I 

114TH CONGRESS 

1ST SESSION H. R. 3110 

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

major disasters declared in any of calendar years 2012 through 2015, 

to make certain tax relief provisions permanent, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 16, 2015 

Mr. REED (for himself, Mr. PASCRELL, Mr. HARPER, Mr. RANGEL, Mr. KING

of New York, Mr. THOMPSON of California, Ms. DELBENE, Mr. GIBSON, 

Mr. COLE, Mr. RODNEY DAVIS of Illinois, Mr. DENT, Mr. KELLY of 

Pennsylvania, Mr. MEEHAN, Mr. SMITH of New Jersey, and Mr. 

FITZPATRICK) 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 provide 

tax relief for major disasters declared in any of calendar 

years 2012 through 2015, to make certain tax relief 

provisions permanent, 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 2015’’. 

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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TAX RELIEF RELATING TO DISASTERS IN 2012, 2013, 

2014, AND 2015 

Sec. 101. Expensing of qualified disaster expenses. 

Sec. 102. Increased limitation on charitable contributions for disaster relief. 

Sec. 103. Losses attributable to disasters in 2012, 2013, 2014, and 2015. 

Sec. 104. Net operating losses attributable to disasters in 2012, 2013, 2014, 

and 2015. 

Sec. 105. Waiver of certain mortgage revenue bond requirements following 

2012, 2013, 2014, and 2015 disasters. 

Sec. 106. Increased expensing and bonus depreciation for qualified disaster assistance property following 2012, 2013, 2014, and 2015 disasters. 

Sec. 107. Increase in new markets tax credit for investments in community development entities serving 2012, 2013, 2014, and 2015 disaster areas. 

Sec. 108. Special rules for use of retirement funds in connection with federally 

declared disasters in 2012, 2013, 2014, and 2015. 

Sec. 109. Additional exemption for housing qualified disaster displaced individuals. 

Sec. 110. Exclusions of certain cancellations of indebtedness by reason of 2012, 

2013, 2014, and 2015 disasters. 

Sec. 111. Special rule for determining earned income of individuals affected by 

federally declared disasters. 

Sec. 112. Increase in rehabilitation credit for buildings in 2012, 2013, 2014, 

and 2015 disaster areas. 

Sec. 113. Advanced refundings of certain tax-exempt bonds. 

Sec. 114. Qualified disaster area recovery bonds. 

Sec. 115. Additional low-income housing credit allocations. 

Sec. 116. Facilitation of transfer of water leasing and water by mutual ditch 

or irrigation companies in disaster areas. 

TITLE II—OTHER DISASTER TAX RELIEF PROVISIONS 

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

local governments. 

Sec. 202. Natural disaster funds. 

TITLE III—PERMANENT DISASTER TAX RELIEF PROVISIONS 

Sec. 301. Increase property replacement period to 5 years. 

Sec. 302. Wage credit for specified disaster-damaged businesses. 

Sec. 303. Disaster-related medical expenses. 

Sec. 304. Expensing of qualified disaster expenses. 

Sec. 305. Losses attributable to disasters. 

Sec. 306. Net operating losses attributable to disasters. 

Sec. 307. Special rules for use of retirement funds in connection with federally 

declared disasters. 

Sec. 308. Additional exemption for housing qualified disaster displaced individuals. 

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Sec. 309. Exclusions of certain cancellations of indebtedness by reason of disasters. 

Sec. 310. Special rule for determining earned income of individuals affected by 

federally declared disasters. 

Sec. 311. Qualified disaster area recovery bonds. 

Sec. 312. Additional low-income housing credit allocations. 

1 TITLE I—TAX RELIEF RELATING 

2 TO DISASTERS IN 2012, 2013, 

3 2014, AND 2015 

4 SEC. 101. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

5 (a) IN GENERAL.—Part VI of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 is amended 

7 by inserting after section 198 the following: 

8 ‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX9 PENSES. 

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

11 any qualified disaster expenses which are paid or incurred 

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

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

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

15 is paid or incurred. 

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

17 of this section, the term ‘qualified disaster expense’ means 

18 any expenditure— 

19 ‘‘(1) which is paid or incurred in connection 

20 with a trade or business or with business-related 

21 property, 

22 ‘‘(2) which is— 

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1 ‘‘(A) for the abatement or control of haz2 ardous substances that were released on ac3 count of a federally declared disaster occurring 

4 during the period beginning— 

5 ‘‘(i) after December 31, 2007, and be6 fore January 1, 2010, or 

7 ‘‘(ii) after December 31, 2011, and 

8 before January 1, 2016, 

9 ‘‘(B) for the removal of debris from, or the 

10 demolition of structures on, real property which 

11 is business-related property damaged or de12 stroyed as a result of a federally declared dis13 aster occurring during any such period, or 

14 ‘‘(C) for the repair of business-related 

15 property damaged as a result of a federally de16 clared disaster occurring during any such pe17 riod, and 

18 ‘‘(3) which is otherwise chargeable to capital ac19 count. 

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

21 section— 

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

23 term ‘business-related property’ means property— 

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

2 trade or business or for the production of in3 come, or 

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

5 hands of the taxpayer. 

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

7 term ‘federally declared disaster’ has the meaning 

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

9 ‘‘(d) DEDUCTION RECAPTURED AS ORDINARY IN10 COME ON SALE, ETC.—Solely for purposes of section 

11 1245, in the case of property to which a qualified disaster 

12 expense would have been capitalized but for this section— 

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

14 such expense shall be treated as a deduction for de15 preciation, and 

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

17 1245 property) shall be treated as section 1245 

18 property solely for purposes of applying section 1245 

19 to such deduction. 

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

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

22 which are treated as expenses under this section. 

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

24 such regulations as may be necessary or appropriate to 

25 carry out the purposes of this section.’’. 

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

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

3 Revenue Code of 1986 is amended by inserting after the 

4 item relating to section 198 the following item: 

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

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

6 this section shall apply to amounts paid or incurred after 

7 December 31, 2011, in connection with disasters declared 

8 after such date. 

9 SEC. 102. INCREASED LIMITATION ON CHARITABLE CON10 TRIBUTIONS FOR DISASTER RELIEF. 

11 (a) INDIVIDUALS.—Paragraph (1) of section 170(b) 

12 of the Internal Revenue Code of 1986 is amended by re13 designating subparagraphs (F) and (G) as subparagraphs 

14 (G) and (H), respectively, and by inserting after subpara15 graph (E) the following new subparagraph: 

16 ‘‘(F) QUALIFIED DISASTER CONTRIBU17 TIONS.— 

18 ‘‘(i) IN GENERAL.—Any qualified dis19 aster contribution shall be allowed to the 

20 extent that the aggregate of such contribu21 tions does not exceed the excess of 80 per22 cent of the taxpayer’s contribution base 

23 over the amount of all other charitable 

24 contributions allowable under this para25 graph. 

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1 ‘‘(ii) CARRYOVER.—If the aggregate 

2 amount of contributions described in clause 

3 (i) exceeds the limitation under clause (i), 

4 such excess shall be treated (in a manner 

5 consistent with the rules of subsection 

6 (d)(1)) as a charitable contribution to 

7 which clause (i) applies in each of the 5 

8 succeeding years in order of time. 

9 ‘‘(iii) COORDINATION WITH OTHER

10 SUBPARAGRAPHS.—For purposes of apply11 ing this subsection and subsection (d)(1), 

12 contributions described in clause (i) shall 

13 not be treated as described in subpara14 graph (A) and such subparagraph shall be 

15 applied without regard to such contribu16 tions. 

17 ‘‘(iv) QUALIFIED DISASTER CON18 TRIBUTIONS.—For purposes of this sub19 paragraph, the term ‘qualified disaster 

20 contribution’ means any charitable con21 tribution if— 

22 ‘‘(I) such contribution is for re23 lief efforts related to a federally de24 clared disaster (as defined in section 

25 165(h)(3)(C)(i)), 

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1 ‘‘(II) such contribution is made 

2 during the period beginning on the 

3 applicable disaster date with respect 

4 to the disaster described in subclause 

5 (I) and ending on December 31, 

6 2015, and 

7 ‘‘(III) such contribution is made 

8 in cash to an organization described 

9 in subparagraph (A) (other than an 

10 organization described in section 

11 509(a)(3)). 

12 Such term shall not include a contribution 

13 if the contribution is for establishment of 

14 a new, or maintenance in an existing, 

15 donor advised fund (as defined in section 

16 4966(d)(2)). 

17 ‘‘(v) APPLICABLE DISASTER DATE.— 

18 For purposes of clause (iv)(II), the term 

19 ‘applicable disaster date’ means, with re20 spect to any federally declared disaster de21 scribed in clause (iv)(I), the date on which 

22 the disaster giving rise to the Presidential 

23 declaration described in section 

24 165(i)(5)(A) occurred. 

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1 ‘‘(vi) SUBSTANTIATION REQUIRE2 MENT.—This paragraph shall not apply to 

3 any qualified disaster contribution unless 

4 the taxpayer obtains from such organiza5 tion to which the contribution was made a 

6 contemporaneous written acknowledgment 

7 (within the meaning of subsection (f)(8)) 

8 that such contribution was used (or is to 

9 be used) for a purpose described in clause 

10 (iv)(III).’’. 

11 (b) CORPORATIONS.— 

12 (1) IN GENERAL.—Paragraph (2) of section 

13 170(b) of the Internal Revenue Code of 1986 is 

14 amended by redesignating subparagraph (C) as sub15 paragraph (D) and by inserting after subparagraph 

16 (B) the following new subparagraph: 

17 ‘‘(C) QUALIFIED DISASTER CONTRIBU18 TIONS.— 

19 ‘‘(i) IN GENERAL.—Any qualified dis20 aster contribution shall be allowed to the 

21 extent that the aggregate of such contribu22 tions does not exceed the excess of 20 per23 cent of the taxpayer’s taxable income over 

24 the amount of charitable contributions al25 lowed under subparagraph (A). 

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1 ‘‘(ii) CARRYOVER.—If the aggregate 

2 amount of contributions described in clause 

3 (i) exceeds the limitation under clause (i), 

4 such excess shall be treated (in a manner 

5 consistent with the rules of subsection 

6 (d)(1)) as a charitable contribution to 

7 which clause (i) applies in each of the 5 

8 succeeding years in order of time. 

9 ‘‘(iii) QUALIFIED DISASTER CON10 TRIBUTION.—The term ‘qualified disaster 

11 contribution’ has the meaning given such 

12 term under paragraph (2)(F)(iv). 

13 ‘‘(iv) SUBSTANTIATION REQUIRE14 MENT.—This paragraph shall not apply to 

15 any qualified disaster contribution unless 

16 the taxpayer obtains from such organiza17 tion to which the contribution was made a 

18 contemporaneous written acknowledgment 

19 (within the meaning of subsection (f)(8)) 

20 that such contribution was used (or is to 

21 be used) for a purpose described in para22 graph (1)(F)(iv)(III).’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Subparagraph (A) of section 170(b)(2) 

25 of such Code is amended by striking ‘‘subparamstockstill on DSK4VPTVN1PROD with BILLS

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1 graph (B) applies’’ and inserting ‘‘subpara2 graphs (B) and (C) apply’’. 

