```

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5296 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 5296

 To amend the Internal Revenue Code of 1986 to provide for Residential 
 Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           November 12, 2024

  Mr. Scott of Florida introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to provide for Residential 
 Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``READY Accounts Act''.

SEC. 2. READY ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 224 
as section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. RESIDENTIAL EMERGENCY ASSET-ACCUMULATION DEFERRED TAXATION 
              YIELD (READY) ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual, there shall 
be allowed as a deduction for the taxable year an amount equal to the 
aggregate amount paid in cash during such taxable year by or on behalf 
of such individual to a Residential Emergency Asset-accumulation 
Deferred Taxation Yield (READY) account such individual.
    ``(b) Limitation.--
            ``(1) In general.--The amount allowable as a deduction 
        under subsection (a) to an individual for the taxable year 
        shall not exceed $4,500.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2025, the $4,500 
                dollar amount under paragraph (1) shall be increased by 
                an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting in subparagraph 
                        (A)(ii) thereof `calendar year 2024' for 
                        `calendar year 2016'.
                    ``(B) Rounding.--If any amount as adjusted under 
                paragraph (1) is not a multiple of $50, such dollar 
                amount shall be rounded to the next lowest multiple of 
                $50.
    ``(c) Residential Emergency Asset-Accumulation Deferred Taxation 
Yield (READY) Account.--For purposes of this section--
            ``(1) In general.--The term `Residential Emergency Asset-
        accumulation Deferred Taxation Yield (READY) account' means a 
        trust created or organized in the United States as a 
        Residential Emergency Asset-accumulation Deferred Taxation 
        Yield (READY) account exclusively for the purpose of paying the 
        qualified home disaster mitigation and recovery expenses of the 
        account beneficiary, but only if the written governing 
        instrument creating the trust meets the following requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in subsection (e)(5), no contribution will be 
                accepted--
                            ``(i) unless it is in cash, or
                            ``(ii) to the extent such contribution, 
                        when added to previous contributions to the 
                        trust for the calendar year, exceeds the dollar 
                        amount in effect under subsection (b)(1).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
            ``(2) Qualified home disaster mitigation and recovery 
        expenses.--
                    ``(A) In general.--The term `qualified home 
                disaster mitigation and recovery expenses' means, with 
                respect to an account beneficiary, amounts paid by such 
                beneficiary for--
                            ``(i) qualified disaster mitigation 
                        measures, or
                            ``(ii) qualified disaster recovery costs,
                with respect to a qualified home of the taxpayer.
                    ``(B) Qualified disaster mitigation measures.--For 
                purposes of subparagraph (A)--
                            ``(i) In general.--The term `qualified 
                        disaster mitigation measures' means any measure 
                        described in clause (ii) with respect to a 
                        qualified home of the taxpayer if--
                                    ``(I) such measure meets such 
                                criteria as the Secretary, in 
                                consultation with the Administrator of 
                                the Federal Emergency Management 
                                Agency, considers appropriate to 
                                mitigate damage from a natural or other 
                                disaster, and
                                    ``(II) is certified by a qualified 
                                industry professional as meeting such 
                                criteria.
                            ``(ii) Mitigation measures.--The following 
                        measures are measures described in this clause:
                                    ``(I) Installing a roofing 
                                underlayment to sheathing.
                                    ``(II) Replacing a roof covering.
                                    ``(III) Applying a foam adhesive to 
                                reinforce the roof structure.
                                    ``(IV) Strengthening connection of 
                                roof deck to roof framing.
                                    ``(V) Strengthening roof-to-wall 
                                connections.
                                    ``(VI) Strengthening soffits.
                                    ``(VII) Strengthening attic 
                                ventilation openings.
                                    ``(VIII) Installing impact-
                                resistant windows.
                                    ``(IX) Installing impact-resistant 
                                entry doors.
                                    ``(X) Elevating the residential 
                                home.
                                    ``(XI) Installing ground anchors.
                                    ``(XII) If the qualified home was 
                                built according to a building code from 
                                a prior year, achieving the current 
                                building code standard in the 
                                applicable State or locality.
