II 

115TH CONGRESS 

1ST SESSION S. 1907 

To amend the Internal Revenue Code of 1986 to provide tax relief for 

disaster areas, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 3, 2017 

Mr. NELSON 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 

tax relief for disaster areas, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘National Disaster Tax Relief Act of 2017’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TAX RELIEF RELATING TO DISASTERS 

Sec. 101. Expensing of qualified disaster expenses. 

Sec. 102. Net operating losses attributable to disasters. 


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Sec. 103. Increase in new markets tax credit for investments in community development entities serving disaster areas. 

Sec. 104. Exclusions of certain cancellations of indebtedness by reason of disasters. 

Sec. 105. Advanced refundings of certain tax-exempt bonds. 

Sec. 106. Additional low-income housing credit allocations. 

TITLE II—PERMANENT DISASTER TAX RELIEF PROVISIONS 

Sec. 201. Exclusion for disaster mitigation payments received from State and 

local governments. 

Sec. 202. Catastrophe Savings Accounts. 

TITLE III—OTHER PERMANENT TAX PROVISIONS 

Sec. 301. Repeal of limitation on cover over of distilled spirits taxes to Virgin 

Islands and Puerto Rico. 

Sec. 302. Deduction for income attributable to domestic production activities in 

Puerto Rico made permanent. 

Sec. 303. Refundable child tax credit parity for residents of Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the 

Virgin Islands. 

TITLE IV—TREATMENT OF CERTAIN POSSESSIONS 

Sec. 401. Treatment of possessions. 

1 TITLE I—TAX RELIEF RELATING 

2 TO DISASTERS 

3 SEC. 101. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

4 (a) IN GENERAL.—Part VI of subchapter B of chap5 ter 1 of the Internal Revenue Code of 1986 is amended 

6 by inserting after section 198 the following: 

7 ‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX8 PENSES. 

9 ‘‘(a) IN GENERAL.—A taxpayer may elect to treat 

10 any qualified disaster expenses which are paid or incurred 

11 by the taxpayer as an expense which is not chargeable to 

12 capital account. Any expense which is so treated shall be 

13 allowed as a deduction for the taxable year in which it 

14 is paid or incurred. 


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1 ‘‘(b) QUALIFIED DISASTER EXPENSE.—For purposes 

2 of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified dis4 aster expense’ means any expenditure— 

5 ‘‘(A) which is paid or incurred in connec6 tion with a trade or business or with business7 related property, 

8 ‘‘(B) which is— 

9 ‘‘(i) for the abatement or control of 

10 hazardous substances that were released 

11 due to a federally declared disaster occur12 ring during the period beginning on Janu13 ary 1, 2012, and ending on December 31, 

14 2022, 

15 ‘‘(ii) for the removal of debris from, 

16 or the demolition of structures on, real 

17 property which is business-related property 

18 and which is damaged or destroyed as a 

19 result of a federally declared disaster oc20 curring during such period, or 

21 ‘‘(iii) for the repair of business-related 

22 property damaged as a result of a federally 

23 declared disaster occurring during any 

24 such period, and 


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1 ‘‘(C) which is otherwise chargeable to cap2 ital account. 

3 ‘‘(2) SPECIAL RULE FOR REPLANTING OF CIT4 RUS PLANTS LOST BY REASON OF CASUALTY.— 

5 Amounts paid or incurred by a taxpayer in any tax6 able year beginning after December 31, 2016, for 

7 the replanting as described in section 263A(d)(2)(A) 

8 of citrus plants which were lost or damaged, due to 

9 disease or to a federally declared disaster, while such 

10 plants were in the hands of a person other than the 

11 taxpayer shall be treated as a qualified disaster ex12 pense of the taxpayer if— 

13 ‘‘(A) such other person has an equity in14 terest of not less than 50 percent in the re15 planted citrus plants at all times during the 

16 taxable year in which such amounts are paid or 

17 incurred, and the taxpayer holds any part of 

18 the remaining equity interest, or 

19 ‘‘(B) the taxpayer acquired the entirety of 

20 such other person’s equity interest in the land 

21 on which the lost or damaged citrus plants were 

22 located at the time of such loss or damage, and 

23 the replanting is on such land. 

24 ‘‘(c) OTHER DEFINITIONS.—For purposes of this 

25 section— 


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1 ‘‘(1) BUSINESS-RELATED PROPERTY.—The 

2 term ‘business-related property’ means property 

3 which is— 

4 ‘‘(A) held by the taxpayer for use in a 

5 trade or business or for the production of in6 come, or 

7 ‘‘(B) described in section 1221(a)(1) in the 

8 hands of the taxpayer. 