3 (B) Subparagraph (B) of section 170(b)(2) 

4 of such Code is amended by striking ‘‘subpara5 graph (A)’’ and inserting ‘‘subparagraphs (A) 

6 and (C)’’. 

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

8 this section shall apply to disasters arising in taxable years 

9 ending after December 31, 2011. 

10 SEC. 103. LOSSES ATTRIBUTABLE TO DISASTERS IN 2012, 

11 2013, 2014, AND 2015. 

12 (a) IN GENERAL.—Section 165(h) of the Internal 

13 Revenue Code of 1986 is amended by redesignating para14 graphs (3) and (4) as paragraphs (4) and (5), respectively, 

15 and by inserting after paragraph (2) the following: 

16 ‘‘(3) SPECIAL RULE FOR LOSSES IN FEDERALLY

17 DECLARED DISASTERS.— 

18 ‘‘(A) IN GENERAL.—If an individual has a 

19 net disaster loss for any taxable year, the 

20 amount determined under paragraph (2)(A)(ii) 

21 shall be the sum of— 

22 ‘‘(i) such net disaster loss, and 

23 ‘‘(ii) so much of the excess referred to 

24 in the matter preceding clause (i) of para25 graph (2)(A) (reduced by the amount in 

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1 clause (i) of this subparagraph) as exceeds 

2 10 percent of the adjusted gross income of 

3 the individual. 

4 ‘‘(B) NET DISASTER LOSS.—For purposes 

5 of subparagraph (A), the term ‘net disaster 

6 loss’ means the excess of— 

7 ‘‘(i) the personal casualty losses— 

8 ‘‘(I) attributable to a federally 

9 declared disaster occurring during the 

10 period beginning after December 31, 

11 2007, and before January 1, 2010, or 

12 during the period beginning after De13 cember 31, 2011, and before January 

14 1, 2016, and 

15 ‘‘(II) occurring in a disaster 

16 area, over 

17 ‘‘(ii) personal casualty gains. 

18 ‘‘(C) FEDERALLY DECLARED DISASTER.— 

19 For purposes of this paragraph— 

20 ‘‘(i) FEDERALLY DECLARED DIS21 ASTER.—The term ‘federally declared dis22 aster’ has the meaning given such term by 

23 subsection (i)(5)(A). 

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1 ‘‘(ii) DISASTER AREA.—The term ‘dis2 aster area’ has the meaning given such 

3 term by subsection (i)(5)(B).’’. 

4 (b) CONFORMING AMENDMENT.—Paragraph (4) of 

5 section 165(h) of such Code, as so redesignated, is amend6 ed by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs 

7 (2) and (3)’’. 

8 (c) LOSS ALLOWED WHETHER OR NOT INDIVIDUAL

9 ITEMIZED DEDUCTIONS.—Section 62(a) of the Internal 

10 Revenue Code of 1986 is amended by inserting after para11 graph (21) the following new paragraph: 

12 ‘‘(22) DISASTER CASUALTY LOSSES.—Any net 

13 disaster loss (as defined in section 165(h)(3)(B)).’’. 

14 (d) TECHNICAL AMENDMENT.—Subparagraph (A) of 

15 section 165(i)(5) of the Internal Revenue Code of 1986 

16 is amended by inserting ‘‘major’’ after ‘‘means any’’. 

17 (e) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to disasters declared in taxable 

19 years beginning after December 31, 2011. 

20 (f) USE OF AMENDED INCOME TAX RETURNS TO

21 TAKE INTO ACCOUNT RECEIPT OF CERTAIN CASUALTY

22 LOSS GRANTS BY DISALLOWING PREVIOUSLY TAKEN

23 CASUALTY LOSS DEDUCTIONS.— 

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1 (1) IN GENERAL.—Notwithstanding any other 

2 provision of the Internal Revenue Code of 1986, if 

3 a taxpayer— 

4 (A) claims a deduction for any taxable year 

5 with respect to a casualty loss to a principal 

6 residence (within the meaning of section 121 of 

7 such Code) resulting from any federally de8 clared disaster (as defined in section 

9 165(h)(3)(C) of such Code) occurring during 

10 the period beginning after December 31, 2011, 

11 and before January 1, 2016, and 

12 (B) in a subsequent taxable year receives 

13 a grant under any Federal or State program as 

14 reimbursement for such loss, 

15 such taxpayer may elect to file an amended income 

16 tax return for the taxable year in which such deduc17 tion was allowed (and for any taxable year to which 

18 such deduction is carried) and reduce (but not below 

19 zero) the amount of such deduction by the amount 

20 of such reimbursement. 

21 (2) TIME OF FILING AMENDED RETURN.— 

22 Paragraph (1) shall apply with respect to any grant 

23 only if any amended income tax returns with respect 

24 to such grant are filed not later than the later of— 

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1 (A) the due date for filing the tax return 

2 for the taxable year in which the taxpayer re3 ceives such grant, or 

4 (B) the date which is 1 year after the date 

5 of the enactment of this Act. 

6 (3) WAIVER OF PENALTIES AND INTEREST.— 

7 Any underpayment of tax resulting from the reduc8 tion under paragraph (1) of the amount otherwise 

9 allowable as a deduction shall not be subject to any 

10 penalty or interest under such Code if such tax is 

11 paid not later than 1 year after the filing of the 

12 amended return to which such reduction relates. 

13 SEC. 104. NET OPERATING LOSSES ATTRIBUTABLE TO DIS14 ASTERS IN 2012, 2013, 2014, AND 2015. 

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

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

17 the following: 

18 ‘‘(G) CERTAIN LOSSES ATTRIBUTABLE

19 FEDERALLY DECLARED DISASTERS.—In the 

20 case of a taxpayer who has a qualified disaster 

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

22 shall be a net operating loss carryback to each 

23 of the 5 taxable years preceding the taxable 

24 year of such loss.’’. 

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1 (b) RULES RELATING TO QUALIFIED DISASTER

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

3 1986 is amended by redesignating subsection (i) a sub4 section (j) and by inserting after subsection (h) the fol5 lowing: 

6 ‘‘(i) RULES RELATING TO QUALIFIED DISASTER

7 LOSSES.—For purposes of this section— 

8 ‘‘(1) IN GENERAL.—The term ‘qualified dis9 aster loss’ means the lesser of— 

10 ‘‘(A) the sum of— 

11 ‘‘(i) the losses allowable under section 

12 165 for the taxable year— 

13 ‘‘(I) attributable to a federally 

14 declared disaster (as defined in sec15 tion 165(i)(5)(A)) occurring during 

16 the period beginning after December 

17 31, 2007, and before January 1, 

18 2010, or during the period beginning 

19 after December 31, 2011, and before 

20 January 1, 2016, and 

21 ‘‘(II) occurring in a disaster area 

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

23 and 

24 ‘‘(ii) the deduction for the taxable 

25 year for qualified disaster expenses which 

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1 is allowable under section 198A(a) or 

2 which would be so allowable if not other3 wise treated as an expense, or 

4 ‘‘(B) the net operating loss for such tax5 able year. 

6 ‘‘(2) COORDINATION WITH SUBSECTION

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

8 a qualified disaster loss for any taxable year shall be 

9 treated in a manner similar to the manner in which 

10 a specified liability loss is treated. 

11 ‘‘(3) ELECTION.—Any taxpayer entitled to a 5- 

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

13 loss year may elect to have the carryback period 

14 with respect to such loss year determined without re15 gard to subsection (b)(1)(G). Such election shall be 

16 made in such manner as may be prescribed by the 

17 Secretary and shall be made by the due date (includ18 ing extensions of time) for filing the taxpayer’s re19 turn for the taxable year of the net operating loss. 

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

21 be irrevocable for such taxable year. 

22 ‘‘(4) EXCLUSION.—The term ‘qualified disaster 

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

24 property described in section 1400N(p)(3).’’. 

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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, in connection with 

4 disasters declared after such date. 

5 SEC. 105. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 

6 REQUIREMENTS FOLLOWING 2012, 2013, 2014, 

7 AND 2015 DISASTERS. 

8 (a) IN GENERAL.—Paragraph (13) of section 143(k) 

9 of the Internal Revenue Code of 1986 is amended by strik10 ing ‘‘before January 1, 2010’’ in subparagraphs (A)(i) and 

11 (B)(i) of such paragraph and inserting ‘‘during the period 

12 beginning after December 31, 2007, and before January 

13 1, 2010, or during the period beginning after December 

14 31, 2011, and before January 1, 2016’’. 

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

16 this section shall apply to disasters occurring after Decem17 ber 31, 2011. 

18 SEC. 106. INCREASED EXPENSING AND BONUS DEPRECIA19 TION FOR QUALIFIED DISASTER ASSISTANCE 

20 PROPERTY FOLLOWING 2012, 2013, 2014, AND 

21 2015 DISASTERS. 

22 (a) IN GENERAL.—Subclause (I) of section 

23 168(n)(2)(A)(ii) of the Internal Revenue Code of 1986 is 

24 amended by striking ‘‘before January 1, 2010’’ and insert25 ing ‘‘during the period beginning after December 31, 

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1 2007, and before January 1, 2010, or during the period 

2 beginning after December 31, 2011, and before January 

3 1, 2016’’. 

4 (b) REMOVAL OF EXCLUSION.—Section 

5 168(n)(2)(B)(i) of such Code is amended by inserting 

6 ‘‘and’’ at the end of subclause (I), by striking ‘‘, and’’ 

7 at the end of subclause (II) and inserting a period, and 

8 by striking subclause (III). 

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

10 this section shall apply to property placed in service after 

11 December 31, 2011, with respect to disasters declared 

12 after such date. 

13 SEC. 107. INCREASE IN NEW MARKETS TAX CREDIT FOR IN14 VESTMENTS IN COMMUNITY DEVELOPMENT 

15 ENTITIES SERVING 2012, 2013, 2014, AND 2015 

16 DISASTER AREAS. 

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

18 the Internal Revenue Code of 1986 is amended by adding 

19 at the end the following new paragraph: 

20 ‘‘(4) INCREASED SPECIAL ALLOCATION FOR

21 COMMUNITY DEVELOPMENT ENTITIES SERVING DIS22 ASTER AREAS WITH RESPECT TO DISASTERS OCCUR23 RING IN ANY OF CALENDAR YEARS 2012 THROUGH

24 2015.— 

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

2 calendar year which begins after 2012 and be3 fore 2017, the new markets tax credit limitation 

4 shall be increased by an amount equal to 

5 $500,000,000, to be allocated among qualified 

6 community development entities to make quali7 fied low-income community investments within 

8 any covered federally declared disaster area. 

