II 

114TH CONGRESS 

1ST SESSION S. 1795 

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 SENATE OF THE UNITED STATES 

JULY 16, 2015 

Mr. VITTER (for himself, Mr. SCHUMER, Mr. CASSIDY, Mr. MANCHIN, Mrs. 

CAPITO, Mr. BENNET, Mrs. GILLIBRAND, Mr. BOOKER, and Mr. MENENDEZ) 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 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’’. 

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

7 this Act is as follows: 


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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. 

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. 


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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— 

23 ‘‘(A) for the abatement or control of haz24 ardous substances that were released on acVerDate Sep 11 2014 02:52 Jul 21, 2015 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1795.IS S1795

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1 count of a federally declared disaster occurring 

2 during the period beginning— 

3 ‘‘(i) after December 31, 2007, and be4 fore January 1, 2010, or 

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

6 before January 1, 2016, 

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

8 demolition of structures on, real property which 

9 is business-related property damaged or de10 stroyed as a result of a federally declared dis11 aster occurring during any such period, or 

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

13 property damaged as a result of a federally de14 clared disaster occurring during any such pe15 riod, and 

16 ‘‘(3) which is otherwise chargeable to capital ac17 count. 

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

19 section— 

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

21 term ‘business-related property’ means property— 

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

23 trade or business or for the production of in24 come, or 


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

2 hands of the taxpayer. 

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

4 term ‘federally declared disaster’ has the meaning 

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

6 ‘‘(d) DEDUCTION RECAPTURED AS ORDINARY IN7 COME ON SALE, ETC.—Solely for purposes of section 

8 1245, in the case of property to which a qualified disaster 

9 expense would have been capitalized but for this section— 

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

11 such expense shall be treated as a deduction for de12 preciation, and 

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

14 1245 property) shall be treated as section 1245 

15 property solely for purposes of applying section 1245 

16 to such deduction. 

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

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

19 which are treated as expenses under this section. 

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

21 such regulations as may be necessary or appropriate to 

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

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

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


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1 Revenue Code of 1986 is amended by inserting after the 

2 item relating to section 198 the following item: 

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

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

4 this section shall apply to amounts paid or incurred after 

5 December 31, 2011, in connection with disasters declared 

6 after such date. 

7 SEC. 102. INCREASED LIMITATION ON CHARITABLE CON8 TRIBUTIONS FOR DISASTER RELIEF. 

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

10 of the Internal Revenue Code of 1986 is amended by re11 designating subparagraphs (F) and (G) as subparagraphs 

12 (G) and (H), respectively, and by inserting after subpara13 graph (E) the following new subparagraph: 

14 ‘‘(F) QUALIFIED DISASTER CONTRIBU15 TIONS.— 

16 ‘‘(i) IN GENERAL.—Any qualified dis17 aster contribution shall be allowed to the 

18 extent that the aggregate of such contribu19 tions does not exceed the excess of 80 per20 cent of the taxpayer’s contribution base 

21 over the amount of all other charitable 

22 contributions allowable under this para23 graph. 

24 ‘‘(ii) CARRYOVER.—If the aggregate 

25 amount of contributions described in clause 


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

2 such excess shall be treated (in a manner 

3 consistent with the rules of subsection 

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

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

6 succeeding years in order of time. 

7 ‘‘(iii) COORDINATION WITH OTHER

8 SUBPARAGRAPHS.—For purposes of apply9 ing this subsection and subsection (d)(1), 

10 contributions described in clause (i) shall 

11 not be treated as described in subpara12 graph (A) and such subparagraph shall be 

13 applied without regard to such contribu14 tions. 

15 ‘‘(iv) QUALIFIED DISASTER CON16 TRIBUTIONS.—For purposes of this sub17 paragraph, the term ‘qualified disaster 

18 contribution’ means any charitable con19 tribution if— 

20 ‘‘(I) such contribution is for re21 lief efforts related to a federally de22 clared disaster (as defined in section 

23 165(h)(3)(C)(i)), 

24 ‘‘(II) such contribution is made 

25 during the period beginning on the 


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1 applicable disaster date with respect 

2 to the disaster described in subclause 

3 (I) and ending on December 31, 

4 2015, and 

5 ‘‘(III) such contribution is made 

6 in cash to an organization described 

7 in subparagraph (A) (other than an 

8 organization described in section 

9 509(a)(3)). 

10 Such term shall not include a contribution 

11 if the contribution is for establishment of 

12 a new, or maintenance in an existing, 

13 donor advised fund (as defined in section 

14 4966(d)(2)). 

15 ‘‘(v) APPLICABLE DISASTER DATE.— 

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

17 ‘applicable disaster date’ means, with re18 spect to any federally declared disaster de19 scribed in clause (iv)(I), the date on which 

20 the disaster giving rise to the Presidential 

21 declaration described in section 

22 165(i)(5)(A) occurred. 

23 ‘‘(vi) SUBSTANTIATION REQUIRE24 MENT.—This paragraph shall not apply to 

25 any qualified disaster contribution unless 


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1 the taxpayer obtains from such organiza2 tion to which the contribution was made a 

3 contemporaneous written acknowledgment 

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

5 that such contribution was used (or is to 

6 be used) for a purpose described in clause 

7 (iv)(III).’’. 