9 ‘‘(2) FEDERALLY DECLARED DISASTER.—The 

10 term ‘federally declared disaster’ has the meaning 

11 given such term by section 165(i)(5)(A). 

12 ‘‘(d) DEDUCTION RECAPTURED AS ORDINARY IN13 COME ON SALE, ETC.—Solely for purposes of section 

14 1245, in the case of property with respect to which a quali15 fied disaster expense would have been capitalized but for 

16 this section— 

17 ‘‘(1) the deduction allowed by this section for 

18 such expense shall be treated as a deduction for de19 preciation, and 

20 ‘‘(2) such property (if not otherwise section 

21 1245 property) shall be treated as section 1245 

22 property solely for purposes of applying section 1245 

23 to such deduction. 

24 ‘‘(e) COORDINATION WITH OTHER PROVISIONS.— 

25 Sections 198, 280B, and 468 shall not apply to amounts 


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1 which are treated as expenses not chargeable to capital 

2 account under this section. 

3 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

4 such regulations as may be necessary or appropriate to 

5 carry out the purposes of this section. 

6 ‘‘(g) TERMINATION.—This section shall not apply to 

7 amounts paid or incurred after December 31, 2023.’’. 

8 (b) CLERICAL AMENDMENT.—The table of sections 

9 for part VI of subchapter B of chapter 1 of the Internal 

10 Revenue Code of 1986 is amended by inserting after the 

11 item relating to section 198 the following item: 

‘‘Sec. 198A. Expensing of qualified disaster expenses.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to amounts paid or incurred after 

14 the date of the enactment of this Act. 

15 SEC. 102. NET OPERATING LOSSES ATTRIBUTABLE TO DIS16 ASTERS. 

17 (a) IN GENERAL.—Section 172(b)(1) of the Internal 

18 Revenue Code of 1986 is amended by adding at the end 

19 the following: 

20 ‘‘(G) CERTAIN LOSSES ATTRIBUTABLE TO

21 FEDERALLY DECLARED DISASTERS.—In the 

22 case of a taxpayer who has a qualified disaster 

23 loss (as defined in subsection (i)), such loss 

24 shall be a net operating loss carryback to each 


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1 of the 5 taxable years preceding the taxable 

2 year of such loss.’’. 

3 (b) RULES RELATING TO QUALIFIED DISASTER

4 LOSSES.—Section 172 of the Internal Revenue Code of 

5 1986 is amended by redesignating subsection (i) as sub6 section (j) and by inserting after subsection (h) the fol7 lowing: 

8 ‘‘(i) RULES RELATING TO QUALIFIED DISASTER

9 LOSSES.—For purposes of this section— 

10 ‘‘(1) IN GENERAL.—The term ‘qualified dis11 aster loss’ means the lesser of— 

12 ‘‘(A) the sum of— 

13 ‘‘(i) the losses allowable under section 

14 165 for the taxable year— 

15 ‘‘(I) attributable to a federally 

16 declared disaster (as defined in sec17 tion 165(i)(5)(A)) occurring after De18 cember 31, 2011, and before January 

19 1, 2023, and 

20 ‘‘(II) occurring in a disaster area 

21 (as defined in section 165(i)(5)(B)), 

22 and 

23 ‘‘(ii) the deduction for the taxable 

24 year for qualified disaster expenses which 

25 is allowable under section 198A(a), or 


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1 which would be so allowable if not other2 wise treated as an expense, or 

3 ‘‘(B) the net operating loss for the taxable 

4 year in which the taxpayer had the losses de5 scribed in subparagraph (A). 

6 ‘‘(2) EXCLUSION.—The term ‘qualified disaster 

7 loss’ shall not include any loss with respect to any 

8 property described in section 1400N(p)(3). 

9 ‘‘(3) COORDINATION WITH SUBSECTION

10 (b)(2).—For purposes of applying subsection (b)(2), 

11 a qualified disaster loss for any taxable year shall be 

12 treated in a manner similar to the manner in which 

13 a specified liability loss is treated. 

14 ‘‘(4) ELECTION.—Any taxpayer entitled to a 5- 

15 year carryback under subsection (b)(1)(G) from any 

16 loss year may elect to have the carryback period 

17 with respect to such loss year determined without re18 gard to subsection (b)(1)(G). Such election shall be 

19 made in such manner as may be prescribed by the 

20 Secretary and shall be made by the due date (includ21 ing extensions of time) for filing the taxpayer’s re22 turn for the taxable year of the net operating loss. 

23 Such election, once made for any taxable year, shall 

24 be irrevocable for such taxable year.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to losses arising in taxable years 

3 beginning after December 31, 2011. 