9 ‘‘(B) ALLOCATION OF INCREASE.—The 

10 amount of the increase in limitation under sub11 paragraph (A) shall be allocated by the Sec12 retary under paragraph (2) to qualified commu13 nity development entities and shall give priority 

14 to such entities with a record of having success15 fully provided capital or technical assistance to 

16 businesses or communities within any covered 

17 federally declared disaster area or areas for 

18 which the allocation is requested. 

19 ‘‘(C) APPLICATION OF CARRYFORWARD.— 

20 Paragraph (3) shall be applied separately with 

21 respect to the amount of any increase under 

22 subparagraph (A). 

23 ‘‘(D) COVERED FEDERALLY DECLARED

24 DISASTER AREA.—For purposes of this para25 graph, the term ‘covered federally declared dismstockstill on DSK4VPTVN1PROD with BILLS

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1 aster area’ means any disaster area resulting 

2 from any federally declared disaster occurring 

3 after December 31, 2011, and before January 

4 1, 2016. For purposes of the preceding sen5 tence, the terms ‘federally declared disaster’ 

6 and ‘disaster area’ have the meanings given 

7 such terms in section 165(i)(5).’’. 

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

9 this section shall apply to calendar years beginning after 

10 2012. 

11 SEC. 108. SPECIAL RULES FOR USE OF RETIREMENT FUNDS 

12 IN CONNECTION WITH FEDERALLY DE13 CLARED DISASTERS IN 2012, 2013, 2014, AND 

14 2015. 

15 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE16 MENT PLANS.— 

17 (1) IN GENERAL.—Paragraph (2) of section 

18 72(t) of the Internal Revenue Code of 1986 is 

19 amended by adding at the end the following new 

20 subparagraph: 

21 ‘‘(H) DISTRIBUTIONS FROM RETIREMENT

22 PLANS IN CONNECTION WITH FEDERALLY DE23 CLARED DISASTERS DURING IN ANY CALENDAR

24 YEARS AFTER 2011.—Any qualified disaster re25 covery distribution.’’. 

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1 (2) QUALIFIED DISASTER RECOVERY DISTRIBU2 TION.—Section 72(t) of such Code is amended by 

3 adding at the end the following new paragraph: 

4 ‘‘(11) QUALIFIED DISASTER RECOVERY DIS5 TRIBUTION.—For purposes of paragraph (2)(H)— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (B), the term ‘qualified disaster 

8 recovery distribution’ means, with respect to 

9 any federally declared disaster occurring in any 

10 calendar year beginning after 2011 and before 

11 January 1, 2016, any distribution from an eli12 gible retirement plan made on or after the ap13 plicable disaster date and before the date that 

14 is 1 year after the applicable disaster date, to 

15 an individual whose principal place of abode on 

16 the applicable disaster date, is located in the 

17 disaster area and who has sustained an eco18 nomic loss by reason of such federally declared 

19 disaster. 

20 ‘‘(B) DOLLAR LIMITATION.— 

21 ‘‘(i) IN GENERAL.—For purposes of 

22 this subsection, the aggregate amount of 

23 distributions received by an individual with 

24 respect to any federally declared disaster 

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1 ginning after 2011 shall not exceed 

2 $100,000. 

3 ‘‘(ii) TREATMENT OF PLAN DISTRIBU4 TIONS.—If a distribution to an individual 

5 would (without regard to clause (i)) be a 

6 qualified disaster recovery distribution, a 

7 plan shall not be treated as violating any 

8 requirement of this title merely because 

9 the plan treats such distribution as a 

10 qualified disaster recovery distribution, un11 less the aggregate amount of such distribu12 tions from all plans maintained by the em13 ployer (and any member of any controlled 

14 group which includes the employer) to such 

15 individual with respect to any federally de16 clared disaster occurring in any calendar 

17 year beginning after 2011 exceeds 

18 $100,000. 

19 ‘‘(iii) CONTROLLED GROUP.—For pur20 poses of clause (ii), the term ‘controlled 

21 group’ means any group treated as a single 

22 employer under subsection (b), (c), (m), or 

23 (o) of section 414. 

24 ‘‘(C) AMOUNT DISTRIBUTED MAY BE RE25 PAID.— 

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1 ‘‘(i) IN GENERAL.—Any individual 

2 who receives a qualified disaster recovery 

3 distribution may, at any time during the 3- 

4 year period beginning on the day after the 

5 date on which such distribution was re6 ceived, make one or more contributions in 

7 an aggregate amount not to exceed the 

8 amount of such distribution to an eligible 

9 retirement plan of which such individual is 

10 a beneficiary and to which a rollover con11 tribution of such distribution could be 

12 made under section 402(c), 403(a)(4), 

13 403(b)(8), 408(d)(3), or 457(e)(16), as the 

14 case may be. 

15 ‘‘(ii) TREATMENT OF REPAYMENTS OF

16 DISTRIBUTIONS FROM ELIGIBLE RETIRE17 MENT PLANS OTHER THAN IRAS.—For 

18 purposes of this title, if a contribution is 

19 made pursuant to clause (i) with respect to 

20 a qualified disaster recovery distribution 

21 from an eligible retirement plan other than 

22 an individual retirement plan, then the tax23 payer shall, to the extent of the amount of 

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1 tribution in an eligible rollover distribution 

2 (as defined in section 402(c)(4)) and as 

3 having transferred the amount to the eligi4 ble retirement plan in a direct trustee to 

5 trustee transfer within 60 days of the dis6 tribution. 

7 ‘‘(iii) TREATMENT OF REPAYMENTS

8 FOR DISTRIBUTIONS FROM IRAS.—For 

9 purposes of this title, if a contribution is 

10 made pursuant to clause (i) with respect to 

11 a qualified disaster recovery distribution 

12 from an individual retirement plan (as de13 fined by section 7701(a)(37)), then, to the 

14 extent of the amount of the contribution, 

15 the qualified disaster recovery distribution 

16 shall be treated as a distribution described 

17 in section 408(d)(3) and as having been 

18 transferred to the eligible retirement plan 

19 in a direct trustee to trustee transfer with20 in 60 days of the distribution. 

21 ‘‘(D) INCOME INCLUSION SPREAD OVER 3- 

22 YEAR PERIOD.— 

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

24 qualified disaster recovery distribution, un25 less the taxpayer elects not to have this 

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1 paragraph apply for any taxable year, any 

2 amount required to be included in gross in3 come for such taxable year shall be so in4 cluded ratably over the 3-taxable-year pe5 riod beginning with such taxable year. 

6 ‘‘(ii) SPECIAL RULE.—For purposes of 

7 clause (i), rules similar to the rules of sub8 paragraph (E) of section 408A(d)(3) shall 

9 apply. 

10 ‘‘(E) OTHER DEFINITIONS.— 

11 ‘‘(i) FEDERALLY DECLARED DIS12 ASTER; DISASTER AREA.—The terms ‘fed13 erally declared disaster’ and ‘disaster area’ 

14 have the meanings given such terms under 

15 section 165(i)(5). 

16 ‘‘(ii) APPLICABLE DISASTER DATE.— 

17 The term ‘applicable disaster date’ means, 

18 with respect to any federally declared dis19 aster, the date on which such federally de20 clared disaster occurs. 

21 ‘‘(iii) ELIGIBLE RETIREMENT PLAN.— 

22 The term ‘eligible retirement plan’ shall 

23 have the meaning given such term by sec24 tion 402(c)(8)(B). 

25 ‘‘(F) SPECIAL RULES.— 

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1 ‘‘(i) EXEMPTION OF DISTRIBUTIONS

2 FROM TRUSTEE TO TRUSTEE TRANSFER

3 AND WITHHOLDING RULES.—For purposes 

4 of sections 401(a)(31), 402(f), and 3405, 

5 qualified disaster recovery distributions 

6 shall not be treated as eligible rollover dis7 tributions. 

8 ‘‘(ii) QUALIFIED DISASTER RECOVERY

9 DISTRIBUTIONS TREATED AS MEETING

10 PLAN DISTRIBUTION REQUIREMENTS.— 

11 For purposes of this title, a qualified dis12 aster recovery distribution shall be treated 

13 as meeting the requirements of sections 

14 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 

15 403(b)(11), and 457(d)(1)(A).’’. 

16 (3) EFFECTIVE DATE.—The amendments made 

17 by this subsection shall apply to distributions with 

18 respect to disaster declared after December 31, 

19 2011. 

20 (b) LOANS FROM QUALIFIED PLANS.— 

21 (1) IN GENERAL.—Subsection (p) of section 72 

22 of the Internal Revenue Code of 1986 is amended by 

23 adding at the end the following new paragraph: 

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1 ‘‘(6) INCREASE IN LIMIT ON LOANS NOT TREAT2 ED AS DISTRIBUTIONS WITH RESPECT TO DISASTERS

3 IN ANY CALENDAR YEAR AFTER 2011.— 

4 ‘‘(A) IN GENERAL.—In the case of any 

5 loan from a qualified employer plan to a quali6 fied individual made during the applicable pe7 riod— 

8 ‘‘(i) clause (i) of paragraph (2)(A) 

9 shall be applied by substituting ‘$100,000’ 

10 for ‘$50,000’, and 

11 ‘‘(ii) clause (ii) of such paragraph 

12 shall be applied by substituting ‘the 

13 present value of the nonforfeitable accrued 

14 benefit of the employee under the plan’ for 

15 ‘one-half of the present value of the non16 forfeitable accrued benefit of the employee 

17 under the plan’. 

18 ‘‘(B) DELAY OF REPAYMENT.—In the case 

19 of a qualified individual with an outstanding 

20 loan on or after the applicable disaster date 

21 from a qualified employer plan— 

22 ‘‘(i) if the due date pursuant to sub23 paragraph (B) or (C) of paragraph (2) for 

24 any repayment with respect to such loan 

25 occurs during the 1-year period beginning 

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1 on the applicable disaster date, such due 

2 date shall be delayed for 1 year, 

3 ‘‘(ii) any subsequent repayments with 

4 respect to any such loan shall be appro5 priately adjusted to reflect the delay in the 

6 due date under clause (i) and any interest 

7 accruing during such delay, and 

8 ‘‘(iii) in determining the 5-year period 

9 and the term of a loan under subpara10 graph (B) or (C) of paragraph (2), the pe11 riod described in clause (i) shall be dis12 regarded. 

13 ‘‘(C) DEFINITIONS.—For purposes of this 

14 paragraph— 

15 ‘‘(i) QUALIFIED INDIVIDUAL.—The 

16 term ‘qualified individual’ means, with re17 spect to any federally declared disaster oc18 curring during in any calendar year begin19 ning after 2011, an individual whose prin20 cipal place of abode on the applicable dis21 aster date is located in the disaster area 

22 and who has sustained an economic loss by 

23 reason of such federally declared disaster. 

24 ‘‘(ii) APPLICABLE PERIOD.—The ap25 plicable period is the period beginning on 

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1 the applicable disaster date and ending on 

2 December 31, 2016. 

3 ‘‘(iii) FEDERALLY DECLARED DIS4 ASTER; DISASTER AREA.—The terms ‘fed5 erally declared disaster’ and ‘disaster area’ 

6 have the meanings given such terms under 

7 section 165(i)(5). 