8 (b) CORPORATIONS.— 

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

10 170(b) of the Internal Revenue Code of 1986 is 

11 amended by redesignating subparagraph (C) as sub12 paragraph (D) and by inserting after subparagraph 

13 (B) the following new subparagraph: 

14 ‘‘(C) QUALIFIED DISASTER CONTRIBU15 TIONS.— 

16 ‘‘(i) IN GENERAL.—Any qualified dis17 aster contribution shall be allowed to the 

18 extent that the aggregate of such contribu19 tions does not exceed the excess of 20 per20 cent of the taxpayer’s taxable income over 

21 the amount of charitable contributions al22 lowed under subparagraph (A). 

23 ‘‘(ii) CARRYOVER.—If the aggregate 

24 amount of contributions described in clause 

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


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1 such excess shall be treated (in a manner 

2 consistent with the rules of subsection 

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

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

5 succeeding years in order of time. 

6 ‘‘(iii) QUALIFIED DISASTER CON7 TRIBUTION.—The term ‘qualified disaster 

8 contribution’ has the meaning given such 

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

10 ‘‘(iv) SUBSTANTIATION REQUIRE11 MENT.—This paragraph shall not apply to 

12 any qualified disaster contribution unless 

13 the taxpayer obtains from such organiza14 tion to which the contribution was made a 

15 contemporaneous written acknowledgment 

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

17 that such contribution was used (or is to 

18 be used) for a purpose described in para19 graph (1)(F)(iv)(III).’’. 

20 (2) CONFORMING AMENDMENTS.— 

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

22 of such Code is amended by striking ‘‘subpara23 graph (B) applies’’ and inserting ‘‘subpara24 graphs (B) and (C) apply’’. 


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

2 of such Code is amended by striking ‘‘subpara3 graph (A)’’ and inserting ‘‘subparagraphs (A) 

4 and (C)’’. 

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

6 this section shall apply to disasters arising in taxable years 

7 ending after December 31, 2011. 

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

9 2013, 2014, AND 2015. 

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

11 Revenue Code of 1986 is amended by redesignating para12 graphs (3) and (4) as paragraphs (4) and (5), respectively, 

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

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

15 DECLARED DISASTERS.— 

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

17 net disaster loss for any taxable year, the 

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

19 shall be the sum of— 

20 ‘‘(i) such net disaster loss, and 

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

22 in the matter preceding clause (i) of para23 graph (2)(A) (reduced by the amount in 

24 clause (i) of this subparagraph) as exceeds 


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1 10 percent of the adjusted gross income of 

2 the individual. 

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

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

5 loss’ means the excess of— 

6 ‘‘(i) the personal casualty losses— 

7 ‘‘(I) attributable to a federally 

8 declared disaster occurring during the 

9 period beginning after December 31, 

10 2007, and before January 1, 2010, or 

11 during the period beginning after De12 cember 31, 2011, and before January 

13 1, 2016, and 

14 ‘‘(II) occurring in a disaster 

15 area, over 

16 ‘‘(ii) personal casualty gains. 

17 ‘‘(C) FEDERALLY DECLARED DISASTER.— 

18 For purposes of this paragraph— 

19 ‘‘(i) FEDERALLY DECLARED DIS20 ASTER.—The term ‘federally declared dis21 aster’ has the meaning given such term by 

22 subsection (i)(5)(A). 

23 ‘‘(ii) DISASTER AREA.—The term ‘dis24 aster area’ has the meaning given such 

25 term by subsection (i)(5)(B).’’. 


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

2 section 165(h) of such Code, as so redesignated, is amend3 ed by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs 

4 (2) and (3)’’. 

5 (c) LOSS ALLOWED WHETHER OR NOT INDIVIDUAL

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

7 Revenue Code of 1986 is amended by inserting after para8 graph (21) the following new paragraph: 

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

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

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

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

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

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

15 this section shall apply to disasters declared in taxable 

16 years beginning after December 31, 2011. 

17 (f) USE OF AMENDED INCOME TAX RETURNS TO

18 TAKE INTO ACCOUNT RECEIPT OF CERTAIN CASUALTY

19 LOSS GRANTS BY DISALLOWING PREVIOUSLY TAKEN

20 CASUALTY LOSS DEDUCTIONS.— 

21 (1) IN GENERAL.—Notwithstanding any other 

22 provision of the Internal Revenue Code of 1986, if 

23 a taxpayer— 

24 (A) claims a deduction for any taxable year 

25 with respect to a casualty loss to a principal 


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1 residence (within the meaning of section 121 of 

2 such Code) resulting from any federally de3 clared disaster (as defined in section 

4 165(h)(3)(C) of such Code) occurring during 

5 the period beginning after December 31, 2011, 

6 and before January 1, 2016, and 

7 (B) in a subsequent taxable year receives 

8 a grant under any Federal or State program as 

9 reimbursement for such loss, 

10 such taxpayer may elect to file an amended income 

11 tax return for the taxable year in which such deduc12 tion was allowed (and for any taxable year to which 

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

14 zero) the amount of such deduction by the amount 

15 of such reimbursement. 