                                    ``(XIII) Such other measures 
                                determined by the Secretary, in 
                                consultation with the Administrator of 
                                the Federal Emergency Management 
                                Agency, to be consistent with the 
                                purposes of this section.
                            ``(iii) Qualified industry professional.--
                        The term `qualified industry professional' 
                        means an individual who meets such rules and 
                        standards as determined appropriate by the 
                        Secretary, in consultation with the 
                        Administrator of the Federal Emergency 
                        Management Agency.
                    ``(C) Qualified disaster recovery costs.--For 
                purposes of subparagraph (A), the term `qualified 
                disaster recovery costs' means costs for repairing 
                damage to the qualified home of the taxpayer if such 
                damage arises from fire, storm, or other casualty and 
                such costs are not compensated for by insurance or 
                otherwise.
                    ``(D) Qualified home.--For purposes of this 
                section, the term `qualified home' means, with respect 
                to any taxable year, any structure which is--
                            ``(i) owned by the taxpayer, and
                            ``(ii) used by the taxpayer as the 
                        taxpayer's principal residence (within the 
                        meaning of section 121) for the taxable year.
            ``(3) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the Residential Emergency 
        Asset-accumulation Deferred Taxation Yield (READY) account was 
        established.
            ``(4) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(d)(2) (relating to no deduction 
                for rollovers).
                    ``(B) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(C) Section 219(f)(5) (relating to employer 
                payments).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
    ``(d) Tax Treatment of Accounts.--
            ``(1) In general.--A Residential Emergency Asset-
        accumulation Deferred Taxation Yield (READY) account is exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a Residential Emergency Asset-accumulation 
        Deferred Taxation Yield (READY) account. Notwithstanding the 
        preceding sentence, any such account is subject to the taxes 
        imposed by section 511 (relating to imposition of tax on 
        unrelated business income of charitable, etc. organizations).
            ``(2) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to 
        Residential Emergency Asset-accumulation Deferred Taxation 
        Yield (READY) accounts, and any amount treated as distributed 
        under such rules shall be treated as not used to pay qualified 
        home disaster mitigation and recovery expenses.
    ``(e) Tax Treatment of Distributions.--
            ``(1) Amounts used for qualified home disaster mitigation 
        and recovery expenses.--Any amount paid or distributed out of a 
        Residential Emergency Asset-accumulation Deferred Taxation 
        Yield (READY) account which is used exclusively to pay 
        qualified home disaster mitigation and recovery expenses of the 
        account beneficiary shall not be includible in gross income.
            ``(2) Inclusion of amounts not used for qualified home 
        disaster mitigation and recovery expenses.--Any amount paid or 
        distributed out of a Residential Emergency Asset-accumulation 
        Deferred Taxation Yield (READY) account which is not used 
        exclusively to pay the qualified home disaster mitigation and 
        recovery expenses of the account beneficiary shall be included 
        in the gross income of such beneficiary.
            ``(3) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account of an individual, paragraph (2) shall 
                not apply to distributions from the Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) accounts of such individual (to the extent such 
                distributions do not exceed the aggregate excess 
                contributions to all such accounts of such individual 
                for such year) if--
                            ``(i) such distribution is received by the 
                        individual on or before the last day prescribed 
                        by law (including extensions of time) for 
                        filing such individual's return for such 
                        taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the individual for the 
                taxable year in which it is received.
                    ``(B) Excess contribution.--For purposes of 
                subparagraph (A), the term `excess contribution' means 
                any contribution (other than a rollover contribution 
                described in paragraph (5)) which is not deductible 
                under this section.
            ``(4) Additional tax on distributions not used for 
        qualified home disaster mitigation and recovery expenses.--The 
        tax imposed by this chapter on the account beneficiary for any 
        taxable year in which there is a payment or distribution from a 
        Residential Emergency Asset-accumulation Deferred Taxation 
        Yield (READY) account of such beneficiary which is includible 
        in gross income under paragraph (2) shall be increased by 20 
        percent of the amount which is so includible.
