I

103D CONGRESS

1ST SESSION H. R. 406

To amend the Internal Revenue Code of 1986 to modify the involuntary

conversion rules for certain disaster-related conversions.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. STARK (for himself, Mr. DELLUMS, Mr. MINETA, Mrs. MINK, Mr. ACKERMAN, Mr. EVANS, and Mr. MANTON) introduced the following bill; which

was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to modify

the involuntary conversion rules for certain disaster-related conversions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. MODIFICATION OF INVOLUNTARY CONVERSION

4 RULES FOR CERTAIN DISASTER-RELATED

5 CONVERSIONS.

6 (a) IN GENERAL.—Section 1033 of the Internal Rev7 enue Code of 1986 (relating to involuntary conversions)

8 is amended by redesignating subsection (h) as subsection
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1 (i) and by inserting after subsection (g) the following new

2 subsection:

3 ‘‘(h) SPECIAL RULES FOR PRINCIPAL RESIDENCES

4 DAMAGED BY PRESIDENTIALLY DECLARED DISAS5 TERS.—

6 ‘‘(1) IN GENERAL.—If the taxpayer’s principal

7 residence or any of its contents is compulsorily or in8 voluntarily converted as a result of a Presidentially

9 declared disaster—

10 ‘‘(A) TREATMENT OF INSURANCE PRO11 CEEDS.—

12 ‘‘(i) EXCLUSION FOR UNSCHEDULED

13 PERSONAL PROPERTY.—No gain shall be

14 recognized by reason of the receipt of any

15 insurance proceeds for personal property

16 which was part of such contents and which

17 was not scheduled property for purposes of

18 such insurance.

19 ‘‘(ii) OTHER PROCEEDS TREATED AS

20 COMMON FUND.—In the case of any insur21 ance proceeds (not described in clause (i))

22 for such residence or contents—

23 ‘‘(I) such proceeds shall be treat24 ed as received for the conversion of a

25 single item of property, and
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1 ‘‘(II) any property which is simi2 lar or related in service or use to the

3 residence so converted (or contents

4 thereof) shall be treated for purposes

5 of subsection (a)(2) as property simi6 lar or related in service or use to such

7 single item of property.

8 ‘‘(B) EXTENSION OF REPLACEMENT PE9 RIOD.—Subsection (a)(2)(B) shall be applied

10 with respect to any property so converted by

11 substituting ‘4 years’ for ‘2 years’.

12 ‘‘(2) PRESIDENTIALLY DECLARED DISASTER.—

13 For purposes of this subsection, the term ‘Presi14 dentially declared disaster’ means any disaster

15 which, with respect to the area in which the resi16 dence is located, resulted in a subsequent determina17 tion by the President that such area warrants assist18 ance by the Federal Government under the Disaster

19 Relief and Emergency Assistance Act.

20 ‘‘(3) PRINCIPAL RESIDENCE.—For purposes of

21 this subsection, the term ‘principal residence’ has

22 the same meaning as when used in section 1034, ex23 cept that no ownership requirement shall be im24 posed.’’
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to property compulsorily or in3 voluntarily converted as a result of disasters for which the

4 determination referred to in section 1033(h)(2) of the In5 ternal Revenue Code of 1986 (as added by this section)

6 is made on or after September 1, 1991, and to taxable

7 years ending on or after such date.

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