4 SEC. 103. INCREASE IN NEW MARKETS TAX CREDIT FOR IN5 VESTMENTS IN COMMUNITY DEVELOPMENT 

6 ENTITIES SERVING DISASTER AREAS. 

7 (a) IN GENERAL.—Subsection (f) of section 45D of 

8 the Internal Revenue Code of 1986 is amended by adding 

9 at the end the following new paragraph: 

10 ‘‘(4) INCREASED SPECIAL ALLOCATION FOR

11 COMMUNITY DEVELOPMENT ENTITIES SERVING DIS12 ASTER AREAS.— 

13 ‘‘(A) IN GENERAL.—In the case of each 

14 calendar year beginning after the date of the 

15 enactment of the National Disaster Tax Relief 

16 Act of 2017 and before January 1, 2023, for 

17 which there is a limitation under paragraph (1), 

18 such limitation shall be increased by 

19 $500,000,000, to be allocated among qualified 

20 community development entities to make quali21 fied low-income community investments within 

22 any covered federally declared disaster area. 

23 ‘‘(B) ALLOCATION OF INCREASE.—The 

24 amount of the increase in limitation under sub25 paragraph (A) shall be allocated by the SecVerDate Sep 11 2014 23:45 Oct 04, 2017 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1907.IS S1907

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1 retary under paragraph (2) to qualified commu2 nity development entities and shall give priority 

3 to such entities with a record of having success4 fully provided capital or technical assistance to 

5 businesses or communities within any covered 

6 federally declared disaster area or areas for 

7 which the allocation is requested. 

8 ‘‘(C) APPLICATION OF CARRYFORWARD.— 

9 Paragraph (3) shall be applied separately with 

10 respect to the amount of any increase under 

11 subparagraph (A). 

12 ‘‘(D) COVERED FEDERALLY DECLARED

13 DISASTER AREA.—For purposes of this para14 graph, the term ‘covered federally declared dis15 aster area’ means any disaster area with re16 spect to which a federally declared disaster is 

17 declared which occurs after December 31, 2011, 

18 and before January 1, 2023. For purposes of 

19 the preceding sentence, the terms ‘federally de20 clared disaster’ and ‘disaster area’ have the 

21 meanings given such terms in section 

22 165(i)(5).’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to calendar years beginning after 

25 December 31, 2016. 


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1 SEC. 104. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN2 DEBTEDNESS BY REASON OF DISASTERS. 

3 (a) IN GENERAL.—Section 108 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(j) DISCHARGE OF INDEBTEDNESS FOR INDIVID7 UALS AFFECTED BY DISASTERS.— 

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2), gross income shall not include any 

10 amount which (but for this subsection) would be in11 cludible in gross income by reason of any discharge 

12 (in whole or in part) of indebtedness of a natural 

13 person described in paragraph (3) by an applicable 

14 entity (as defined in section 6050P(c)(1)) during the 

15 applicable period. 

16 ‘‘(2) EXCEPTIONS FOR BUSINESS INDEBTED17 NESS.—Paragraph (1) shall not apply to any indebt18 edness incurred in connection with a trade or busi19 ness. 

20 ‘‘(3) PERSONS DESCRIBED.—A natural person 

21 is described in this paragraph if, with respect to any 

22 federally declared disaster occurring after December 

23 31, 2011, and before January 1, 2023, the principal 

24 place of abode of such person on the applicable dis25 aster date was located in the disaster area. 


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1 ‘‘(4) APPLICABLE PERIOD.—For purposes of 

2 this subsection, the term ‘applicable period’ means 

3 the period beginning on the applicable disaster date 

4 and ending on the date which is 24 months after 

5 such date. 

6 ‘‘(5) OTHER DEFINITIONS.—For purposes of 

7 this subsection— 

8 ‘‘(A) FEDERALLY DECLARED DISASTER; 

9 DISASTER AREA.—The terms ‘federally declared 

10 disaster’ and ‘disaster area’ have the meanings 

11 given such terms under section 165(i)(5). 

12 ‘‘(B) APPLICABLE DISASTER DATE.—The 

13 term ‘applicable disaster date’ means, with re14 spect to any federally declared disaster, the 

15 date on which such federally declared disaster 

16 occurs.’’. 

17 (b) EFFECTIVE DATE.—The amendment made by 

18 this section shall apply to discharges made on or after De19 cember 31, 2015. 