8 ‘‘(iv) APPLICABLE DISASTER DATE.— 

9 The term ‘applicable disaster date’ means, 

10 with respect to any federally declared dis11 aster, the date on which such federally de12 clared disaster occurs.’’. 

13 (2) EFFECTIVE DATE.—The amendment made 

14 by this subsection shall apply to loans made with re15 spect to disaster declared after December 31, 2011. 

16 (c) PROVISIONS RELATING TO PLAN AMEND17 MENTS.— 

18 (1) IN GENERAL.—If this subsection applies to 

19 any amendment to any plan or annuity contract, 

20 such plan or contract shall be treated as being oper21 ated in accordance with the terms of the plan during 

22 the period described in paragraph (2)(B)(i). 

23 (2) AMENDMENTS TO WHICH SUBSECTION AP24 PLIES.— 

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1 (A) IN GENERAL.—This subsection shall 

2 apply to any amendment to any plan or annuity 

3 contract which is made— 

4 (i) pursuant to any provision of, or 

5 amendment made by, this section, or pur6 suant to any regulation issued by the Sec7 retary or the Secretary of Labor under any 

8 provision of, or amendment made by, this 

9 section, and 

10 (ii) on or before the last day of the 

11 first plan year beginning on or after Janu12 ary 1, 2016, or such later date as the Sec13 retary may prescribe. 

14 In the case of a governmental plan (as defined 

15 in section 414(d)), clause (ii) shall be applied 

16 by substituting the date which is 2 years after 

17 the date otherwise applied under clause (ii). 

18 (B) CONDITIONS.—This subsection shall 

19 not apply to any amendment unless— 

20 (i) during the period— 

21 (I) beginning on the date that 

22 the provisions of, and amendments 

23 made by, this section or the regulation 

24 described in subparagraph (A)(i) 

25 takes effect (or in the case of a plan 

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1 or contract amendment not required 

2 by the provisions of, or amendments 

3 made by, this section or such regula4 tion, the effective date specified by the 

5 plan), and 

6 (II) ending on the date described 

7 in subparagraph (A)(ii) (or, if earlier, 

8 the date the plan or contract amend9 ment is adopted), 

10 the plan or contract is operated as if such 

11 plan or contract amendment were in effect; 

12 and 

13 (ii) such plan or contract amendment 

14 applies retroactively for such period. 

15 SEC. 109. ADDITIONAL EXEMPTION FOR HOUSING QUALI16 FIED DISASTER DISPLACED INDIVIDUALS. 

17 (a) IN GENERAL.—Section 151 of the Internal Rev18 enue Code of 1986 is amended by adding at the end the 

19 following new subsection: 

20 ‘‘(f) ADDITIONAL EXEMPTION FOR CERTAIN DIS21 ASTER-DISPLACED INDIVIDUALS.— 

22 ‘‘(1) IN GENERAL.—In the case of any taxable 

23 year beginning in any calendar year beginning after 

24 2011, there shall be allowed an exemption of $500 

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1 for each qualified disaster-displaced individual with 

2 respect to the taxpayer for the taxable year. 

3 ‘‘(2) LIMITATIONS.— 

4 ‘‘(A) DOLLAR LIMITATION.—The exemp5 tion under paragraph (1) shall not exceed 

6 $2,000, reduced by the amount of the exemp7 tion under this subsection for all prior taxable 

8 years. 

9 ‘‘(B) INDIVIDUALS TAKEN INTO ACCOUNT

10 ONLY ONCE.—An individual shall not be taken 

11 into account under paragraph (1) if such indi12 vidual was taken into account under this sub13 section by the taxpayer for any prior taxable 

14 year. 

15 ‘‘(C) IDENTIFYING INFORMATION RE16 QUIRED.—An individual shall not be taken into 

17 account under paragraph (1) for a taxable year 

18 unless the taxpayer identification number of 

19 such individual is included on the return of the 

20 taxpayer for such taxable year. 

21 ‘‘(3) QUALIFIED DISASTER-DISPLACED INDI22 VIDUAL.— 

23 ‘‘(A) IN GENERAL.—For purposes of this 

24 subsection, the term ‘qualified disaster-dis25 placed individual’ means, with respect to any 

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1 taxpayer for any taxable year, any qualified in2 dividual if such individual is provided housing 

3 free of charge by the taxpayer in the principal 

4 residence of the taxpayer for a period of 60 

5 consecutive days which ends in such taxable 

6 year. Such term shall not include the spouse or 

7 any dependent of the taxpayer. 

8 ‘‘(B) QUALIFIED INDIVIDUAL.—The term 

9 ‘qualified individual’ means any individual 

10 who— 

11 ‘‘(i) on the date of a federally declared 

12 disaster occurring in calendar years begin13 ning after 2011 and before 2016 main14 tained such individual’s principal place of 

15 abode in the disaster area declared with re16 spect to such disaster, and 

17 ‘‘(ii) was displaced from such prin18 cipal place of abode by reason of the feder19 ally declared disaster. 

20 For purposes of the preceding sentence, the 

21 terms ‘federally declared disaster’ and ‘disaster 

22 area’ have the meanings given such terms in 

23 section 165(i)(5). 

24 ‘‘(4) COMPENSATION FOR HOUSING.—No de25 duction shall be allowed under this subsection if the 

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1 taxpayer receives any rent or other amount (from 

2 any source) in connection with the providing of such 

3 housing.’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2011. 

7 SEC. 110. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN8 DEBTEDNESS BY REASON OF 2012, 2013, 2014, 

9 AND 2015 DISASTERS. 

10 (a) IN GENERAL.—Section 108 of the Internal Rev11 enue Code of 1986 is amended by adding at the end the 

12 following new subsection: 

13 ‘‘(j) DISCHARGE OF INDEBTEDNESS FOR INDIVID14 UALS AFFECTED BY DISASTERS IN ANY CALENDAR YEAR

15 AFTER 2011.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (2), gross income shall not include any 

18 amount which (but for this subsection) would be in19 cludible in gross income by reason of any discharge 

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

21 person described in paragraph (3) by an applicable 

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

23 applicable period. 

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1 edness incurred in connection with a trade or busi2 ness. 

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

4 is described in this paragraph if the principal place 

5 of abode of such person on the applicable disaster 

6 date was located in the disaster area with respect to 

7 any federally declared disaster occurring during any 

8 calendar year beginning after 2011 and before 2016. 

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

10 this subsection, the term ‘applicable period’ means 

11 the period beginning on the applicable disaster date 

12 and ending on the date which is 14 months after 

13 such date. 

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

15 this subsection— 

16 ‘‘(A) FEDERALLY DECLARED DISASTER; 

17 DISASTER AREA.—The terms ‘federally declared 

18 disaster’ and ‘disaster area’ have the meanings 

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

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

21 term ‘applicable disaster date’ means, with re22 spect to any federally declared disaster, the 

23 date on which such federally declared disaster 

24 occurs.’’. 

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

2 this section shall apply to discharges made on or after De3 cember 31, 2011. 

4 SEC. 111. SPECIAL RULE FOR DETERMINING EARNED IN5 COME OF INDIVIDUALS AFFECTED BY FEDER6 ALLY DECLARED DISASTERS. 

7 (a) IN GENERAL.—Section 32 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(n) SPECIAL RULE FOR DETERMINING EARNED IN11 COME OF TAXPAYERS AFFECTED BY FEDERALLY DE12 CLARED DISASTERS.— 

13 ‘‘(1) IN GENERAL.—In the case of a qualified 

14 individual with respect to any federally declared dis15 aster occurring during any calendar year beginning 

16 after 2011, if the earned income of the taxpayer for 

17 the taxable year which includes the applicable dis18 aster date is less than the earned income of the tax19 payer for the preceding taxable year, the credit al20 lowed under this section and section 24(d) may, at 

21 the election of the taxpayer, be determined by sub22 stituting— 

23 ‘‘(A) such earned income for the preceding 

24 taxable year, for 

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1 ‘‘(B) such earned income for the taxable 

2 year which includes the applicable date. 

3 ‘‘(2) QUALIFIED INDIVIDUAL.—For purposes of 

4 this subsection, the term ‘qualified individual’ 

5 means, with respect to any federally declared dis6 aster occurring during in any calendar year begin7 ning after 2011 and before 2016, any individual 

8 whose principal place of abode on the applicable dis9 aster date, was located— 

10 ‘‘(A) in any portion of a disaster area de11 termined by the President to warrant individual 

12 or individual and public assistance under the 

13 Robert T. Stafford Disaster Relief and Emer14 gency Assistance Act by reason of the federally 

15 declared disaster, or 

16 ‘‘(B) in any portion of the disaster area 

17 not described in subparagraph (A) and such in18 dividual was displaced from such principal place 

19 of abode by reason of the federally declared dis20 aster. 

21 ‘‘(3) OTHER DEFINITIONS.—For purposes of 

22 this paragraph— 

23 ‘‘(A) FEDERALLY DECLARED DISASTER; 

24 DISASTER AREA.—The terms ‘federally declared 

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1 disaster’ and ‘disaster area’ have the meanings 

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

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

4 term ‘applicable disaster date’ means, with re5 spect to any federally declared disaster, the 

6 date on which such federally declared disaster 

7 occurs. 

8 ‘‘(4) SPECIAL RULES.— 

9 ‘‘(A) APPLICATION TO JOINT RETURNS.— 

10 For purposes of paragraph (1), in the case of 

11 a joint return for a taxable year which includes 

12 the disaster date— 

13 ‘‘(i) such paragraph shall apply if ei14 ther spouse is a qualified individual, and 

15 ‘‘(ii) the earned income of the tax16 payer for the preceding taxable year shall 

17 be the sum of the earned income of each 

18 spouse for such preceding taxable year. 

19 ‘‘(B) UNIFORM APPLICATION OF ELEC20 TION.—Any election made under paragraph (1) 

21 shall apply with respect to both section 24(d) 

22 and this section. 

23 ‘‘(C) ERRORS TREATED AS MATHEMATICAL

24 ERROR.—For purposes of section 6213, an in25 correct use on a return of earned income pursumstockstill on DSK4VPTVN1PROD with BILLS

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1 ant to paragraph (1) shall be treated as a 

2 mathematical or clerical error. 

3 ‘‘(D) NO EFFECT ON DETERMINATION OF

4 GROSS INCOME, ETC.—Except as otherwise pro5 vided in this subsection, this title shall be ap6 plied without regard to any substitution under 

7 paragraph (1).’’. 

8 (b) CHILD TAX CREDIT.—Section 24(d) of the Inter9 nal Revenue Code of 1986 is amended by adding at the 

10 end the following new paragraph: 

11 ‘‘(5) SPECIAL RULE FOR DETERMINING

12 EARNED INCOME OF TAXPAYERS AFFECTED BY FED13 ERALLY DECLARED DISASTERS.—For election by 

14 qualified individuals with respect to certain federally 

15 declared disasters to substitute earned income from 

16 the preceding taxable year, see section 32(n).’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2011. 

