Federal agency administering the 
                unfunded authorized project or after a 90-day period 
                following such request (plus an additional 30-day 
                period if requested by such agency within the 90-day 
                period) during which no decision regarding such request 
                is made by such agency, and
                    ``(B) such amounts are applied proportionally to 
                the Federal and non-Federal share of the total amount 
                authorized to be appropriated for such project.
            ``(2) Unfunded authorized project.--The term `unfunded 
        authorized project' means any project--
                    ``(A) authorized by Federal law to provide 
                hurricane or flood protection in the United States, and
                    ``(B) with respect to which no or only partial 
                Federal funding has been appropriated prior to the 
                request described in paragraph (1)(A).
    ``(d) Carryovers Allowed.--
            ``(1) In general.--If the credit amount allowable under 
        subsection (a) for a taxable year exceeds the amount of the 
        limitation under subsection (b) for such taxable year (referred 
        to as the `unused credit year' in this paragraph), such excess 
        shall be allowed as a credit carryforward for each of the 
        taxable years following the unused credit year or as a credit 
        carryback for each of the taxable years preceding the unused 
        credit year.
            ``(2) Rules.--For purposes of paragraph (1), rules similar 
        to the rules of section 39 shall apply, except that--
                    ``(A) subsection (a)(1) shall be applied--
                            ``(i) by substituting `3 taxable years' for 
                        `1 taxable years' in subparagraph (A) thereof, 
                        and
                            ``(ii) by substituting `5 taxable years' 
                        for `20 taxable years' in subparagraph (B) 
                        thereof, and
                    ``(B) subsection (a)(2) shall be applied--
                            ``(i) by substituting `8 taxable years' for 
                        `21 taxable years' in subparagraph (A) thereof, 
                        and
                            ``(ii) by substituting `7 taxable years' 
                        for `20 taxable years' in subparagraph (B).
    ``(e) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        subsection (b)).
            ``(2) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter (other than the credit 
        allowable under subsection (a)), shall be reduced by the amount 
        of credit allowed under subsection (a) (determined without 
        regard to subsection (b)) for the taxable year.
            ``(3) Reduction for assistance.--The amount taken into 
        account under subsection (a) with respect to any project shall 
        be reduced by the amount of any Federal, State, or local grant 
        or other assistance received by the taxpayer during such 
        taxable year or any prior taxable year which was used to make 
        qualified expenditures and which was not included in the gross 
        income of such taxpayer.''.
    (b) Basis Adjustment.--Section 1016(a) of the Internal Revenue Code 
of 1986 is amended by striking ``and'' at the end of paragraph (36), by 
striking the period at the end of paragraph (37) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(38) to the extent provided in section 30D(e)(1).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 30A the following new 
item:

``Sec. 3DB. Credit for expenses incurred in hurricane or flood 
                            protection projects.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.