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[109th Congress Public Law 7]
[From the U.S. Government Printing Office]

<DOC>
[DOCID: f:publ007.109]

[[Page 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. <<NOTE: Apr. 15, 
                         2005 -  [H.R. 1134]>> 

    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 <<NOTE: 26 USC 139.>> (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)''.

[[Page 119 STAT. 22]]

    (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) <<NOTE: 26 USC 139 note.>> 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) <<NOTE: 26 USC 1033 note.>> 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.

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.

                                  <all>
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