16 (2) TIME OF FILING AMENDED RETURN.— 

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

18 only if any amended income tax returns with respect 

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

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

21 for the taxable year in which the taxpayer re22 ceives such grant, or 

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

24 of the enactment of this Act. 


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1 (3) WAIVER OF PENALTIES AND INTEREST.— 

2 Any underpayment of tax resulting from the reduc3 tion under paragraph (1) of the amount otherwise 

4 allowable as a deduction shall not be subject to any 

5 penalty or interest under such Code if such tax is 

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

7 amended return to which such reduction relates. 

8 SEC. 104. NET OPERATING LOSSES ATTRIBUTABLE TO DIS9 ASTERS IN 2012, 2013, 2014, AND 2015. 

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

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

12 the following: 

13 ‘‘(G) CERTAIN LOSSES ATTRIBUTABLE

14 FEDERALLY DECLARED DISASTERS.—In the 

15 case of a taxpayer who has a qualified disaster 

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

17 shall be a net operating loss carryback to each 

18 of the 5 taxable years preceding the taxable 

19 year of such loss.’’. 

20 (b) RULES RELATING TO QUALIFIED DISASTER

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

22 1986 is amended by redesignating subsection (i) a sub23 section (j) and by inserting after subsection (h) the fol24 lowing: 


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1 ‘‘(i) RULES RELATING TO QUALIFIED DISASTER

2 LOSSES.—For purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified dis4 aster loss’ means the lesser of— 

5 ‘‘(A) the sum of— 

6 ‘‘(i) the losses allowable under section 

7 165 for the taxable year— 

8 ‘‘(I) attributable to a federally 

9 declared disaster (as defined in sec10 tion 165(i)(5)(A)) occurring during 

11 the period beginning after December 

12 31, 2007, and before January 1, 

13 2010, or during the period beginning 

14 after December 31, 2011, and before 

15 January 1, 2016, and 

16 ‘‘(II) occurring in a disaster area 

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

18 and 

19 ‘‘(ii) the deduction for the taxable 

20 year for qualified disaster expenses which 

21 is allowable under section 198A(a) or 

22 which would be so allowable if not other23 wise treated as an expense, or 

24 ‘‘(B) the net operating loss for such tax25 able year. 


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1 ‘‘(2) COORDINATION WITH SUBSECTION

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

3 a qualified disaster loss for any taxable year shall be 

4 treated in a manner similar to the manner in which 

5 a specified liability loss is treated. 

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

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

8 loss year may elect to have the carryback period 

9 with respect to such loss year determined without re10 gard to subsection (b)(1)(G). Such election shall be 

11 made in such manner as may be prescribed by the 

12 Secretary and shall be made by the due date (includ13 ing extensions of time) for filing the taxpayer’s re14 turn for the taxable year of the net operating loss. 

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

16 be irrevocable for such taxable year. 

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

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

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

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

21 this section shall apply to losses arising in taxable years 

22 beginning after December 31, 2011, in connection with 

23 disasters declared after such date. 


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1 SEC. 105. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 

2 REQUIREMENTS FOLLOWING 2012, 2013, 2014, 

3 AND 2015 DISASTERS. 

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

5 of the Internal Revenue Code of 1986 is amended by strik6 ing ‘‘before January 1, 2010’’ in subparagraphs (A)(i) and 

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

8 beginning after December 31, 2007, and before January 

9 1, 2010, or during the period beginning after December 

10 31, 2011, and before January 1, 2016’’. 

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

12 this section shall apply to disasters occurring after Decem13 ber 31, 2011. 

14 SEC. 106. INCREASED EXPENSING AND BONUS DEPRECIA15 TION FOR QUALIFIED DISASTER ASSISTANCE 

16 PROPERTY FOLLOWING 2012, 2013, 2014, AND 

17 2015 DISASTERS. 

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

19 168(n)(2)(A)(ii) of the Internal Revenue Code of 1986 is 

20 amended by striking ‘‘before January 1, 2010’’ and insert21 ing ‘‘during the period beginning after December 31, 

22 2007, and before January 1, 2010, or during the period 

23 beginning after December 31, 2011, and before January 

24 1, 2016’’. 

25 (b) REMOVAL OF EXCLUSION.—Section 

26 168(n)(2)(B)(i) of such Code is amended by inserting 


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

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

3 by striking subclause (III). 

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

5 this section shall apply to property placed in service after 

6 December 31, 2011, with respect to disasters declared 

7 after such date. 

8 SEC. 107. INCREASE IN NEW MARKETS TAX CREDIT FOR IN9 VESTMENTS IN COMMUNITY DEVELOPMENT 

10 ENTITIES SERVING 2012, 2013, 2014, AND 2015 

11 DISASTER AREAS. 

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

13 the Internal Revenue Code of 1986 is amended by adding 

14 at the end the following new paragraph: 

15 ‘‘(4) INCREASED SPECIAL ALLOCATION FOR

16 COMMUNITY DEVELOPMENT ENTITIES SERVING DIS17 ASTER AREAS WITH RESPECT TO DISASTERS OCCUR18 RING IN ANY OF CALENDAR YEARS 2012 THROUGH

19 2015.— 

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

21 calendar year which begins after 2012 and be22 fore 2017, the new markets tax credit limitation 

23 shall be increased by an amount equal to 

24 $500,000,000, to be allocated among qualified 

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1 fied low-income community investments within 

2 any covered federally declared disaster area. 