            ``(5) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--Paragraph (2) shall not apply to 
                any amount paid or distributed from a Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account to the account beneficiary to the 
                extent the amount received is paid into a Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account for the benefit of such beneficiary not 
                later than the 60th day after the day on which the 
                beneficiary receives the payment or distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a Residential Emergency Asset-
                accumulation Deferred Taxation Yield (READY) account 
                if, at any time during the 1-year period ending on the 
                day of such receipt, such individual received any other 
                amount described in subparagraph (A) from a Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account which was not includible in the 
                individual's gross income because of the application of 
                this paragraph.
            ``(6) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a Residential Emergency 
        Asset-accumulation Deferred Taxation Yield (READY) account to 
        an individual's spouse or former spouse under a divorce or 
        separation instrument described in clause (i) of section 
        121(d)(3)(C) shall not be considered a taxable transfer made by 
        such individual notwithstanding any other provision of this 
        subtitle, and such interest shall, after such transfer, be 
        treated as a Residential Emergency Asset-accumulation Deferred 
        Taxation Yield (READY) account with respect to which such 
        spouse is the account beneficiary.
            ``(7) Treatment after death of account beneficiary.--
                    ``(A) Treatment if designated beneficiary is 
                spouse.--If the account beneficiary's surviving spouse 
                acquires such beneficiary's interest in a Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account by reason of being the designated 
                beneficiary of such account at the death of the account 
                beneficiary, such Residential Emergency Asset-
                accumulation Deferred Taxation Yield (READY) account 
                shall be treated as if the spouse were the account 
                beneficiary.
                    ``(B) Other cases.--If, by reason of the death of 
                the account beneficiary, any person acquires the 
                account beneficiary's interest in a Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) account in a case to which subparagraph (A) 
                does not apply--
                            ``(i) such account shall cease to be a 
                        Residential Emergency Asset-accumulation 
                        Deferred Taxation Yield (READY) account as of 
                        the date of death, and
                            ``(ii) an amount equal to the fair market 
                        value of the assets in such account on such 
                        date shall be includible if such person is not 
                        the estate of such beneficiary, in such 
                        person's gross income for the taxable year 
                        which includes such date, or if such person is 
                        the estate of such beneficiary, in such 
                        beneficiary's gross income for the last taxable 
                        year of such beneficiary.
    ``(f) Reports.--
            ``(1) In general.--The Secretary may require the trustee of 
        a Residential Emergency Asset-accumulation Deferred Taxation 
        Yield (READY) account to make such reports regarding such 
        account to the Secretary and to the account beneficiary with 
        respect to contributions, distributions, the return of excess 
        contributions, and such other matters as the Secretary 
        determines appropriate.
            ``(2) Time and manner of reports.--The reports required by 
        this subsection shall be filed at such time and in such manner 
        and furnished to such individuals at such time and in such 
        manner as may be required by the Secretary.
    ``(g) Regulations.-- The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section and to prevent the abuse of such purposes.''.
    (b) Excess Contributions.--
            (1) In general.--Section 4973(a) of the Internal Revenue 
        Code of 1986 is amended by striking ``or'' at the end of 
        paragraph (5), by inserting ``or'' at the end of paragraph (6), 
        and by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) a Residential Emergency Asset-accumulation Deferred 
        Taxation Yield (READY) account (within the meaning of section 
        224),''.
            (2) Excess contributions.--Section 4973 of such Code is 
        amended by adding at the end the following new subsection:
    ``(i) Excess Contributions to READY Accounts.--
            ``(1) In general.--For purposes of this section, in the 
        case of a Residential Emergency Asset-accumulation Deferred 
        Taxation Yield (READY) account (within the meaning of section 
        224), the term `excess contributions' means the sum of--
                    ``(A) the aggregate amount contributed for the 
                taxable year to such accounts (other than rollover 
                contributions described in section 224(e)(5)) which is 
                not allowed as a deduction under section 224 fo such 
                year, and, and
                    ``(B) the amount determined under this subsection 
                for the preceding taxable year, reduced by the sum of--
                            ``(i) the distributions out of the accounts 
                        which were included in gross income under 
                        section 224(e)(2), and
                            ``(ii) the excess (if any) of the maximum 
                        amount allowed as a deduction under section 
                        224(b) for the taxable year over the amount 
                        contributed to the accounts for the taxable 
                        year.