20 SEC. 105. ADVANCED REFUNDINGS OF CERTAIN TAX-EX21 EMPT BONDS. 

22 (a) IN GENERAL.—Section 149(d) of the Internal 

23 Revenue Code of 1986 is amended by redesignating para24 graph (7) as paragraph (8) and by inserting after para25 graph (6) the following new paragraph: 


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1 ‘‘(7) SPECIAL RULE WITH RESPECT TO CER2 TAIN NATURAL DISASTERS.— 

3 ‘‘(A) IN GENERAL.—With respect to a 

4 bond described in subparagraph (C), 1 addi5 tional advance refunding after the date of the 

6 enactment of the National Disaster Tax Relief 

7 Act of 2017 and before January 1, 2023, shall 

8 be allowed under the rules of this subsection 

9 if— 

10 ‘‘(i) the Governor of the State des11 ignates the advance refunding bond for 

12 purposes of this subsection, and 

13 ‘‘(ii) the requirements of subpara14 graph (E) are met. 

15 ‘‘(B) CERTAIN PRIVATE ACTIVITY

16 BONDS.—Subparagraph (A) shall apply with re17 spect to a bond described in subparagraph (C) 

18 which is an exempt facility bond described in 

19 paragraph (1) or (2) of section 142(a) notwith20 standing paragraph (2) of this subsection. 

21 ‘‘(C) BONDS DESCRIBED.—A bond is de22 scribed in this paragraph if, with respect to any 

23 federally declared disaster, such bond— 

24 ‘‘(i) was outstanding on the applicable 

25 disaster date, and 


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1 ‘‘(ii) is issued by an applicable State 

2 or a political subdivision thereof. 

3 ‘‘(D) AGGREGATE LIMIT.—The maximum 

4 aggregate face amount of bonds outstanding on 

5 any applicable disaster date which may be des6 ignated under this subsection by the Governor 

7 of a State shall not exceed $2,000,000,000. 

8 ‘‘(E) ADDITIONAL REQUIREMENTS.—The 

9 requirements of this subparagraph are met with 

10 respect to any advance refunding of a bond de11 scribed in subparagraph (C) if— 

12 ‘‘(i) no advance refundings of such 

13 bond would be allowed under this title on 

14 or after the applicable disaster date, 

15 ‘‘(ii) the advance refunding bond is 

16 the only other outstanding bond with re17 spect to the refunded bond, and 

18 ‘‘(iii) the requirements of section 148 

19 are met with respect to all bonds issued 

20 under this paragraph. 

21 ‘‘(F) DEFINITIONS.—For purposes of this 

22 subsection— 

23 ‘‘(i) FEDERALLY DECLARED DIS24 ASTER; DISASTER AREA.—The terms ‘fed25 erally declared disaster’ and ‘disaster area’ 


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1 have the meanings given such terms under 

2 section 165(i)(5). 

3 ‘‘(ii) APPLICABLE DISASTER DATE.— 

4 The term ‘applicable disaster date’ means, 

5 with respect to any federally declared dis6 aster, the date on which such federally de7 clared disaster occurs. 

8 ‘‘(iii) APPLICABLE STATE.—The term 

9 ‘applicable State’ means, with respect to 

10 any federally declared disaster, any State 

11 in which a portion of the disaster area is 

12 located.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to bonds issued after the date of 

15 the enactment of this Act. 

16 SEC. 106. ADDITIONAL LOW-INCOME HOUSING CREDIT AL17 LOCATIONS. 

18 (a) IN GENERAL.—Paragraph (3) of section 42(h) of 

19 the Internal Revenue Code of 1986 is amended by adding 

20 at the end the following new subparagraph: 

21 ‘‘(J) INCREASE IN STATE HOUSING CREDIT

22 FOR STATES DAMAGED BY NATURAL DISAS23 TERS.— 

24 ‘‘(i) IN GENERAL.—In the case of any 

25 calendar year beginning after the date of 


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1 the enactment of the National Disaster 

2 Tax Relief Act of 2017 and before January 

3 1, 2023, the State housing credit ceiling of 

4 each State any portion of which includes 

5 any portion of a qualifying disaster area 

6 shall be increased by so much of the aggre7 gate housing credit dollar amount as does 

8 not exceed the applicable limitation allo9 cated by the State housing credit agency of 

10 such State for such calendar year to build11 ings located in qualifying disaster areas. 

12 ‘‘(ii) APPLICABLE LIMITATION.—For 

13 purposes of clause (i), the applicable limi14 tation is the greater of— 

15 ‘‘(I) $8 multiplied by the popu16 lation of the qualifying disaster areas 

17 in such State, or 

18 ‘‘(II) 50 percent of the State 

19 housing credit ceiling (determined 

20 without regard to this subparagraph) 

21 for 2017. 