3 ‘‘(B) ALLOCATION OF INCREASE.—The 

4 amount of the increase in limitation under sub5 paragraph (A) shall be allocated by the Sec6 retary under paragraph (2) to qualified commu7 nity development entities and shall give priority 

8 to such entities with a record of having success9 fully provided capital or technical assistance to 

10 businesses or communities within any covered 

11 federally declared disaster area or areas for 

12 which the allocation is requested. 

13 ‘‘(C) APPLICATION OF CARRYFORWARD.— 

14 Paragraph (3) shall be applied separately with 

15 respect to the amount of any increase under 

16 subparagraph (A). 

17 ‘‘(D) COVERED FEDERALLY DECLARED

18 DISASTER AREA.—For purposes of this para19 graph, the term ‘covered federally declared dis20 aster area’ means any disaster area resulting 

21 from any federally declared disaster occurring 

22 after December 31, 2011, and before January 

23 1, 2016. For purposes of the preceding sen24 tence, the terms ‘federally declared disaster’ 


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1 and ‘disaster area’ have the meanings given 

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

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

4 this section shall apply to calendar years beginning after 

5 2012. 

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

7 IN CONNECTION WITH FEDERALLY DE8 CLARED DISASTERS IN 2012, 2013, 2014, AND 

9 2015. 

10 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE11 MENT PLANS.— 

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

13 72(t) of the Internal Revenue Code of 1986 is 

14 amended by adding at the end the following new 

15 subparagraph: 

16 ‘‘(H) DISTRIBUTIONS FROM RETIREMENT

17 PLANS IN CONNECTION WITH FEDERALLY DE18 CLARED DISASTERS DURING IN ANY CALENDAR

19 YEARS AFTER 2011.—Any qualified disaster re20 covery distribution.’’. 

21 (2) QUALIFIED DISASTER RECOVERY DISTRIBU22 TION.—Section 72(t) of such Code is amended by 

23 adding at the end the following new paragraph: 

24 ‘‘(11) QUALIFIED DISASTER RECOVERY DIS25 TRIBUTION.—For purposes of paragraph (2)(H)— 


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

2 subparagraph (B), the term ‘qualified disaster 

3 recovery distribution’ means, with respect to 

4 any federally declared disaster occurring in any 

5 calendar year beginning after 2011 and before 

6 January 1, 2016, any distribution from an eli7 gible retirement plan made on or after the ap8 plicable disaster date and before the date that 

9 is 1 year after the applicable disaster date, to 

10 an individual whose principal place of abode on 

11 the applicable disaster date, is located in the 

12 disaster area and who has sustained an eco13 nomic loss by reason of such federally declared 

14 disaster. 

15 ‘‘(B) DOLLAR LIMITATION.— 

16 ‘‘(i) IN GENERAL.—For purposes of 

17 this subsection, the aggregate amount of 

18 distributions received by an individual with 

19 respect to any federally declared disaster 

20 occurring during in any calendar year be21 ginning after 2011 shall not exceed 

22 $100,000. 

23 ‘‘(ii) TREATMENT OF PLAN DISTRIBU24 TIONS.—If a distribution to an individual 

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


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1 qualified disaster recovery distribution, a 

2 plan shall not be treated as violating any 

3 requirement of this title merely because 

4 the plan treats such distribution as a 

5 qualified disaster recovery distribution, un6 less the aggregate amount of such distribu7 tions from all plans maintained by the em8 ployer (and any member of any controlled 

9 group which includes the employer) to such 

10 individual with respect to any federally de11 clared disaster occurring in any calendar 

12 year beginning after 2011 exceeds 

13 $100,000. 

14 ‘‘(iii) CONTROLLED GROUP.—For pur15 poses of clause (ii), the term ‘controlled 

16 group’ means any group treated as a single 

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

18 (o) of section 414. 

19 ‘‘(C) AMOUNT DISTRIBUTED MAY BE RE20 PAID.— 

21 ‘‘(i) IN GENERAL.—Any individual 

22 who receives a qualified disaster recovery 

23 distribution may, at any time during the 3- 

24 year period beginning on the day after the 

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1 ceived, make one or more contributions in 

2 an aggregate amount not to exceed the 

3 amount of such distribution to an eligible 

4 retirement plan of which such individual is 

5 a beneficiary and to which a rollover con6 tribution of such distribution could be 

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

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

9 case may be. 

10 ‘‘(ii) TREATMENT OF REPAYMENTS OF

11 DISTRIBUTIONS FROM ELIGIBLE RETIRE12 MENT PLANS OTHER THAN IRAS.—For 

13 purposes of this title, if a contribution is 

14 made pursuant to clause (i) with respect to 

15 a qualified disaster recovery distribution 

16 from an eligible retirement plan other than 

17 an individual retirement plan, then the tax18 payer shall, to the extent of the amount of 

19 the contribution, be treated as having re20 ceived the qualified disaster recovery dis21 tribution in an eligible rollover distribution 

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

23 having transferred the amount to the eligi24 ble retirement plan in a direct trustee to 


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1 trustee transfer within 60 days of the dis2 tribution. 