            ``(2) Special rules.--For purposes of this subsection, any 
        contribution which is distributed out of the Residential 
        Emergency Asset-accumulation Deferred Taxation Yield (READY) 
        account in a distribution to which section 223(e)(3) applies 
        shall be treated as an amount not contributed.''.
    (c) Application of Prohibited Transaction Rules.--
            (1) In general.--Section 4975(e)(1) of the Internal Revenue 
        Code of 1986 is amended by striking ``or'' at the end of 
        subparagraph (F), by redesignating subparagraph (G) as 
        subparagraph (H), and by inserting after subparagraph (F) the 
        following new subparagraph:
                    ``(G) a Residential Emergency Asset-accumulation 
                Deferred Taxation Yield (READY) account described in 
                section 224, or''.
            (2) Special rule.--Section 4975(c) of such Code is amended 
        by adding at the end the following new paragraph:
            ``(8) Special rule for residential emergency asset-
        accumulation deferred taxation yield (ready) accounts.--An 
        individual for whose benefit a Residential Emergency Asset-
        accumulation Deferred Taxation Yield (READY) account (within 
        the meaning of section 224) is established shall be exempt from 
        the tax imposed by this section with respect to any transaction 
        concerning such account (which would otherwise be taxable under 
        this section) if, with respect to such transaction, the account 
        ceases to be a Residential Emergency Asset-accumulation 
        Deferred Taxation Yield (READY) account by reason of the 
        application of section 224(d)(2) to such account.''.
    (d) Conforming Amendments.--
            (1) Section 26(b)(2) of the Internal Revenue Code of 1986 
        is amended by striking ``and'' at the end of subparagraph (Y), 
        by striking the period at the end of subparagraph (Z) and 
        inserting ``, and'', and by inserting after subparagraph (Y) 
        the following:
                    ``(AA) section 224(e)(4).''.
            (2) Section 62(a) of such Code is amended by inserting 
        after paragraph (21) the following new paragraph:
            ``(22) Residential emergency asset-accumulation deferred 
        taxation yield (ready) account.--The deduction allowed by 
        section 224.''.
            (3) Section 165(h) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(6) Coordination with expenditures from ready accounts.--
        No deduction shall be allowed with respect to any loss 
        described in subsection (a)(3) to the extent the taxpayer has 
        made an expenditure from a Residential Emergency Asset-
        accumulation Deferred Taxation Yield (READY) account (as 
        defined in section 224) which is taken into account under 
        section 224(c)(2)(C) as a cost with respect to such loss.''.
            (4) Section 877A of such Code is amended--
                    (A) in subsection (e)(2) by inserting ``a 
                Residential Emergency Asset-accumulation Deferred 
                Taxation Yield (READY) account (as defined in section 
                224),'' after ``a health savings account (as defined in 
                section 223),'', and
                    (B) in subsection (g)(6) by inserting 
                ``224(e)(4),'' after ``223(f)(4),''.
            (5) Section 6693(a)(2) of such Code is amended by striking 
        ``and'' at the end of subparagraph (E), by striking the period 
        at the end of subparagraph (F) and inserting ``, and'', and by 
        inserting after subparagraph (F) the following new 
        subparagraph:
                    ``(G) section 224(f) (relating to Residential 
                Emergency Asset-accumulation Deferred Taxation Yield 
                (READY) accounts).''.
            (6) The table of sections for part VII of subchapter B of 
        chapter 1 of such Code is amended redesignating the item 
        relating to section 224 as relating to section 225 and by 
        inserting after the item relating to section 223 the following 
        new item:

``Sec. 224. Residential Emergency Asset-accumulation Deferred Taxation 
                            Yield (READY) accounts.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>
```