20 SEC. 112. INCREASE IN REHABILITATION CREDIT FOR 

21 BUILDINGS IN 2012, 2013, 2014, AND 2015 DIS22 ASTER AREAS. 

23 (a) IN GENERAL.—Section 47 of the Internal Rev24 enue Code of 1986 is amended by adding at the end the 

25 following new subsection: 

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1 ‘‘(e) SPECIAL RULE FOR EXPENDITURES MADE IN

2 CONNECTION WITH CERTAIN DISASTERS.— 

3 ‘‘(1) IN GENERAL.—In the case of qualified re4 habilitation expenditures paid or incurred during the 

5 applicable period with respect to any qualified reha6 bilitated building or certified historic structure lo7 cated in a disaster area with respect to any federally 

8 declared disaster occurring in, subsection (a) shall 

9 be applied— 

10 ‘‘(A) by substituting ‘13 percent’ for ‘10 

11 percent’ in paragraph (1) thereof, and 

12 ‘‘(B) by substituting ‘26 percent’ for ‘20 

13 percent’ in paragraph (2) thereof. 

14 ‘‘(2) DEFINITIONS.—For purposes of this sub15 section— 

16 ‘‘(A) FEDERALLY DECLARED DISASTER; 

17 DISASTER AREA.—The terms ‘federally declared 

18 disaster’ and ‘disaster area’ have the meanings 

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

20 ‘‘(B) APPLICABLE PERIOD.—The term ‘ap21 plicable period’ means the period beginning on 

22 the applicable disaster date and ending on De23 cember 31, 2015. 

24 ‘‘(C) APPLICABLE DISASTER DATE.—The 

25 term ‘applicable disaster date’ means, with remstockstill on DSK4VPTVN1PROD with BILLS

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1 spect to any federally declared disaster, the 

2 date on which such federally declared disaster 

3 occurs.’’. 

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

5 this section shall apply to amounts paid or incurred after 

6 December 31, 2011. 

7 SEC. 113. ADVANCED REFUNDINGS OF CERTAIN TAX-EX8 EMPT BONDS. 

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

10 Revenue Code of 1986 is amended by redesignating para11 graph (7) as paragraph (8) and by inserting after para12 graph (6) the following new paragraph: 

13 ‘‘(7) SPECIAL RULE WITH RESPECT TO CER14 TAIN NATURAL DISASTERS.— 

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

16 bond described in subparagraph (C), one addi17 tional advance refunding after the date of the 

18 enactment of this paragraph and before Janu19 ary 1, 2018, shall be allowed under the rules of 

20 this subsection if— 

21 ‘‘(i) the Governor of the State des22 ignates the advance refunding bond for 

23 purposes of this subsection, and 

24 ‘‘(ii) the requirements of subpara25 graph (E) are met. 

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1 ‘‘(B) CERTAIN PRIVATE ACTIVITY

2 BONDS.—With respect to a bond described in 

3 subparagraph (C) which is an exempt facility 

4 bond described in paragraph (1) or (2) of sec5 tion 142(a), one advance refunding after the 

6 date of the enactment of this paragraph and be7 fore January 1, 2018, shall be allowed under 

8 the applicable rules of this subsection (notwith9 standing paragraph (2) thereof) if the require10 ments of clauses (i) and (ii) of subparagraph 

11 (A) are met. 

12 ‘‘(C) BONDS DESCRIBED.—A bond is de13 scribed in this paragraph if, with respect to any 

14 federally declared disaster, such bond— 

15 ‘‘(i) was outstanding on the applicable 

16 disaster date, and 

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

18 or a political subdivision thereof. 

19 ‘‘(D) AGGREGATE LIMIT.—The maximum 

20 aggregate face amount of bonds which may be 

21 designated under this subsection by the Gov22 ernor of a State shall not exceed 

23 $4,500,000,000. 

24 ‘‘(E) ADDITIONAL REQUIREMENTS.—The 

25 requirements of this subparagraph are met with 

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1 respect to any advance refunding of a bond de2 scribed in subparagraph (C) if— 

3 ‘‘(i) no advance refundings of such 

4 bond would be allowed under this title on 

5 or after the applicable disaster date, 

6 ‘‘(ii) the advance refunding bond is 

7 the only other outstanding bond with re8 spect to the refunded bond, and 

9 ‘‘(iii) the requirements of section 148 

10 are met with respect to all bonds issued 

11 under this paragraph. 

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

13 subsection— 

14 ‘‘(i) FEDERALLY DECLARED DIS15 ASTER; DISASTER AREA.—The terms ‘fed16 erally declared disaster’ and ‘disaster area’ 

17 have the meanings given such terms under 

18 section 165(i)(5). 

19 ‘‘(ii) APPLICABLE DISASTER DATE.— 

20 The term ‘applicable disaster date’ means, 

21 with respect to any federally declared dis22 aster, the date on which such federally de23 clared disaster occurs. 

24 ‘‘(iii) APPLICABLE STATE.—The term 

25 ‘applicable State’ means, with respect to 

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1 any federally declared disaster, any State 

2 in which a portion of the disaster area is 

3 located.’’. 

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

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

6 the enactment of this Act. 

7 SEC. 114. QUALIFIED DISASTER AREA RECOVERY BONDS. 

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter B of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by inserting after section 146 the fol11 lowing new section: 

12 ‘‘SEC. 146A. QUALIFIED DISASTER AREA RECOVERY BONDS. 

13 ‘‘(a) IN GENERAL.—For purposes of this title, any 

14 qualified disaster area recovery bond shall— 

15 ‘‘(1) be treated as an exempt facility bond, and 

16 ‘‘(2) not be subject to section 146. 

17 ‘‘(b) QUALIFIED DISASTER AREA RECOVERY

18 BOND.—For purposes of this section, the term ‘qualified 

19 disaster area recovery bond’ means any bond issued as 

20 part of an issue if— 

21 ‘‘(1) 95 percent or more of the net proceeds of 

22 such issue are to be used for qualified project costs, 

23 ‘‘(2) such bond is issued by a State or any po24 litical subdivision thereof any part of which is in a 

25 qualified disaster area, 

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1 ‘‘(3) the Governor of the issuing State des2 ignates such bond for purposes of this section, and 

3 ‘‘(4) such bond is issued after the date of the 

4 enactment of this section and before January 1, 

5 2017. 

6 ‘‘(c) LIMITATION ON AMOUNT OF BONDS.— 

7 ‘‘(1) IN GENERAL.—The maximum aggregate 

8 face amount of bonds which may be designated 

9 under this section by any State shall not exceed 

10 $10,000,000,000. 

11 ‘‘(2) MOVABLE PROPERTY.—No bonds shall be 

12 issued which are to be used for movable fixtures and 

13 equipment. 

14 ‘‘(3) TREATMENT OF CURRENT REFUNDING

15 BONDS.—Paragraph (1) shall not apply to any bond 

16 (or series of bonds) issued to refund a qualified dis17 aster area recovery bond, if— 

18 ‘‘(A) the average maturity date of the issue 

19 of which the refunding bond is a part is not 

20 later than the average maturity date of the 

21 bonds to be refunded by such issue, 

22 ‘‘(B) the amount of the refunding bond 

23 does not exceed the outstanding amount of the 

24 refunded bond, and 

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1 ‘‘(C) the net proceeds of the refunding 

2 bond are used to redeem the refunded bond not 

3 later than 90 days after the date of the 

4 issuance of the refunding bond. 

5 For purposes of subparagraph (A), average maturity 

6 shall be determined in accordance with section 

7 147(b)(2)(A). 

8 ‘‘(d) QUALIFIED PROJECT COSTS.—For purposes of 

9 this section, the term ‘qualified project costs’ means the 

10 cost of acquisition, construction, reconstruction, and ren11 ovation of— 

12 ‘‘(1) residential rental property (as defined in 

13 section 142(d)), 

14 ‘‘(2) nonresidential real property (including 

15 fixed improvements associated with such property), 

16 ‘‘(3) a facility described in paragraph (2) or (3) 

17 of section 142(a), or 

18 ‘‘(4) public utility property (as defined in sec19 tion 168(i)(10)), 

20 which is located in a qualified disaster area and was dam21 aged or destroyed by reason of a federally declared dis22 aster. 

23 ‘‘(e) SPECIAL RULES.—In applying this title to any 

24 qualified disaster area recovery bond, the following modi25 fications shall apply: 

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1 ‘‘(1) Section 147(d) (relating to acquisition of 

2 existing property not permitted) shall be applied by 

3 substituting ‘50 percent’ for ‘15 percent’ each place 

4 it appears. 

5 ‘‘(2) Section 148(f)(4)(C) (relating to exception 

6 from rebate for certain proceeds to be used to fi7 nance construction expenditures) shall apply to the 

8 available construction proceeds of bonds issued 

9 under this section. For purposes of the preceding 

10 sentence, the following spending requirements shall 

11 apply in lieu of the requirements in clause (ii) of 

12 such section: 

13 ‘‘(A) 40 percent of such available construc14 tion proceeds are spent for the governmental 

15 purposes of the issue within the 2-year period 

16 beginning on the date the bonds are issued, 

17 ‘‘(B) 60 percent of such proceeds are spent 

18 for such purposes within the 3-year period be19 ginning on such date, 

20 ‘‘(C) 80 percent of such proceeds are spent 

21 for such purposes within the 4-year period be22 ginning on such date, and 

23 ‘‘(D) 100 percent of such proceeds are 

24 spent for such purposes within the 5-year pe25 riod beginning on such date. 

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1 ‘‘(3) Repayments of principal on financing pro2 vided by the issue— 

3 ‘‘(A) may not be used to provide financing, 

4 and 

5 ‘‘(B) must be used not later than the close 

6 of the first semiannual period beginning after 

7 the date of the repayment to redeem bonds 

8 which are part of such issue. 

9 The requirement of subparagraph (B) shall be treat10 ed as met with respect to amounts received within 

11 5 years after the date of issuance of the issue (or, 

12 in the case of a refunding bond, the date of issuance 

13 of the original bond) if such amounts are used by 

14 the close of such 5 years to redeem bonds which are 

15 part of such issue. 

16 ‘‘(4) Section 57(a)(5) shall not apply. 

17 ‘‘(f) SEPARATE ISSUE TREATMENT OF PORTIONS OF

18 AN ISSUE.—This section shall not apply to the portion of 

19 an issue which (if issued as a separate issue) would be 

20 treated as a qualified bond or as a bond that is not a 

21 private activity bond (determined without regard to para22 graph (1)), if the issuer elects to so treat such portion. 

23 ‘‘(g) QUALIFIED DISASTER AREA; FEDERALLY DE24 CLARED DISASTER.— 

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1 ‘‘(1) QUALIFIED DISASTER AREA.—The term 

2 ‘qualified disaster area’ means any area determined 

3 to warrant individual or individual and public assist4 ance from the Federal Government under the Robert 

5 T. Stafford Disaster Relief and Emergency Assist6 ance Act by reason of a federally declared disaster 

7 occurring during the period beginning after Decem8 ber 31, 2011, and before January 1, 2016. 