22 ‘‘(iii) APPLICABLE PERCENTAGE.— 

23 For purposes of this section, the applicable 

24 percentage with respect to any building to 

25 which amounts are allocated under clause 


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1 (i) shall be determined under subsection 

2 (b)(2). 

3 ‘‘(iv) ALLOCATIONS TREATED AS

4 MADE FIRST FROM ADDITIONAL ALLOCA5 TION AMOUNT FOR PURPOSES OF DETER6 MINING CARRYOVER.—For purposes of de7 termining the unused State housing credit 

8 ceiling under subparagraph (C) for any 

9 calendar year, any increase in the State 

10 housing credit ceiling under clause (i) shall 

11 be treated as an amount described in 

12 clause (ii) of such subparagraph. 

13 ‘‘(v) QUALIFYING DISASTER AREA.— 

14 For purposes of this subparagraph, the 

15 term ‘qualifying federally declared disaster 

16 area’ means— 

17 ‘‘(I) each county which is deter18 mined to warrant individual or indi19 vidual and public assistance from the 

20 Federal Government under a quali21 fying natural disaster declaration de22 scribed in clause (vi)(I), and 

23 ‘‘(II) each county not described 

24 in subclause (I) which is included in 

25 the geographical area covered by a 


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1 qualifying natural disaster declaration 

2 described in subclause (II) or (III) of 

3 clause (vi). 

4 ‘‘(vi) QUALIFYING NATURAL DISASTER

5 DECLARATION.—For purposes of clause 

6 (v), the term ‘qualifying natural disaster 

7 declaration’ means— 

8 ‘‘(I) a federally declared disaster 

9 (as defined in section 165(i)(5)) oc10 curring after December 31, 2011, and 

11 before January 1, 2023, or 

12 ‘‘(II) a natural disaster declared 

13 by the Secretary of Agriculture.’’. 

14 (b) ELIGIBILITY FOR DIFFICULT DEVELOPMENT

15 AREA.—For purposes of section 42 of the Internal Rev16 enue Code of 1986, any area located in a disaster area 

17 (as defined in section 165(i)(5)(B) of the Internal Rev18 enue Code of 1986) shall be designated a difficult develop19 ment area for purposes of section 42(d)(5)(B)(iii) of such 

20 Code for any 24-month period following the date of a fed21 erally declared disaster, if the area qualifies to be such 

22 a difficult development area at any time within such 24- 

23 month period. 


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1 (c) EFFECTIVE DATE.—The amendment made by 

2 this section shall take effect on the date of the enactment 

3 of this Act. 

4 TITLE II—PERMANENT DIS5 ASTER TAX RELIEF PROVI6 SIONS 

7 SEC. 201. EXCLUSION FOR DISASTER MITIGATION PAY8 MENTS RECEIVED FROM STATE AND LOCAL 

9 GOVERNMENTS. 

10 (a) IN GENERAL.—Paragraph (2) of section 139(g) 

11 of the Internal Revenue Code of 1986 is amended by in12 serting ‘‘, or any other amount which is paid by a State 

13 or local government or an agency or instrumentality there14 of,’’ after ‘‘(as in effect on such date)’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to payments received after the date 

17 of the enactment of this Act. 

18 SEC. 202. CATASTROPHE SAVINGS ACCOUNTS. 

19 (a) IN GENERAL.—Subchapter F of chapter 1 of the 

20 Internal Revenue Code of 1986 is amended by adding at 

21 the end the following new part: 

22 ‘‘PART IX—CATASTROPHE SAVINGS ACCOUNTS 

23 ‘‘SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS. 

24 ‘‘(a) GENERAL RULE.—A Catastrophe Savings Ac25 count shall be exempt from taxation under this subtitle. 


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1 Notwithstanding the preceding sentence, such account 

2 shall be subject to the taxes imposed by section 511 (relat3 ing to imposition of tax on unrelated business income of 

4 charitable organizations). 

5 ‘‘(b) CATASTROPHE SAVINGS ACCOUNT.—For pur6 poses of this section, the term ‘Catastrophe Savings Ac7 count’ means a trust created or organized in the United 

8 States for the exclusive benefit of an individual or the indi9 vidual’s beneficiaries and which is designated (in such 

10 manner as the Secretary shall prescribe) at the time of 

11 the establishment of the trust as a Catastrophe Savings 

12 Account, but only if the written governing instrument cre13 ating the trust meets the following requirements: 

14 ‘‘(1) Except in the case of a qualified rollover 

15 contribution— 

16 ‘‘(A) no contribution will be accepted un17 less it is in cash, and 

18 ‘‘(B) contributions will not be accepted in 

19 excess of the account balance limit specified in 

20 subsection (c). 

