II 

109TH CONGRESS 

1ST SESSION S. 583 

To amend the Internal Revenue Code of 1986 to provide for the proper 

tax treatment of certain disaster mitigation payments. 

IN THE SENATE OF THE UNITED STATES 

MARCH 9, 2005 

Ms. LANDRIEU 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 

for the proper tax treatment of certain disaster mitigation payments. 

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

3 SECTION 1. PROPER TAX TREATMENT OF CERTAIN DIS4 ASTER MITIGATION PAYMENTS. 

5 (a) QUALIFIED DISASTER MITIGATION PAYMENTS

6 EXCLUDED FROM GROSS INCOME.— 

7 (1) IN GENERAL.—Section 139 of the Internal 

8 Revenue Code of 1986 (relating to disaster relief 

9 payments) is amended by adding at the end the fol10 lowing new subsections: 
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•S 583 IS

1 ‘‘(g) QUALIFIED DISASTER MITIGATION PAY2 MENTS.— 

3 ‘‘(1) IN GENERAL.—Gross income shall not in4 clude any amount received as a qualified disaster 

5 mitigation payment. 

6 ‘‘(2) QUALIFIED DISASTER MITIGATION PAY7 MENT DEFINED.—For purposes of this section, the 

8 term ‘qualified disaster mitigation payment’ means 

9 any amount which is paid pursuant to the Robert T. 

10 Stafford Disaster Relief and Emergency Assistance 

11 Act (as in effect on the date of the enactment of this 

12 subsection) or the National Flood Insurance Act (as 

13 in effect on such date) to or for the benefit of the 

14 owner of any property for hazard mitigation with re15 spect to such property. Such term shall not include 

16 any amount received for the sale or disposition of 

17 any property. 

18 ‘‘(3) NO INCREASE IN BASIS.—Notwithstanding 

19 any other provision of this subtitle, no increase in 

20 the basis or adjusted basis of any property shall re21 sult from any amount excluded under this subsection 

22 with respect to such property. 

23 ‘‘(h) DENIAL OF DOUBLE BENEFIT.—Notwith24 standing any other provision of this subtitle, no deduction 

25 or credit shall be allowed (to the person for whose benefit 
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1 a qualified disaster relief payment or qualified disaster 

2 mitigation payment is made) for, or by reason of, any ex3 penditure to the extent of the amount excluded under this 

4 section with respect to such expenditure.’’. 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Subsection (d) of section 139 of such 

7 Code is amended by striking ‘‘a qualified dis8 aster relief payment’’ and inserting ‘‘qualified 

9 disaster relief payments and qualified disaster 

10 mitigation payments’’. 

11 (B) Subsection (e) of section 139 of such 

12 Code is amended by striking ‘‘and (f)’’ and in13 serting ‘‘, (f), and (g)’’. 

14 (b) CERTAIN DISPOSITIONS OF PROPERTY UNDER

15 HAZARD MITIGATION PROGRAMS TREATED AS INVOLUN16 TARY CONVERSIONS.—Section 1033 of such Code (relat17 ing to involuntary conversions) is amended by redesig18 nating subsection (k) as subsection (l) and by inserting 

19 after subsection (j) the following new subsection: 

20 ‘‘(k) SALES OR EXCHANGES UNDER CERTAIN HAZ21 ARD MITIGATION PROGRAMS.—For purposes of this sub22 title, if property is sold or otherwise transferred to the 

23 Federal Government, a State or local government, or an 

24 Indian tribal government to implement hazard mitigation 

25 under the Robert T. Stafford Disaster Relief and Emer-
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1 gency Assistance Act (as in effect on the date of the enact2 ment of this subsection) or the National Flood Insurance 

3 Act (as in effect on such date), such sale or transfer shall 

4 be treated as an involuntary conversion to which this sec5 tion applies.’’. 

6 (c) EFFECTIVE DATE.— 

7 (1) QUALIFIED DISASTER MITIGATION PAY8 MENTS.—The amendments made by subsection (a) 

9 shall apply to amounts received in taxable years end10 ing after December 31, 2003. 

11 (2) DISPOSITIONS OF PROPERTY UNDER HAZ12 ARD MITIGATION PROGRAMS.—The amendments 

13 made by subsection (b) shall apply to sales or other 

14 dispositions in taxable years ending after December 

15 31, 2003. 

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