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

10 term ‘federally declared disaster’ has the meaning 

11 given to such term under section 165(i)(5).’’. 

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

13 for subpart A of part IV of subchapter B of chapter 1 

14 of such Code is amended by inserting after the item relat15 ing to section 146 the following new item: 

‘‘Sec. 146A. Qualified disaster area recovery bonds.’’. 

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

17 this section shall apply to obligations issued after Decem18 ber 31, 2015. 

19 SEC. 115. ADDITIONAL LOW-INCOME HOUSING CREDIT AL20 LOCATIONS. 

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

22 the Internal Revenue Code of 1986 (relating to limitation 

23 on aggregate credit allowable with respect to projects lo24 cated in a State) is amended by adding at the end the 

25 following new subparagraph: 

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1 ‘‘(J) INCREASE IN STATE HOUSING CREDIT

2 FOR STATES DAMAGED BY NATURAL DISAS3 TERS.— 

4 ‘‘(i) IN GENERAL.—In the case of cal5 endar year 2016, the State housing credit 

6 ceiling of each State any portion of which 

7 includes any portion of a qualifying dis8 aster area shall be increased by so much of 

9 the aggregate housing credit dollar amount 

10 as does not exceed the applicable limitation 

11 allocated by the State housing credit agen12 cy of such State for such calendar year to 

13 buildings located in qualifying disaster 

14 areas. 

15 ‘‘(ii) APPLICABLE LIMITATION.—For 

16 purposes of clause (i), the applicable limi17 tation is the greater of— 

18 ‘‘(I) $8 multiplied by the popu19 lation of the qualifying disaster areas 

20 in such State, or 

21 ‘‘(II) 50 percent of the State 

22 housing credit ceiling (determined 

23 without regard to this subparagraph) 

24 for 2015. 

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1 ‘‘(iii) APPLICABLE PERCENTAGE.— 

2 For purposes of this section, the applicable 

3 percentage with respect to any building to 

4 which amounts allocated under clause (i) 

5 shall be determined under subsection 

6 (b)(2), except that subparagraph (A) 

7 thereof shall be applied by substituting 

8 ‘January 1, 2016’ for ‘January 1, 2015’. 

9 ‘‘(iv) ALLOCATIONS TREATED AS

10 MADE FIRST FROM ADDITIONAL ALLOCA11 TION AMOUNT FOR PURPOSES OF DETER12 MINING CARRYOVER.—For purposes of de13 termining the unused State housing credit 

14 ceiling under subparagraph (C) for any 

15 calendar year, any increase in the State 

16 housing credit ceiling under clause (i) shall 

17 be treated as an amount described in 

18 clause (ii) of such subparagraph. 

19 ‘‘(v) QUALIFYING DISASTER AREA.— 

20 For purposes of this subparagraph, the 

21 term ‘qualifying federally declared disaster 

22 area’ means— 

23 ‘‘(I) each county which is deter24 mined to warrant individual or indi25 vidual and public assistance from the 

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1 Federal Government under a quali2 fying natural disaster declaration de3 scribed in clause (vi)(I), and 

4 ‘‘(II) each county not described 

5 in subclause (I) which is included in 

6 the geographical area covered by a 

7 qualifying natural disaster declaration 

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

9 clause (vi). 

10 ‘‘(vi) QUALIFYING NATURAL DISASTER

11 DECLARATION.—For purposes of clause 

12 (v), the term ‘qualifying natural disaster 

13 declaration’ means— 

14 ‘‘(I) a federally declared disaster 

15 (as defined in section 165(i)(5)) oc16 curring during the period beginning 

17 after December 31, 2011, and before 

18 January 1, 2016, 

19 ‘‘(II) a natural disaster declared 

20 by the Secretary of Agriculture in 

21 2011 due to damaging weather and 

22 other conditions relating to Hurricane 

23 Irene or Tropical Storm Lee under 

24 section 321(a) of the Consolidated 

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1 Farm and Rural Development Act (7 

2 U.S.C. 1961(a)), or 

3 ‘‘(III) a major disaster or emer4 gency designated by the President in 

5 2011 due to damaging weather and 

6 other conditions relating to Hurricane 

7 Irene or Tropical Storm Lee under 

8 the Robert T. Stafford Disaster Relief 

9 and Emergency Assistance Act (42 

10 U.S.C. 5121 et seq.).’’. 

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

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

13 of this Act. 

14 SEC. 116. FACILITATION OF TRANSFER OF WATER LEASING 

15 AND WATER BY MUTUAL DITCH OR IRRIGA16 TION COMPANIES IN DISASTER AREAS. 

17 (a) IN GENERAL.—Paragraph (12) of section 501(c) 

18 of the Internal Revenue Code of 1986 is amended by add19 ing at the end the following new subparagraph: 

20 ‘‘(I) TREATMENT OF MUTUAL DITCH OR

21 IRRIGATION COMPANIES IN CERTAIN DISASTER

22 AREAS.— 

23 ‘‘(i) IN GENERAL.—In the case of a 

24 qualified mutual ditch or irrigation com25 pany or like organization, subparagraph 

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1 (A) shall be applied without taking into ac2 count any income received or accrued dur3 ing the applicable period— 

4 ‘‘(I) from the sale, lease, or ex5 change of fee or other interests in real 

6 property, including interests in water, 

7 ‘‘(II) from the sale or exchange 

8 of stock in a mutual ditch or irriga9 tion company or like organization or 

10 contract rights for the delivery or use 

11 of water, 

12 ‘‘(III) from the investment of 

13 proceeds from sales, leases, or ex14 changes under subclauses (I) and (II), 

15 or 

16 ‘‘(IV) from the United States, or 

17 a State or local government, resulting 

18 from the federally declared disaster. 

19 except that any income received under sub20 clause (I), (II), (III), or (IV) which is dis21 tributed or expended for expenses (other 

22 than for operations, maintenance, and cap23 ital improvements) of the qualified mutual 

24 ditch or irrigation company or like organi25 zation shall be treated as nonmember inmstockstill on DSK4VPTVN1PROD with BILLS

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1 come in the year in which it is distributed 

2 or expended. 

3 ‘‘(ii) QUALIFIED MUTUAL DITCH OR

4 IRRIGATION COMPANY OR LIKE ORGANIZA5 TION.—For purposes of this paragraph— 

6 ‘‘(I) IN GENERAL.—The term 

7 ‘qualified mutual ditch or irrigation 

8 company or like organization’ means 

9 any mutual ditch or irrigation com10 pany or like organization that di11 verted, delivered, transported, stored, 

12 or used its water for agricultural irri13 gation purposes on its own or through 

14 its shareholders in a qualified disaster 

15 area during any of calendar years 

16 2012 through 2015. 

17 ‘‘(II) QUALIFIED ASSET.—The 

18 term ‘qualified asset’ means any real 

19 property or tangible personal property 

20 used in the mutual ditch or irrigation 

21 company’s (or like organization’s) sys22 tem. 

23 ‘‘(III) MULTIPLE AREAS.—Under 

24 regulations, if the qualified assets of 

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1 pany or like organization are located 

2 in more than 1 qualified disaster area, 

3 all such areas shall be treated as 1 

4 area and if more than 1 federally de5 clared disaster is involved, the date on 

6 which the last of such disasters oc7 curred shall be the date used for pur8 poses of this paragraph. 

9 ‘‘(iii) APPLICABLE PERIOD.—For pur10 poses of this paragraph, the term ‘applica11 ble period’ means the taxable year in which 

12 the federally declared disaster occurred 

13 and the 5 following taxable years. 

14 ‘‘(iv) OTHER DEFINITIONS.— 

15 ‘‘(I) QUALIFIED DISASTER

16 AREA.—The term ‘qualified disaster 

17 area’ means any area determined to 

18 warrant individual or individual and 

19 public assistance from the Federal 

20 Government under the Robert T. 

21 Stafford Disaster Relief and Emer22 gency Assistance Act by reason of a 

23 federally declared disaster occurring 

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1 ary 1, 2012, and ending on December 

2 31, 2015. 

3 ‘‘(II) FEDERALLY DECLARED

4 DISASTER.—The term ‘federally de5 clared disaster’ has the meaning given 

6 to such term under section 

7 165(i)(5).’’. 

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

9 subsection (a) shall apply to taxable years ending after 

10 December 31, 2011. 

11 TITLE II—OTHER DISASTER TAX 

12 RELIEF PROVISIONS 

13 SEC. 201. EXCLUSION FOR DISASTER MITIGATION PAY14 MENTS RECEIVED FROM STATE AND LOCAL 

15 GOVERNMENTS. 

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

17 of the Internal Revenue Code of 1986 is amended by in18 serting ‘‘, or any other amount which is paid by a State 

19 or local government or agency or instrumentality thereof,’’ 

20 after ‘‘(as in effect on such date)’’. 

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

22 this section shall apply to payments received after the date 

23 of the enactment of this Act. 

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1 SEC. 202. NATURAL DISASTER FUNDS. 

2 (a) NATURAL DISASTER FUND.—Subpart C of part 

3 II of subchapter E of chapter 1 of the Internal Revenue 

4 Code of 1986 is amended by inserting after section 468B 

5 the following new section: 

6 ‘‘SEC. 468C. SPECIAL RULES FOR NATURAL DISASTER 

7 FUNDS. 

8 ‘‘(a) IN GENERAL.—If a qualified taxpayer elects the 

9 application of this section, there shall be allowed as a de10 duction for any taxable year the amount of payments 

11 made by the taxpayer to a natural disaster fund during 

12 such taxable year. 

13 ‘‘(b) NATURAL DISASTER FUND.—The term ‘natural 

14 disaster fund’ means a fund meeting the following require15 ments: 

16 ‘‘(1) DESIGNATION.—The taxpayer des17 ignates— 

18 ‘‘(A) the fund as a natural disaster fund in 

19 the manner prescribed by the Secretary, and 

20 ‘‘(B) the line or lines of business to which 

21 the fund applies. 

22 ‘‘(2) SEGREGATION.—The assets of the fund 

23 are segregated from other assets of the taxpayer. 

24 ‘‘(3) INVESTMENTS.— 

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1 ‘‘(A) The assets of the fund are main2 tained in one or more qualified accounts and 

3 are invested only in— 

4 ‘‘(i) deposits with banks whose depos5 its are insured subject to applicable limits 

6 by the Federal Deposit Insurance Corpora7 tion, or 

8 ‘‘(ii) in stock or other securities in 

9 which the fund would be permitted to in10 vest if it were a capital construction fund 

11 subject to the investment limitations of 

12 paragraphs (2) and (3) of section 

13 7518(b)(2). 

14 ‘‘(B) All investment earnings (including 

15 gains and losses) from investments of the fund 

16 become part of the fund. 

17 ‘‘(4) CONTRIBUTIONS TO THE FUND.—The 

18 fund does not accept any deposits (or other 

19 amounts) other than cash payments with respect to 

20 which a deduction is allowable under subsection (a) 

21 and earnings (including gains and losses) from fund 

22 investments. 