21 ‘‘(2) The trustee is a bank (as defined in sec22 tion 408(n)) or another person who demonstrates to 

23 the satisfaction of the Secretary that the manner in 

24 which that person will administer the trust will be 

25 consistent with the requirements of this section. 


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1 ‘‘(3) The interest of an individual in the bal2 ance of the individual’s account is nonforfeitable. 

3 ‘‘(4) The assets of the trust shall not be com4 mingled with other property except in a common 

5 trust fund or common investment fund. 

6 ‘‘(c) ACCOUNT BALANCE LIMIT.— 

7 ‘‘(1) IN GENERAL.—The aggregate account bal8 ance for all Catastrophe Savings Accounts main9 tained for the benefit of an individual (including 

10 qualified rollover contributions) shall not exceed— 

11 ‘‘(A) in the case of an individual whose 

12 qualified deductible is not more than $1,000, 

13 $75,000, and 

14 ‘‘(B) in the case of an individual whose 

15 qualified deductible is more than $1,000, 

16 $150,000. 

17 ‘‘(2) QUALIFIED DEDUCTIBLE.—For purposes 

18 of this subsection, with respect to an individual, the 

19 term ‘qualified deductible’ means the annual deduct20 ible for the individual’s homeowners’ insurance pol21 icy. 

22 ‘‘(d) QUALIFIED ROLLOVER CONTRIBUTION.—For 

23 purposes of this section, the term ‘qualified rollover con24 tribution’ means a contribution to a Catastrophe Savings 

25 Account— 


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1 ‘‘(1) from another such account of the same 

2 beneficiary, but only if such amount is contributed 

3 not later than the 60th day after the distribution 

4 from such other account, and 

5 ‘‘(2) from a Catastrophe Savings Account of a 

6 spouse of the beneficiary of the account to which the 

7 contribution is made, but only if such amount is 

8 contributed not later than the 60th day after the 

9 distribution from such other account. 

10 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

11 ‘‘(1) IN GENERAL.—Any distribution from a 

12 Catastrophe Savings Account shall be includible in 

13 the gross income of the distributee in the manner 

14 provided in section 72. 

15 ‘‘(2) DISTRIBUTIONS FOR QUALIFIED CATAS16 TROPHE EXPENSES.— 

17 ‘‘(A) IN GENERAL.—No amount shall be 

18 includible in gross income under paragraph (1) 

19 if the aggregate distributions during the taxable 

20 year do not exceed the qualified catastrophe ex21 penses of the distributee during such taxable 

22 year. 

23 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX24 PENSES.—If such aggregate distributions ex25 ceed such expenses during the taxable year, the 


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1 amount otherwise includible in gross income 

2 under paragraph (1) shall be reduced by the 

3 amount which bears the same ratio to the 

4 amount which would be includible in gross in5 come under paragraph (1) (without regard to 

6 this subparagraph) as the qualified catastrophe 

7 expenses bear to such aggregate distributions. 

8 ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT

9 USED FOR QUALIFIED CATASTROPHE EXPENSES.— 

10 The tax imposed by this chapter for any taxable 

11 year on any taxpayer who receives a payment or dis12 tribution from a Catastrophe Savings Account which 

13 is includible in gross income shall be increased by 10 

14 percent of the amount which is so includible. 

15 ‘‘(4) QUALIFIED CATASTROPHE EXPENSES.— 

16 For purposes of this subsection, the term ‘qualified 

17 catastrophe expenses’ means expenses paid or in18 curred by reason of a major disaster that has been 

19 declared by the President under section 401 of the 

20 Robert T. Stafford Disaster Relief and Emergency 

21 Assistance Act. 

22 ‘‘(5) EXCEPTION FOR RETIREMENT DISTRIBU23 TIONS.—No amount shall be includible in gross in24 come under paragraph (1) (or subject to an addi25 tional tax under paragraph (3)) if the payment or 


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1 distribution is made on or after the date on which 

2 the distributee attains age 62. 

3 ‘‘(f) TAX TREATMENT OF ACCOUNTS.—Rules similar 

4 to the rules of paragraphs (2) and (4) of section 408(e) 

5 shall apply to any Catastrophe Savings Account.’’. 

6 (b) TAX ON EXCESS CONTRIBUTIONS.— 

7 (1) IN GENERAL.—Subsection (a) of section 

8 4973 of the Internal Revenue Code of 1986 is 

9 amended by striking ‘‘or’’ at the end of paragraph 

10 (5), by inserting ‘‘or’’ at the end of paragraph (6), 

11 and by inserting after paragraph (6) the following 

12 new paragraph: 

13 ‘‘(7) a Catastrophe Savings Account (as defined 

14 in section 530A(b)),’’. 