3 ‘‘(iii) TREATMENT OF REPAYMENTS

4 FOR DISTRIBUTIONS FROM IRAS.—For 

5 purposes of this title, if a contribution is 

6 made pursuant to clause (i) with respect to 

7 a qualified disaster recovery distribution 

8 from an individual retirement plan (as de9 fined by section 7701(a)(37)), then, to the 

10 extent of the amount of the contribution, 

11 the qualified disaster recovery distribution 

12 shall be treated as a distribution described 

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

14 transferred to the eligible retirement plan 

15 in a direct trustee to trustee transfer with16 in 60 days of the distribution. 

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

18 YEAR PERIOD.— 

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

20 qualified disaster recovery distribution, un21 less the taxpayer elects not to have this 

22 paragraph apply for any taxable year, any 

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1 cluded ratably over the 3-taxable-year pe2 riod beginning with such taxable year. 

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

4 clause (i), rules similar to the rules of sub5 paragraph (E) of section 408A(d)(3) shall 

6 apply. 

7 ‘‘(E) OTHER DEFINITIONS.— 

8 ‘‘(i) FEDERALLY DECLARED DIS9 ASTER; DISASTER AREA.—The terms ‘fed10 erally declared disaster’ and ‘disaster area’ 

11 have the meanings given such terms under 

12 section 165(i)(5). 

13 ‘‘(ii) APPLICABLE DISASTER DATE.— 

14 The term ‘applicable disaster date’ means, 

15 with respect to any federally declared dis16 aster, the date on which such federally de17 clared disaster occurs. 

18 ‘‘(iii) ELIGIBLE RETIREMENT PLAN.— 

19 The term ‘eligible retirement plan’ shall 

20 have the meaning given such term by sec21 tion 402(c)(8)(B). 

22 ‘‘(F) SPECIAL RULES.— 

23 ‘‘(i) EXEMPTION OF DISTRIBUTIONS

24 FROM TRUSTEE TO TRUSTEE TRANSFER

25 AND WITHHOLDING RULES.—For purposes 


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

2 qualified disaster recovery distributions 

3 shall not be treated as eligible rollover dis4 tributions. 

5 ‘‘(ii) QUALIFIED DISASTER RECOVERY

6 DISTRIBUTIONS TREATED AS MEETING

7 PLAN DISTRIBUTION REQUIREMENTS.— 

8 For purposes of this title, a qualified dis9 aster recovery distribution shall be treated 

10 as meeting the requirements of sections 

11 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 

12 403(b)(11), and 457(d)(1)(A).’’. 

13 (3) EFFECTIVE DATE.—The amendments made 

14 by this subsection shall apply to distributions with 

15 respect to disaster declared after December 31, 

16 2011. 

17 (b) LOANS FROM QUALIFIED PLANS.— 

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

19 of the Internal Revenue Code of 1986 is amended by 

20 adding at the end the following new paragraph: 

21 ‘‘(6) INCREASE IN LIMIT ON LOANS NOT TREAT22 ED AS DISTRIBUTIONS WITH RESPECT TO DISASTERS

23 IN ANY CALENDAR YEAR AFTER 2011.— 

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

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1 fied individual made during the applicable pe2 riod— 

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

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

5 for ‘$50,000’, and 

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

7 shall be applied by substituting ‘the 

8 present value of the nonforfeitable accrued 

9 benefit of the employee under the plan’ for 

10 ‘one-half of the present value of the non11 forfeitable accrued benefit of the employee 

12 under the plan’. 

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

14 of a qualified individual with an outstanding 

15 loan on or after the applicable disaster date 

16 from a qualified employer plan— 

17 ‘‘(i) if the due date pursuant to sub18 paragraph (B) or (C) of paragraph (2) for 

19 any repayment with respect to such loan 

20 occurs during the 1-year period beginning 

21 on the applicable disaster date, such due 

22 date shall be delayed for 1 year, 

23 ‘‘(ii) any subsequent repayments with 

24 respect to any such loan shall be appro25 priately adjusted to reflect the delay in the 


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1 due date under clause (i) and any interest 

2 accruing during such delay, and 

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

4 and the term of a loan under subpara5 graph (B) or (C) of paragraph (2), the pe6 riod described in clause (i) shall be dis7 regarded. 

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

9 paragraph— 

10 ‘‘(i) QUALIFIED INDIVIDUAL.—The 

11 term ‘qualified individual’ means, with re12 spect to any federally declared disaster oc13 curring during in any calendar year begin14 ning after 2011, an individual whose prin15 cipal place of abode on the applicable dis16 aster date is located in the disaster area 

17 and who has sustained an economic loss by 

18 reason of such federally declared disaster. 