23 ‘‘(5) PURPOSE.—The fund is established and 

24 maintained for the purposes of covering costs, ex25 penses, and losses (including business interruption 

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1 losses) resulting from a Federally declared natural 

2 disaster to the extent such costs are not covered by 

3 insurance. 

4 ‘‘(6) MAXIMUM BALANCE.—The balance of the 

5 fund does not exceed the lesser of— 

6 ‘‘(A) the sum of— 

7 ‘‘(i) 150 percent of the maximum de8 ductible, and 

9 ‘‘(ii) 100 percent of the maximum co10 insurance (to the extent not taken into ac11 count in clause (i)), 

12 that, in the case of a Federally declared natural 

13 disaster resulting in losses, the taxpayer could 

14 be expected to pay with respect to property and 

15 business interruption insurance maintained by 

16 the taxpayer for the line of business to which 

17 the fund applies and that would cover losses re18 sulting from a Federally declared natural dis19 aster, and 

20 ‘‘(B) the maximum loss under any insur21 ance coverage that the taxpayer could reason22 ably expect to occur for the line of business in 

23 the case of a severe natural disaster. 

24 ‘‘(7) FINANCIAL STATEMENTS.—The fund or 

25 the balance of the fund is recorded in the taxpayer’s 

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1 financial statements in accordance with generally ac2 cepted accounting principles and not as a current 

3 asset and the footnotes to the taxpayer’s financial 

4 statements include a short description of the fund 

5 and its purposes. 

6 ‘‘(8) INSURANCE.—The taxpayer property in7 surance maintained by the qualified taxpayer applies 

8 to 75 percent or more of the property used— 

9 ‘‘(A) in the qualified taxpayer’s line of 

10 business to which the fund relates, and 

11 ‘‘(B) in the United States. 

12 ‘‘(c) QUALIFIED TAXPAYER.—For purposes of this 

13 section, the term ‘qualified taxpayer’ means any taxpayer 

14 that— 

15 ‘‘(1) actively conducts a trade or business, and 

16 ‘‘(2) maintains property insurance with respect 

17 to such trade or business that insures against losses 

18 in natural disasters. 

19 ‘‘(d) FAILURE TO MEET REQUIREMENTS.—If a fund 

20 that was a natural disaster fund ceases to meet any of 

21 the requirements of subsection (b) or a taxpayer who has 

22 a natural disaster fund ceases to meet the requirement 

23 of subsection (c), the entire balance of the fund shall be 

24 deemed distributed in a nonqualified distribution at the 

25 time the fund ceases to meet such requirements. 

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1 ‘‘(e) TAXATION OF FUND.— 

2 ‘‘(1) IN GENERAL.—The earnings (including 

3 gains and losses) from the investment and reinvest4 ment of amounts held in the fund shall not be taken 

5 into account in determining the gross income of the 

6 taxpayer that owns the fund. 

7 ‘‘(2) NOT A SEPARATE TAXPAYER.—A natural 

8 disaster fund shall not be considered a separate tax9 payer for purposes of this subtitle. 

10 ‘‘(f) TAXATION OF DISTRIBUTIONS FROM THE

11 FUND.— 

12 ‘‘(1) QUALIFIED DISTRIBUTIONS.—For pur13 poses of this chapter, qualified distributions shall be 

14 treated in the same manner as proceeds from prop15 erty or business interruption insurance. 

16 ‘‘(2) NONQUALIFIED DISTRIBUTIONS.— 

17 ‘‘(A) IN GENERAL.—In the case of any 

18 taxable year for which there is a nonqualified 

19 distribution— 

20 ‘‘(i) such nonqualified distributions 

21 shall be excluded from the gross income of 

22 the taxpayer, and 

23 ‘‘(ii) the tax imposed by this chapter 

24 (determined without regard to this sub25 section) shall be increased by the product 

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1 of the amount of such nonqualified dis2 tribution and the highest rate of tax speci3 fied in section 1 (section 11 in the case of 

4 a corporation). 

5 ‘‘(B) TAX BENEFIT RULE; COORDINATION

6 WITH DEDUCTION FOR NET OPERATING

7 LOSSES.—Rules similar to the rules of subpara8 graphs (B) and (C) of section 7518(g)(6) shall 

9 apply for purposes of this paragraph. 

10 ‘‘(3) ADDITIONAL TAX.—The tax imposed by 

11 this chapter for any taxable year on any taxpayer 

12 that a owns natural disaster fund shall be increased 

13 by the greater of— 

14 ‘‘(A) 20 percent of the amount of any non15 qualified distributions from the fund in the tax16 able year, and 

17 ‘‘(B) an amount equal to interest, at the 

18 underpayment rate established under section 

19 6621, on the nonqualified distribution from the 

20 time the amount is added to the fund to the 

21 time the amount is distributed. 

22 ‘‘(4) INTEREST CALCULATION.—For purposes 

23 of calculating interest under paragraph (3)(B)— 

24 ‘‘(A) all investment earnings (including 

25 gains or losses) in taxable year shall be treated 

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1 as added to the fund on the last day of the tax2 able year, and 

3 ‘‘(B) amounts distributed from the fund 

4 shall be treated as distributed on a first-in, 

5 first-out basis. 

6 ‘‘(g) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) FEDERALLY DECLARED NATURAL DIS8 ASTER.—The term ‘Federally declared natural dis9 aster’ means a natural disaster that is determined 

10 by Presidential declaration under the Robert T. 

11 Stafford Disaster Relief and Emergency Assistance 

12 Act to warrant individual or individual and public 

13 assistance under such Act. 

14 ‘‘(2) NONQUALIFIED DISTRIBUTION.—The term 

15 ‘nonqualified distribution’ means a distribution from 

16 a natural disaster fund other than a qualified dis17 tribution. 

18 ‘‘(3) QUALIFIED ACCOUNT.—The term ‘quali19 fied account’ means an account with a bank (as de20 fined in section 581) or a brokerage account but 

21 only if the investments of such accounts are limited 

22 to those permitted by subsection (b)(3) and no in23 vestments are made in a related person (as defined 

24 in section 465(b)(3)(C)) to the taxpayer. 

25 ‘‘(4) QUALIFIED DISTRIBUTION.— 

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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 distribution’ means with respect to natural dis3 aster fund an amount equal to the excess of— 

4 ‘‘(i) costs, expenses, and losses (in5 cluding losses of a type reimbursable by 

6 proceeds of business interruption insur7 ance) incurred by the taxpayer as a result 

8 of the Federally declared natural disaster 

9 with respect to the line or lines of business 

10 for which the fund was designated, over 

11 ‘‘(ii) the proceeds of property and 

12 business interruption insurance paid for 

13 the benefit of the taxpayer with respect to 

14 costs, expenses, and losses described in 

15 clause (i). 

16 ‘‘(B) LIMITATION.—A distribution from a 

17 natural disaster fund shall not be treated as a 

18 qualified distribution if such distribution is allo19 cated to a Federally declared natural disaster 

20 occurring more than 3 years before the date of 

21 such distribution. 

22 ‘‘(h) SPECIAL RULES.—For purposes of this sec23 tion— 

24 ‘‘(1) NO DOUBLE COUNTING.—Any portion of 

25 any deductible or coinsurance taken into account 

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1 under subsection (b)(6) in determining the max2 imum balance for a natural disaster fund shall not 

3 be taken into account in determining the maximum 

4 balance for another natural disaster fund. 

5 ‘‘(2) EXCESS BALANCE.— 

6 ‘‘(A) IN GENERAL.—If the balance of a 

7 natural disaster fund exceeds the maximum bal8 ance permitted by subsection (b)(6) by reason 

9 of investment earnings or a reduction in the 

10 maximum balance, the account shall not cease 

11 to be a natural disaster fund as the result of 

12 exceeding such limit if the excess is distributed 

13 within 120 days of the date that such excess 

14 first occurred. 

15 ‘‘(B) TREATMENT OF DISTRIBUTIONS OF

16 EXCESS BALANCE.—In the case of any distribu17 tion of the excess balance of a natural disaster 

18 fund within 120 days of the date that such ex19 cess first occurred— 

20 ‘‘(i) paragraphs (2) and (3) of sub21 section (f) shall not apply to the distribu22 tion of such excess if distributed within 

23 such period, and 

24 ‘‘(ii) the amount of such distribution 

25 shall be included in the gross income of the 

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1 taxpayer in the year such distribution was 

2 made. 

3 ‘‘(C) ANTI-ABUSE RULE.—Subparagraph 

4 (B) shall not apply in the case of any reduction 

5 in the maximum balance resulting from any ac6 tion of the taxpayer the primary purpose of 

7 which was to reduce the maximum balance to 

8 enable a distribution that would not be subject 

9 to the maximum tax rate calculation or the ad10 ditional tax. 

11 ‘‘(3) CERTAIN ASSET ACQUISITIONS.—The 

12 transfer of a natural disaster fund (or the portion of 

13 a natural disaster fund) from one person to another 

14 person shall not constitute a nonqualified distribu15 tion if— 

16 ‘‘(A) such transfer is part of a trans17 action— 

18 ‘‘(i) to which section 381 applies, 

19 ‘‘(ii) the transferee acquires substan20 tially all of the assets of the transferor 

21 used in the line or lines of business for 

22 which the fund was designated, 

23 ‘‘(iii) the transferee acquires substan24 tially all of the assets of the transferor 

25 used in one, but not all, of the lines of 

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1 business for which the fund was des2 ignated, or 

3 ‘‘(iv) the transferee acquires substan4 tially all of the transferor’s assets located 

5 in a geographical area and used in a line 

6 of business for which the fund was des7 ignated, and 

8 ‘‘(B) the transferee elects to treat the ac9 quired natural disaster fund (or portion there10 of) as a natural disaster fund for the line of 

11 business for which the transferor had previously 

12 designated the fund and as a continuation of 

13 the fund (or pro rata portion thereof) for pur14 poses of determining the additional tax imposed 

15 by subsection (f)(4). 

16 ‘‘(i) REGULATIONS.—The Secretary shall prescribe 

17 such regulations as may be necessary or appropriate to 

18 carry out the provisions of this section.’’. 

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

20 for subpart C of part II of subchapter E of chapter 1 of 

21 the Internal Revenue Code of 1986 is amended by insert22 ing after the item relating to section 468B the following 

23 new item: 

‘‘Sec. 468C. Special rules for natural disaster funds.’’. 

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2014. 

4 TITLE III—PERMANENT DIS5 ASTER TAX RELIEF PROVI6 SIONS 

7 SEC. 301. INCREASE PROPERTY REPLACEMENT PERIOD TO 

8 5 YEARS. 

9 (a) IN GENERAL.—Section 1033(a)(2) of the Internal 

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

11 the following: 

12 ‘‘(F) FEDERALLY DECLARED DISASTER.— 

13 ‘‘(i) IN GENERAL.—In the case of con14 verted property that is located in the dis15 aster area of a federally declared disaster 

16 occurring during a calendar year beginning 

17 after 2011 and that is damaged or de18 stroyed by the federally declared disaster, 

19 subparagraph (B)(i) shall be applied by 

20 substituting ‘5 years’ for ‘2 years’. 