15 (2) EXCESS CONTRIBUTION.—Section 4973 of 

16 such Code is amended by adding at the end the fol17 lowing new subsection: 

18 ‘‘(i) EXCESS CONTRIBUTIONS TO CATASTROPHE SAV19 INGS ACCOUNTS.—For purposes of this section, in the 

20 case of a Catastrophe Savings Account (as defined in sec21 tion 530A(b)), the term ‘excess contributions’ means the 

22 amount by which the aggregate account balance for all Ca23 tastrophe Savings Accounts maintained for the benefit of 

24 an individual exceeds the account balance limit under sec25 tion 530A(c)(1).’’. 


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•S 1907 IS

1 (c) CONFORMING AMENDMENT.—The table of parts 

2 for subchapter F of chapter 1 of the Internal Revenue 

3 Code of 1986 is amended by adding at the end the fol4 lowing new item: 

‘‘PART IX—CATASTROPHE SAVINGS ACCOUNTS’’. 

5 (d) CONTRIBUTIONS FROM INSURANCE COMPA6 NIES.—Subsection (c) of section 832 of the Internal Rev7 enue Code of 1986 is amended by striking ‘‘and’’ at the 

8 end of paragraph (12), by striking the period at the end 

9 of paragraph (13) and inserting ‘‘; and’’, and by adding 

10 at the end the following new paragraph: 

11 ‘‘(14) contributions to a Catastrophe Savings 

12 Account (as defined in section 530A(b)) during the 

13 taxable year to the extent such contributions are not 

14 excess contributions (as defined in section 

15 4973(i)).’’. 

16 (e) CUSTODIAL ACCOUNTS TREATED AS TRUST.— 

17 For purposes of this section, a custodial account shall be 

18 treated as a trust if— 

19 (1) the assets of such account are held by a 

20 bank (as defined in section 408(n) of the Internal 

21 Revenue Code of 1986) or another person who dem22 onstrates, to the satisfaction of the Secretary of the 

23 Treasury, that the manner in which such person will 

24 administer the account will be consistent with the re25 quirements of this section, and 


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1 (2) the custodial account would, except for the 

2 fact that it is not a trust, constitute a Catastrophe 

3 Savings Account (as defined in section 530A(b) of 

4 the Internal Revenue Code of 1986). 

5 In the case of a custodial account treated as a trust by 

6 reason of the preceding sentence, the custodian of such 

7 account shall be treated as the trustee thereof for purposes 

8 of the Internal Revenue Code of 1986. 

9 (f) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to taxable years beginning after 

11 December 31, 2017. 

12 TITLE III—OTHER PERMANENT 

13 TAX PROVISIONS 

14 SEC. 301. REPEAL OF LIMITATION ON COVER OVER OF DIS15 TILLED SPIRITS TAXES TO VIRGIN ISLANDS 

16 AND PUERTO RICO. 

17 (a) IN GENERAL.—Section 7652 of the Internal Rev18 enue Code of 1986 is amended by striking subsection (f) 

19 and by redesignating subsections (g) and (h) as sub20 sections (f) and (g), respectively. 

21 (b) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to distilled spirits brought into the 

23 United States after December 31, 2016. 


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•S 1907 IS

1 SEC. 302. DEDUCTION FOR INCOME ATTRIBUTABLE TO DO2 MESTIC PRODUCTION ACTIVITIES IN PUERTO 

3 RICO MADE PERMANENT. 

4 (a) IN GENERAL.—Section 199(d)(8) of the Internal 

5 Revenue Code of 1986 is amended by striking subpara6 graph (C). 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2016. 

10 SEC. 303. REFUNDABLE CHILD TAX CREDIT PARITY FOR 

11 RESIDENTS OF PUERTO RICO, AMERICAN 

12 SAMOA, GUAM, THE NORTHERN MARIANA IS13 LANDS, AND THE VIRGIN ISLANDS. 

14 (a) TREATMENT OF NON-MIRROR CODE POSSES15 SIONS.—Section 24(d) of the Internal Revenue Code of 

16 1986 is amended by inserting after paragraph (2) the fol17 lowing new paragraph: 

18 ‘‘(3) SPECIAL RULE FOR PUERTO RICO AND

19 AMERICAN SAMOA.—In the case of an individual who 

20 is a bona fide resident of Puerto Rico or American 

21 Samoa during the entire taxable year— 

22 ‘‘(A) paragraph (1)(B)(i) shall not apply, 

23 and 

24 ‘‘(B) paragraph (1)(B)(ii) shall be applied 

25 without regard to the number of qualifying chil26 dren of the taxpayer.’’. 