19 ‘‘(ii) APPLICABLE PERIOD.—The ap20 plicable period is the period beginning on 

21 the applicable disaster date and ending on 

22 December 31, 2016. 

23 ‘‘(iii) 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 ‘‘(iv) 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 (2) EFFECTIVE DATE.—The amendment made 

9 by this subsection shall apply to loans made with re10 spect to disaster declared after December 31, 2011. 

11 (c) PROVISIONS RELATING TO PLAN AMEND12 MENTS.— 

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

14 any amendment to any plan or annuity contract, 

15 such plan or contract shall be treated as being oper16 ated in accordance with the terms of the plan during 

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

18 (2) AMENDMENTS TO WHICH SUBSECTION AP19 PLIES.— 

20 (A) IN GENERAL.—This subsection shall 

21 apply to any amendment to any plan or annuity 

22 contract which is made— 

23 (i) pursuant to any provision of, or 

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1 retary or the Secretary of Labor under any 

2 provision of, or amendment made by, this 

3 section, and 

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

5 first plan year beginning on or after Janu6 ary 1, 2016, or such later date as the Sec7 retary may prescribe. 

8 In the case of a governmental plan (as defined 

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

10 by substituting the date which is 2 years after 

11 the date otherwise applied under clause (ii). 

12 (B) CONDITIONS.—This subsection shall 

13 not apply to any amendment unless— 

14 (i) during the period— 

15 (I) beginning on the date that 

16 the provisions of, and amendments 

17 made by, this section or the regulation 

18 described in subparagraph (A)(i) 

19 takes effect (or in the case of a plan 

20 or contract amendment not required 

21 by the provisions of, or amendments 

22 made by, this section or such regula23 tion, the effective date specified by the 

24 plan), and 


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1 (II) ending on the date described 

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

3 the date the plan or contract amend4 ment is adopted), 

5 the plan or contract is operated as if such 

6 plan or contract amendment were in effect; 

7 and 

8 (ii) such plan or contract amendment 

9 applies retroactively for such period. 

10 SEC. 109. ADDITIONAL EXEMPTION FOR HOUSING QUALI11 FIED DISASTER DISPLACED INDIVIDUALS. 

12 (a) IN GENERAL.—Section 151 of the Internal Rev13 enue Code of 1986 is amended by adding at the end the 

14 following new subsection: 

15 ‘‘(f) ADDITIONAL EXEMPTION FOR CERTAIN DIS16 ASTER-DISPLACED INDIVIDUALS.— 

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

18 year beginning in any calendar year beginning after 

19 2011, there shall be allowed an exemption of $500 

20 for each qualified disaster-displaced individual with 

21 respect to the taxpayer for the taxable year. 

22 ‘‘(2) LIMITATIONS.— 

23 ‘‘(A) DOLLAR LIMITATION.—The exemp24 tion under paragraph (1) shall not exceed 

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1 tion under this subsection for all prior taxable 

2 years. 

3 ‘‘(B) INDIVIDUALS TAKEN INTO ACCOUNT

4 ONLY ONCE.—An individual shall not be taken 

5 into account under paragraph (1) if such indi6 vidual was taken into account under this sub7 section by the taxpayer for any prior taxable 

8 year. 

9 ‘‘(C) IDENTIFYING INFORMATION RE10 QUIRED.—An individual shall not be taken into 

11 account under paragraph (1) for a taxable year 

12 unless the taxpayer identification number of 

13 such individual is included on the return of the 

14 taxpayer for such taxable year. 

15 ‘‘(3) QUALIFIED DISASTER-DISPLACED INDI16 VIDUAL.— 

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

18 subsection, the term ‘qualified disaster-dis19 placed individual’ means, with respect to any 

20 taxpayer for any taxable year, any qualified in21 dividual if such individual is provided housing 

22 free of charge by the taxpayer in the principal 

23 residence of the taxpayer for a period of 60 

24 consecutive days which ends in such taxable 


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1 year. Such term shall not include the spouse or 

2 any dependent of the taxpayer. 

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

4 ‘qualified individual’ means any individual 

5 who— 

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

7 disaster occurring in calendar years begin8 ning after 2011 and before 2016 main9 tained such individual’s principal place of 

10 abode in the disaster area declared with re11 spect to such disaster, and 

12 ‘‘(ii) was displaced from such prin13 cipal place of abode by reason of the feder14 ally declared disaster. 

15 For purposes of the preceding sentence, the 

16 terms ‘federally declared disaster’ and ‘disaster 

17 area’ have the meanings given such terms in 

18 section 165(i)(5). 

19 ‘‘(4) COMPENSATION FOR HOUSING.—No de20 duction shall be allowed under this subsection if the 

21 taxpayer receives any rent or other amount (from 

22 any source) in connection with the providing of such 

23 housing.’’. 


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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, 2011. 

4 SEC. 110. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN5 DEBTEDNESS BY REASON OF 2012, 2013, 2014, 

6 AND 2015 DISASTERS. 

7 (a) IN GENERAL.—Section 108 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(j) DISCHARGE OF INDEBTEDNESS FOR INDIVID11 UALS AFFECTED BY DISASTERS IN ANY CALENDAR YEAR

12 AFTER 2011.— 

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), gross income shall not include any 

15 amount which (but for this subsection) would be in16 cludible in gross income by reason of any discharge 

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

18 person described in paragraph (3) by an applicable 

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

20 applicable period. 

