PUBLIC LAW 109–7—APR. 15, 2005 119 STAT. 21

Public Law 109–7

109th Congress

An Act

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)’’.

26 USC 139.

Apr. 15, 2005

[H.R. 1134]

119 STAT. 22 PUBLIC LAW 109–7—APR. 15, 2005

LEGISLATIVE HISTORY—H.R. 1134:

CONGRESSIONAL RECORD, Vol. 151 (2005):

Mar. 14, considered and passed House.

Apr. 13, considered and passed Senate, amended.

Apr. 14, House concurred in Senate amendment.

Æ

(b) CERTAIN DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGA- TION 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 before, on, or 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 before, on, or after the

date of the enactment of this Act.

Approved April 15, 2005.

26 USC 1033

note.

26 USC 139 note.