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•S 1907 IS

1 (b) TREATMENT OF MIRROR CODE POSSESSIONS.— 

2 (1) IN GENERAL.—The Secretary of the Treas3 ury shall pay to each mirror code possession of the 

4 United States amounts equal to the loss to that pos5 session by reason of the application of section 24(d) 

6 of the Internal Revenue Code of 1986 (determined 

7 as if paragraph (3) thereof, as added by this section, 

8 applied to bona fide residents of that possession) 

9 with respect to taxable years beginning after Decem10 ber 31, 2017. Such amounts shall be determined by 

11 the Secretary of the Treasury based on information 

12 provided by the government of the respective posses13 sion. 

14 (2) POSSESSION OF THE UNITED STATES.—For 

15 purposes of this subsection, the term ‘‘mirror code 

16 possession of the United States’’ means Guam, the 

17 Northern Mariana Islands, and the Virgin Islands. 

18 (3) TREATMENT OF PAYMENTS.—For purposes 

19 of section 1324(b)(2) of title 31, United States 

20 Code, the payments under this subsection shall be 

21 treated in the same manner as a refund due from 

22 the credit allowed under section 24 of the Internal 

23 Revenue Code of 1986 by reason of subsection (d) 

24 of such section. 


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•S 1907 IS

1 (c) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2017. 

4 TITLE IV—TREATMENT OF 

5 CERTAIN POSSESSIONS 

6 SEC. 401. TREATMENT OF POSSESSIONS. 

7 (a) PAYMENTS TO POSSESSIONS.— 

8 (1) MIRROR CODE POSSESSIONS.—The Sec9 retary of the Treasury shall pay to each possession 

10 of the United States with a mirror code tax system 

11 amounts equal to the loss to that possession by rea12 son of the application of sections 101, 104, and 201. 

13 Such amounts shall be determined by the Secretary 

14 of the Treasury based on information provided by 

15 the government of the respective possession. 

16 (2) OTHER POSSESSIONS.—The Secretary of 

17 the Treasury shall pay to each possession of the 

18 United States which does not have a mirror code tax 

19 system amounts estimated by the Secretary of the 

20 Treasury as being equal to the aggregate benefits 

21 that would have been provided to residents of such 

22 possession by reason of the application of sections 

23 101, 104, and 201 if a mirror code tax system had 

24 been in effect in such possession. The preceding sen25 tence shall not apply with respect to any possession 


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•S 1907 IS

1 of the United States unless such possession has a 

2 plan, which has been approved by the Secretary of 

3 the Treasury, under which such possession will 

4 promptly distribute such payments to the residents 

5 of such possession. 

6 (b) COORDINATION WITH CREDIT ALLOWED

7 AGAINST UNITED STATES INCOME TAXES.—No increase 

8 in any credit, deduction, or exclusion determined under 

9 section 198A, 108(j), or 139(g) of the Internal Revenue 

10 Code of 1986 against United States income taxes for any 

11 taxable year shall be taken into account with respect to 

12 any person— 

13 (1) to whom the corresponding credit, deduc14 tion, or exclusion is allowed against taxes imposed 

15 by the possession by reason of section 101, 104, or 

16 201, whichever is applicable, for such taxable year, 

17 or 

18 (2) who is eligible for a payment under a plan 

19 described in subsection (a)(2) with respect to such 

20 credit, deduction, or exclusion for the taxable year. 

21 (c) DEFINITIONS AND SPECIAL RULES.— 

22 (1) POSSESSION OF THE UNITED STATES.—For 

23 purposes of this subsection, the term ‘‘possession of 

24 the United States’’ includes the Commonwealth of 


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1 Puerto Rico and the Commonwealth of the Northern 

2 Mariana Islands. 

3 (2) MIRROR CODE TAX SYSTEM.—For purposes 

4 of this subsection, the term ‘‘mirror code tax sys5 tem’’ means, with respect to any possession of the 

6 United States, the income tax system of such posses7 sion if the income tax liability of the residents of 

8 such possession under such system is determined by 

9 reference to the income tax laws of the United 

10 States as if such possession were the United States. 

11 (3) TREATMENT OF PAYMENTS.—For purposes 

12 of section 1324(b)(2) of title 31, United States 

13 Code, rules similar to the rules of section 

14 1001(b)(3)(C) of the American Recovery and Rein15 vestment Tax Act of 2009 shall apply. 

Æ 


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