21 ‘‘(2) EXCEPTIONS FOR BUSINESS INDEBTED22 NESS.—Paragraph (1) shall not apply to any indebt23 edness incurred in connection with a trade or busi24 ness. 


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

2 is described in this paragraph if the principal place 

3 of abode of such person on the applicable disaster 

4 date was located in the disaster area with respect to 

5 any federally declared disaster occurring during any 

6 calendar year beginning after 2011 and before 2016. 

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

8 this subsection, the term ‘applicable period’ means 

9 the period beginning on the applicable disaster date 

10 and ending on the date which is 14 months after 

11 such date. 

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

13 this subsection— 

14 ‘‘(A) FEDERALLY DECLARED DISASTER; 

15 DISASTER AREA.—The terms ‘federally declared 

16 disaster’ and ‘disaster area’ have the meanings 

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

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

19 term ‘applicable disaster date’ means, with re20 spect to any federally declared disaster, the 

21 date on which such federally declared disaster 

22 occurs.’’. 

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

24 this section shall apply to discharges made on or after De25 cember 31, 2011. 


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1 SEC. 111. SPECIAL RULE FOR DETERMINING EARNED IN2 COME OF INDIVIDUALS AFFECTED BY FEDER3 ALLY DECLARED DISASTERS. 

4 (a) IN GENERAL.—Section 32 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(n) SPECIAL RULE FOR DETERMINING EARNED IN8 COME OF TAXPAYERS AFFECTED BY FEDERALLY DE9 CLARED DISASTERS.— 

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

11 individual with respect to any federally declared dis12 aster occurring during any calendar year beginning 

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

14 the taxable year which includes the applicable dis15 aster date is less than the earned income of the tax16 payer for the preceding taxable year, the credit al17 lowed under this section and section 24(d) may, at 

18 the election of the taxpayer, be determined by sub19 stituting— 

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

21 taxable year, for 

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

23 year which includes the applicable date. 

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

25 this subsection, the term ‘qualified individual’ 

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1 aster occurring during in any calendar year begin2 ning after 2011 and before 2016, any individual 

3 whose principal place of abode on the applicable dis4 aster date, was located— 

5 ‘‘(A) in any portion of a disaster area de6 termined by the President to warrant individual 

7 or individual and public assistance under the 

8 Robert T. Stafford Disaster Relief and Emer9 gency Assistance Act by reason of the federally 

10 declared disaster, or 

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

12 not described in subparagraph (A) and such in13 dividual was displaced from such principal place 

14 of abode by reason of the federally declared dis15 aster. 

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

17 this paragraph— 

18 ‘‘(A) FEDERALLY DECLARED DISASTER; 

19 DISASTER AREA.—The terms ‘federally declared 

20 disaster’ and ‘disaster area’ have the meanings 

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

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

23 term ‘applicable disaster date’ means, with re24 spect to any federally declared disaster, the 


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1 date on which such federally declared disaster 

2 occurs. 

3 ‘‘(4) SPECIAL RULES.— 

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

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

6 a joint return for a taxable year which includes 

7 the disaster date— 

8 ‘‘(i) such paragraph shall apply if ei9 ther spouse is a qualified individual, and 

10 ‘‘(ii) the earned income of the tax11 payer for the preceding taxable year shall 

12 be the sum of the earned income of each 

13 spouse for such preceding taxable year. 

14 ‘‘(B) UNIFORM APPLICATION OF ELEC15 TION.—Any election made under paragraph (1) 

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

17 and this section. 

18 ‘‘(C) ERRORS TREATED AS MATHEMATICAL

19 ERROR.—For purposes of section 6213, an in20 correct use on a return of earned income pursu21 ant to paragraph (1) shall be treated as a 

22 mathematical or clerical error. 

23 ‘‘(D) NO EFFECT ON DETERMINATION OF

24 GROSS INCOME, ETC.—Except as otherwise pro25 vided in this subsection, this title shall be apVerDate Sep 11 2014 02:52 Jul 21, 2015 Jkt 049200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\S1795.IS S1795

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1 plied without regard to any substitution under 

2 paragraph (1).’’. 

3 (b) CHILD TAX CREDIT.—Section 24(d) of the Inter4 nal Revenue Code of 1986 is amended by adding at the 

5 end the following new paragraph: 

6 ‘‘(5) SPECIAL RULE FOR DETERMINING

7 EARNED INCOME OF TAXPAYERS AFFECTED BY FED8 ERALLY DECLARED DISASTERS.—For election by 

9 qualified individuals with respect to certain federally 

10 declared disasters to substitute earned income from 

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

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2011. 

15 SEC. 112. INCREASE IN REHABILITATION CREDIT FOR 

16 BUILDINGS IN 2012, 2013, 2014, AND 2015 DIS17 ASTER AREAS. 

18 (a) IN GENERAL.—Section 47 of the Internal Rev19 enue Code of 1986 is amended by adding at the end the 

20 following new subsection: 

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

22 CONNECTION WITH CERTAIN DISASTERS.— 

23 ‘‘(1) IN GENERAL.—In the case of qualified re24 habilitation expenditures paid or incurred during the 

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1 bilitated building or certified historic structure lo2 cated in a disaster area with respect to any federally 

3 declared disaster occurring in, subsection (a) shall 

4 be applied— 

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

6 percent’ in paragraph (1) thereof, and 

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

8 percent’ in paragraph (2) thereof. 

