I

107TH CONGRESS

1ST SESSION H. R. 2176

To amend the Internal Revenue Code of 1986 to provide disaster relief

for homeowners.

IN THE HOUSE OF REPRESENTATIVES

JUNE 14, 2001

Mr. BAIRD (for himself and Mr. ANDREWS) 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

disaster relief for homeowners.

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.

4 This Act may be cited as the ‘‘Disaster Burden Relief

5 Act of 2001’’.

6 SEC. 2. CREDIT FOR MORTGAGE PAYMENTS MADE ON DE7 STROYED HOME.

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

10 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 25A the following new

2 section:

3 ‘‘SEC. 25B. MORTGAGE PAYMENTS MADE ON DESTROYED

4 HOME.

5 ‘‘(a) IN GENERAL.—In the case of an individual,

6 there shall be allowed as a credit against the tax imposed

7 by this chapter for the taxable year an amount equal to

8 the payments made during the taxable year on acquisition

9 indebtedness (as defined in section 163(h)(3)(B)) secured

10 by a qualified destroyed home.

11 ‘‘(b) QUALIFIED DESTROYED HOME.—For purposes

12 of this section, the term ‘qualified destroyed home’ means

13 any residence if—

14 ‘‘(1) such residence is substantially destroyed as

15 a result of a disaster which is a Presidentially de16 clared disaster (as defined in section 1033(h)) or a

17 disaster which is declared by the chief executive offi18 cer of the State in which such residence is located,

19 ‘‘(2) such residence was the principal residence

20 (within the meaning of section 121) of the taxpayer

21 at the time of its destruction,

22 ‘‘(3) because of the high risk of the occurrence

23 of the type of disaster which substantially destroyed

24 such residence, insurance covering damage resulting
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1 from such a disaster was unavailable at reasonable

2 rates, and

3 ‘‘(4) such destruction is not compensated for by

4 insurance or otherwise.

5 ‘‘(c) SPECIAL RULES.—

6 ‘‘(1) COORDINATION WITH INTEREST DEDUC7 TION.—The deduction which would (but for this sub8 section) be allowed on the indebtedness referred to

9 in subsection (a) shall be reduced by the credit al10 lowed under this section.

11 ‘‘(2) CREDIT ONLY FOR PAYMENT DUE AFTER

12 DESTRUCTION.—Subsection (a) shall not apply to

13 any amount first due before the date of the disaster.

14 ‘‘(3) BENEFIT REDUCED BY GOVERNMENT

15 GRANTS.—

16 ‘‘(A) IN GENERAL.—If any grant is pro17 vided to the taxpayer under any Federal, State,

18 or local government program by reason of the

19 destruction of the residence—

20 ‘‘(i) subsection (b)(4) shall be applied

21 without regard to such grant, but

22 ‘‘(ii) the credit which would (but for

23 this paragraph) be allowed under this sec24 tion for any taxable year shall be reduced
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1 by such taxable year’s ratable portion of

2 such grant.

3 ‘‘(B) RATABLE PORTION.—The ratable

4 portion of a grant shall be determined by allo5 cating such grant ratably over the reasonably

6 expected remaining period that payments on the

7 mortgage will be required to be made.

8 ‘‘(d) ELECTION NOT TO HAVE CREDIT APPLY.—

9 This section shall not apply to a taxpayer for a taxable

10 year if the taxpayer elects not to have this section apply

11 for such year.’’

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

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

14 of such Code is amended by inserting after the item relat15 ing to section 25A the following new item:

‘‘Sec. 25B. Mortgage payments made on destroyed home.’’

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

17 this section apply to with respect to disasters occurring

18 on or after January 1, 2000.

19 SEC. 3. NO INCOME FROM DISCHARGE OF INDEBTEDNESS

20 OF DESTROYED HOME.

21 (a) IN GENERAL.—Subsection (a) of section 108 of

22 the Internal Revenue Code of 1986 (relating to income

23 from discharge of indebtedness) is amended by adding at

24 the end the following new paragraph:
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1 ‘‘(4) EXCEPTION FOR HOMES DESTROYED IN

2 PRESIDENTIALLY DECLARED DISASTERS.—Para3 graph (1) shall not apply to any discharge of acqui4 sition indebtedness (as defined in section

5 163(h)(3)(B)) secured by a qualified destroyed home

6 (as defined in section 25B(b)).’’

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

8 this section apply to with respect to disasters occurring

9 on or after January 1, 2000.

10 SEC. 4. LOSS DEDUCTION ON DESTROYED HOME DETER11 MINED AS IF BASIS EQUALED FAIR MARKET

12 VALUE PRIOR TO DESTRUCTION.

13 (a) IN GENERAL.—Subsection (c) of section 165 of

14 the Internal Revenue Code of 1986 (relating to limitation

15 on losses of individuals) is amended by adding at the end

16 the following new sentence:

17 ‘‘If the loss referred to in paragraph (3) is of a qualified

18 destroyed home (as defined in section 25B(b)) and the

19 taxpayer irrevocably elects not to claim the benefits of sec20 tion 25B with respect to such home, the amount of the

21 loss sustained shall be determined as if the adjusted basis

22 of the home equaled its fair market value immediately be23 fore its destruction.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section apply to with respect to disasters occurring

3 on or after January 1, 2000.

4 SEC. 5. LOSS ON SALE OR EXCHANGE OF PRINCIPAL RESI5 DENCE LOCATED IN PRESIDENTIALLY DE6 CLARED DISASTER AREA.

7 (a) IN GENERAL.—Subsection (c) of section 165 of

8 the Internal Revenue Code of 1986 (relating to limitation

9 on losses of individuals) is amended by striking ‘‘and’’ at

10 the end of paragraph (2), by striking the period at the

11 end of paragraph (3) and inserting ‘‘; and’’, and by insert12 ing after paragraph (3) the following new paragraph:

13 ‘‘(4) losses arising from the sale or exchange of

14 the principal residence (within the meaning of sec15 tion 121) of the taxpayer if—

16 ‘‘(A) such residence is located in an area—

17 ‘‘(i) which was at any time determined

18 by the President to warrant assistance by

19 the Federal Government under the Robert

20 T. Stafford Disaster Relief and Emergency

21 Assistance Act, or

22 ‘‘(ii) which was at any time declared

23 a disaster area by the chief executive offi24 cer of the State in which such residence is

25 located,
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1 ‘‘(B) such residence was acquired by the

2 taxpayer on or before the date of the occurrence

3 of the disaster for which such determination or

4 declaration was made, and

5 ‘‘(C) because of the high risk of the reoc6 currence of the type of disaster for which such

7 determination or declaration was made, insur8 ance covering damage resulting from such a

9 disaster was unavailable at reasonable rates.’’

10 (b) LIMITATION ON LOSSES NOT TO APPLY.—Sub11 section (b) of section 1211 of such Code is amended by

12 adding at the end the following new flush sentence:

13 ‘‘The preceding sentence shall not apply to a loss described

14 in section 165(c)(4).’’

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

16 this section shall apply to sales and exchanges on or after

17 January 1, 2000.

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