21 ‘‘(ii) FEDERALLY DECLARED DIS22 ASTER AND DISASTER AREA.—For pur23 poses of clause (i), the terms ‘federally de24 clared disaster’ and ‘disaster area’ have 

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1 the meanings given such terms under sec2 tion 165(i)(5).’’. 

3 (b) CONFORMING AMENDMENT.—Section 

4 1033(h)(1)(B) of the Internal Revenue Code of 1986 is 

5 amended by striking ‘‘4 years’’ and inserting ‘‘5 years’’. 

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

7 this section shall apply to disasters declared after Decem8 ber 31, 2015. 

9 SEC. 302. WAGE CREDIT FOR SPECIFIED DISASTER-DAM10 AGED BUSINESSES. 

11 (a) IN GENERAL.—Subpart D of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 is amended by adding at the end the following new 

14 section: 

15 ‘‘SEC. 45S. WAGE CREDIT FOR SPECIFIED DISASTER-DAM16 AGED BUSINESSES. 

17 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

18 in the case of an eligible employer, the specified disaster19 damaged business wage credit for any taxable year is an 

20 amount equal to 40 percent of the qualified wages for such 

21 year. 

22 ‘‘(b) QUALIFIED WAGES DEFINED.—For purposes of 

23 this section— 

24 ‘‘(1) IN GENERAL.—The term ‘qualified wages’ 

25 means, with respect to any covered employee, wages 

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1 paid or incurred by the eligible employer to the em2 ployee who is not able to work at the disaster-dam3 aged business of the employer during an inoper4 ability period because of a federally declared dis5 aster. Such term shall not include amounts paid or 

6 incurred for overtime compensation. 

7 ‘‘(2) LIMITATIONS.— 

8 ‘‘(A) LIMITATION ON WAGES TAKEN INTO

9 ACCOUNT.—The amount of the qualified wages 

10 with respect to any individual which may be 

11 taken into account with respect to a federally 

12 declared disaster shall not exceed $6,000. 

13 ‘‘(B) INOPERABILITY PERIOD.—The inop14 erability period with respect to a federally de15 clared disaster is the period beginning with the 

16 first day the trade or business is rendered inop17 erable due to damage from the federally de18 clared disaster and ending on the earlier of— 

19 ‘‘(i) the last day on which the trade or 

20 business is inoperable, or 

21 ‘‘(ii) 16 weeks after the first day of 

22 such disaster. 

23 ‘‘(c) DEFINITIONS.—For purposes of this section— 

24 ‘‘(1) ELIGIBLE EMPLOYER.— 

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1 ‘‘(A) IN GENERAL.—The term ‘eligible em2 ployer’ means, with respect to any taxable year, 

3 any employer which— 

4 ‘‘(i) employed an average of less than 

5 200 employees on business days during 

6 such taxable year, and 

7 ‘‘(ii) has a disaster-damaged business. 

8 ‘‘(B) DISASTER-DAMAGED BUSINESS.—The 

9 term ‘disaster-damaged business’ means a place 

10 of business within a disaster area which is ren11 dered inoperable due to damage from the feder12 ally declared disaster. 

13 ‘‘(C) CONTROLLED GROUPS.—For pur14 poses of this section, all persons treated as a 

15 single employer under subsection (b), (c), (m), 

16 or (o) of section 414 shall be treated as a single 

17 employer. 

18 ‘‘(2) COVERED EMPLOYEE.—The term ‘covered 

19 employee’ means, with respect to an eligible em20 ployer, an individual— 

21 ‘‘(A) whose principal place of employment 

22 is in a disaster area with respect to a federally 

23 declared disaster, and 

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1 ‘‘(B) who has been employed by the em2 ployer for more than 30 days before the first 

3 day of the federally declared disaster. 

4 ‘‘(3) FEDERALLY DECLARED DISASTER AND

5 DISASTER AREA.—For purposes of clause (i), the 

6 terms ‘federally declared disaster’ and ‘disaster area’ 

7 have the meanings given such terms under section 

8 165(i)(5).’’. 

9 (b) ALLOWANCE AS GENERAL BUSINESS CREDIT.— 

10 Section 38(b) of the Internal Revenue Code of 1986 is 

11 amended by striking ‘‘plus’’ at the end of paragraph (35), 

12 by striking the period at the end of paragraph (36) and 

13 inserting ‘‘, plus’’, and by adding at the end the following: 

14 ‘‘(37) the specified disaster-damaged business 

15 wage credit determined under section 45S(a).’’. 

16 (c) DENIAL OF DOUBLE BENEFIT.—Subsection (a) 

17 of section 280C of the Internal Revenue Code of 1986 is 

18 amended by inserting ‘‘45S(a),’’ after ‘‘45P(a)’’. 

19 (d) CLERICAL AMENDMENT.—The table of contents 

20 for subpart D of part IV of subchapter A of chapter 1 

21 of the Internal Revenue Code of 1986 is amended by add22 ing at the end the following new item: 

‘‘Sec. 45S. Wage credit for specified disaster-damaged businesses.’’. 

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

24 this section shall apply to taxable years beginning after 

25 December 31, 2015. 

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1 SEC. 303. DISASTER-RELATED MEDICAL EXPENSES. 

2 (a) IN GENERAL.—Section 213 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following new subsection: 

5 ‘‘(g) DISASTER-RELATED MEDICAL EXPENSES.— 

6 ‘‘(1) IN GENERAL.—In the case of expenses di7 rectly related to an injury caused by a federally de8 clared disaster occurring during the taxable year or 

9 the preceding taxable year, there shall be allowed a 

10 separate deduction under this section, which shall be 

11 determined under this section (without regard to 

12 this subsection), except that— 

13 ‘‘(A) subsection (a) shall be applied by 

14 substituting ‘zero percent’ for ‘10 percent’, and 

15 ‘‘(B) subsection (f) shall be applied by sub16 stituting ‘zero percent’ for ‘7.5 percent’. 

17 ‘‘(2) COORDINATION.—Any expense taken into 

18 account under paragraph (1) shall not be treated as 

19 an expense taken into account under this section 

20 (without regard to this section). 

21 ‘‘(3) FEDERALLY DECLARED DISASTER.—For 

22 purposes of this subsection, the term ‘federally de23 clared disaster’ shall have the meaning given such 

24 term under section 165(i)(5).’’. 

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

2 subsection (a) shall apply with respect to disasters occur3 ring after the date of the enactment of this Act. 

4 SEC. 304. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

5 (a) IN GENERAL.—Section 198A(b)(2)(A)(ii) of the 

6 Internal Revenue Code of 1986, as added by section 101 

7 of this Act, is amended by striking ‘‘and before January 

8 1, 2016,’’. 

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

10 this section shall apply to amounts paid or incurred after 

11 December 31, 2015. 

12 SEC. 305. LOSSES ATTRIBUTABLE TO DISASTERS. 

13 (a) IN GENERAL.—Section 165(h)(3)(B)(i)(I) of the 

14 Internal Revenue Code of 1986, as amended by section 

15 103 of this Act, is amended by striking ‘‘the period begin16 ning after December 31, 2011, and before January 1, 

17 2016,’’ and inserting ‘‘any period beginning after Decem18 ber 31, 2011,’’. 

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

20 this section shall apply to disasters declared in taxable 

21 years beginning after December 31, 2015. 

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1 SEC. 306. NET OPERATING LOSSES ATTRIBUTABLE TO DIS2 ASTERS. 

3 (a) IN GENERAL.—Section 172(i)(1)(A)(i)(I) of the 

4 Internal Revenue Code of 1986 is amended by striking 

5 ‘‘and before January 1, 2016,’’. 

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

7 this section shall apply to disasters declared in taxable 

8 years beginning after December 31, 2015. 

9 SEC. 307. SPECIAL RULES FOR USE OF RETIREMENT FUNDS 

10 IN CONNECTION WITH FEDERALLY DE11 CLARED DISASTERS. 

12 (a) WITHDRAWALS.—Section 72(t)(11)(A) of the In13 ternal Revenue Code of 1986, as amended by section 108 

14 of this Act, is amended by striking ‘‘2011 and before Jan15 uary 1, 2016,’’ and inserting ‘‘2011,’’. 

16 (b) LOANS.—Section 72(p)(6)(C)(ii) of such Code is 

17 amended by striking ‘‘and ending on December 31, 2016’’. 

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

19 this section shall apply to distributions with respect to dis20 aster declared after December 31, 2015. 

21 SEC. 308. ADDITIONAL EXEMPTION FOR HOUSING QUALI22 FIED DISASTER DISPLACED INDIVIDUALS. 

23 (a) IN GENERAL.—Section 151(f)(3)(B)(i) of the In24 ternal Revenue Code of 1986, as amended by section 109 

25 of this Act, is amended by striking ‘‘and before 2016’’. 

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2015. 

4 SEC. 309. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN5 DEBTEDNESS BY REASON OF DISASTERS. 

6 (a) IN GENERAL.—Section 108(j)(3) of the Internal 

7 Revenue Code of 1986, as amended by section 110 of this 

8 Act, is amended by striking ‘‘and before 2016’’. 

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

10 this section shall apply to discharges made on or after De11 cember 31, 2015. 

12 SEC. 310. SPECIAL RULE FOR DETERMINING EARNED IN13 COME OF INDIVIDUALS AFFECTED BY FEDER14 ALLY DECLARED DISASTERS. 

15 (a) IN GENERAL.—Section 32(n)(2) of the Internal 

16 Revenue Code of 1986, as amended by section 111 of this 

17 Act, is amended by striking ‘‘and before 2016’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2015. 

21 SEC. 311. QUALIFIED DISASTER AREA RECOVERY BONDS. 

22 (a) IN GENERAL.—Section 146A(b)(4) of the Inter23 nal Revenue Code of 1986, as amended by section 114 

24 of this Act, is further amended by striking ‘‘and before 

25 January 1, 2017’’. 

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

2 this section shall apply to obligations issued after Decem3 ber 31, 2015. 

4 SEC. 312. ADDITIONAL LOW-INCOME HOUSING CREDIT AL5 LOCATIONS. 

6 (a) IN GENERAL.—Section 42(h)(3)(J) of the Inter7 nal Revenue Code of 1986, as amended by section 115 

8 of this Act, is amended— 

9 (1) in clause (i) by striking ‘‘In the case of cal10 endar year 2016,’’ and inserting ‘‘In the case of a 

11 calendar year beginning after 2015,’’, 

12 (2) in clause (ii)(II) by striking ‘‘2015’’ and in13 serting ‘‘the preceding calendar year’’, and 

14 (3) in clause (iii) by striking ‘‘substituting ‘Jan15 uary 1 of the calendar year in which the taxable 

16 year ends’ for ‘January 1, 2015’ ’’. 

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

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

19 of this Act. 

Æ 

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