9 ‘‘(2) DEFINITIONS.—For purposes of this sub10 section— 

11 ‘‘(A) FEDERALLY DECLARED DISASTER; 

12 DISASTER AREA.—The terms ‘federally declared 

13 disaster’ and ‘disaster area’ have the meanings 

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

15 ‘‘(B) APPLICABLE PERIOD.—The term ‘ap16 plicable period’ means the period beginning on 

17 the applicable disaster date and ending on De18 cember 31, 2015. 

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

20 term ‘applicable disaster date’ means, with re21 spect to any federally declared disaster, the 

22 date on which such federally declared disaster 

23 occurs.’’. 


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

2 this section shall apply to amounts paid or incurred after 

3 December 31, 2011. 

4 SEC. 113. ADVANCED REFUNDINGS OF CERTAIN TAX-EX5 EMPT BONDS. 

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

7 Revenue Code of 1986 is amended by redesignating para8 graph (7) as paragraph (8) and by inserting after para9 graph (6) the following new paragraph: 

10 ‘‘(7) SPECIAL RULE WITH RESPECT TO CER11 TAIN NATURAL DISASTERS.— 

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

13 bond described in subparagraph (C), one addi14 tional advance refunding after the date of the 

15 enactment of this paragraph and before Janu16 ary 1, 2018, shall be allowed under the rules of 

17 this subsection if— 

18 ‘‘(i) the Governor of the State des19 ignates the advance refunding bond for 

20 purposes of this subsection, and 

21 ‘‘(ii) the requirements of subpara22 graph (E) are met. 

23 ‘‘(B) CERTAIN PRIVATE ACTIVITY

24 BONDS.—With respect to a bond described in 

25 subparagraph (C) which is an exempt facility 


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1 bond described in paragraph (1) or (2) of sec2 tion 142(a), one advance refunding after the 

3 date of the enactment of this paragraph and be4 fore January 1, 2018, shall be allowed under 

5 the applicable rules of this subsection (notwith6 standing paragraph (2) thereof) if the require7 ments of clauses (i) and (ii) of subparagraph 

8 (A) are met. 

9 ‘‘(C) BONDS DESCRIBED.—A bond is de10 scribed in this paragraph if, with respect to any 

11 federally declared disaster, such bond— 

12 ‘‘(i) was outstanding on the applicable 

13 disaster date, and 

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

15 or a political subdivision thereof. 

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

17 aggregate face amount of bonds which may be 

18 designated under this subsection by the Gov19 ernor of a State shall not exceed 

20 $4,500,000,000. 

21 ‘‘(E) ADDITIONAL REQUIREMENTS.—The 

22 requirements of this subparagraph are met with 

23 respect to any advance refunding of a bond de24 scribed in subparagraph (C) if— 


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1 ‘‘(i) no advance refundings of such 

2 bond would be allowed under this title on 

3 or after the applicable disaster date, 

4 ‘‘(ii) the advance refunding bond is 

5 the only other outstanding bond with re6 spect to the refunded bond, and 

7 ‘‘(iii) the requirements of section 148 

8 are met with respect to all bonds issued 

9 under this paragraph. 

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

11 subsection— 

12 ‘‘(i) FEDERALLY DECLARED DIS13 ASTER; DISASTER AREA.—The terms ‘fed14 erally declared disaster’ and ‘disaster area’ 

15 have the meanings given such terms under 

16 section 165(i)(5). 

17 ‘‘(ii) APPLICABLE DISASTER DATE.— 

18 The term ‘applicable disaster date’ means, 

19 with respect to any federally declared dis20 aster, the date on which such federally de21 clared disaster occurs. 

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

23 ‘applicable State’ means, with respect to 

24 any federally declared disaster, any State 


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•S 1795 IS

1 in which a portion of the disaster area is 

2 located.’’. 

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

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

5 the enactment of this Act. 

6 SEC. 114. QUALIFIED DISASTER AREA RECOVERY BONDS. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter B of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 146 the fol10 lowing new section: 

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

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

13 qualified disaster area recovery bond shall— 

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

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

16 ‘‘(b) QUALIFIED DISASTER AREA RECOVERY

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

18 disaster area recovery bond’ means any bond issued as 

19 part of an issue if— 

20 ‘‘(1) 95 percent or more of the net proceeds of 

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

22 ‘‘(2) such bond is issued by a State or any po23 litical subdivision thereof any part of which is in a 

24 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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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 inVerDate Sep 11 2014 02:52 Jul 21, 2015 Jkt 049200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\S1795.IS S1795

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•S 1795 IS

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 

24 during the period beginning on JanuVerDate Sep 11 2014 02:52 Jul 21, 2015 Jkt 049200 PO 00000 Frm 00057 Fmt 6652 Sfmt 6201 E:\BILLS\S1795.IS S1795

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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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•S 1795 IS

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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