Hurricane Sandy Tax Relief Act of 2013

To amend the Internal Revenue Code of 1986 to provide tax relief for damages relating to Hurricane Sandy, and for other purposes. 1. Short title, etc (a) Short title This Act may be cited as the Hurricane Sandy Tax Relief Act of 2013 (b) Amendment of 1986 Code Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title, etc. Sec. 2. Waiver of adjusted gross income limitation for losses and increase in standard deduction by disaster casualty losses attributable to Hurricane Sandy. Sec. 3. Expensing of qualified disaster expenses. Sec. 4. Net operating losses attributable to federally declared disasters. Sec. 5. Waiver of certain mortgage revenue bond requirements following federally declared disasters. Sec. 6. Increased expensing for Hurricane Sandy qualified disaster assistance property. Sec. 7. Increased limitation on charitable contributions for disaster relief. Sec. 8. Increase in new markets tax credit for investments in community development entities serving Hurricane Sandy disaster areas. Sec. 9. Extension of expensing for environmental remediation costs. Sec. 10. Special rule for public utility casualty losses. Sec. 11. Determination of earned income for purposes of earned income credit and child tax credit. Sec. 12. Work Opportunity Credit. Sec. 13. Hurricane Sandy Bonds. Sec. 14. Additional low-income housing credit may be allocated in States damaged by Hurricane Sandy. Sec. 15. Special rules for use of retirement funds. 2. Waiver of adjusted gross income limitation for losses and increase in standard deduction by disaster casualty losses attributable to Hurricane Sandy (a) In general Subclause (I) of section 165(h)(3)(B)(i) is amended by striking January 1, 2010 January 1, 2010, or the Hurricane Sandy federally declared disaster (b) Hurricane Sandy federally declared disaster Paragraph (3) of section 165(h) is amended by adding at the end the following new subparagraph: (D) Application to Hurricane Sandy (i) In general Personal casualty losses shall be treated as described in subparagraph (B)(i) if such losses— (I) are attributable to the Hurricane Sandy federally declared disaster, and (II) occur in the Hurricane Sandy disaster area. (ii) Hurricane Sandy federally declared disaster For purposes of clause (i), the term Hurricane Sandy federally declared disaster (iii) Hurricane Sandy disaster area The term Hurricane Sandy disaster area . (c) Effective date The amendments made by this subsection shall apply to taxable years ending after October 28, 2012. 3. Expensing of qualified disaster expenses (a) In general Paragraph (2) of 198A(b) is amended— (1) in subparagraph (A) by striking January 1, 2010 January 1, 2010, or released in the Hurricane Sandy disaster area on account of the Hurricane Sandy federally declared disaster, as defined by section 165(h)(3)(D) (2) in subparagraph (B) by striking such date such date or which is business-related property in the Hurricane Sandy disaster area that is damaged or destroyed as a result of the Hurricane Sandy federally declared disaster (as so defined) (3) in subparagraph (C) by striking such date such date or which is business-related property in the Hurricane Sandy disaster area that is damaged as a result of the Hurricane Sandy federally declared disaster (as so defined) (b) Effective date The amendments made by this section shall apply to amounts paid or incurred after October 28, 2012. 4. Net operating losses attributable to federally declared disasters (a) In general Subsection (j) of section 172 is amended by adding at the end the following new paragraph: (5) Application to Hurricane Sandy (A) In general Losses shall be treated as described in paragraph (1)(A)(i) if such losses are attributable to the Hurricane Sandy federally declared disaster (as defined in section 165(h)(3)(D)) and occur in the Hurricane Sandy disaster area (as so defined). (B) Special rule For purposes of subparagraph (A), paragraph (4) shall not apply. . (b) Effective date The amendment made by this section shall apply to taxable years ending after October 28, 2012. 5. Waiver of certain mortgage revenue bond requirements following federally declared disasters (a) In general Subparagraphs (A)(i) and (B)(i) of section 143(k)(12), as added by the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, are each amended by striking January 1, 2010 January 1, 2010, or in the case of a residence located in the Hurricane Sandy disaster area on October 29, 2012, by reason of the Hurricane Sandy federally declared disaster, as defined by section 165(h)(3)(D) (b) Conforming amendments Subparagraph (A)(ii) of such section is amended by striking such date such date or by reason of the Hurricane Sandy federally declared disaster (as so defined) (c) Effective date The amendments made by this section shall apply to disasters occurring after October 28, 2012. 6. Increased expensing for Hurricane Sandy qualified disaster assistance property (a) In general Subsection (e) of section 179 is amended to read as follows: (e) Special rules for Hurricane Sandy (1) In general If a taxpayer elects the application of this subsection for a taxable year and places in service during the taxable year any Hurricane Sandy qualified disaster assistance property— (A) the dollar amount in effect under subsection (b)(1) for the taxable year shall be increased by the qualified disaster limitation amount, and (B) the dollar amount in effect under subsection (b)(2) for the taxable year shall be increased by the qualified disaster limitation reduction amount. (2) Qualified disaster limitation amount For purposes of paragraph (1), the term qualified disaster limitation amount (A) $500,000, or (B) the cost of Hurricane Sandy qualified disaster assistance property placed in service during the taxable year. (3) Qualified disaster limitation reduction amount For purposes of paragraph (1), the term qualified disaster limitation amount (A) $2,000,000, or (B) the cost of Hurricane Sandy qualified disaster assistance property placed in service during the taxable year. (4) Hurricane Sandy qualified disaster assistance property For purposes of this subsection— (A) In general The term Hurricane Sandy qualified disaster assistance property (i) the original use of which in the Hurricane Sandy disaster area commences with the taxpayer on or after October 29, 2012, (ii) substantially all of the use of which is in the Hurricane Sandy disaster area, and (iii) which— (I) rehabilitates property damaged, or replaces property destroyed or condemned, as a result of the Hurricane Sandy federally declared disaster, except that, for purposes of this clause, property shall be treated as replacing property destroyed or condemned if, as part of an integrated plan, such property replaces property which is included in a continuous area which includes real property destroyed or condemned, and (II) is located in the same county as the property being rehabilitated or replaced, (iv) which is placed in service or acquired by the taxpayer by purchase (as defined in subsection (d)) on or after October 29, 2012, but only if no written binding contract for the acquisition was in effect before such date, and (v) which is placed in service by the taxpayer on or after October 29, 2012, and before December 31, 2015 (December 31, 2016, in the case of nonresidential real property and residential rental property). (B) Qualified property The term qualified property (i) tangible property to which section 168 applies and which has a recovery period of 39 years or less, or (ii) computer software (as defined in section 167(f)(1)(B)) for which a deduction is allowable under section 167(a). (C) Exceptions (i) Alternative depreciation property Such term shall not include any property to which the alternative depreciation system under section 168(g) applies, determined without regard to paragraph (7) thereof (relating to election to have system apply). (ii) Tax-exempt bond financed property Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103. (D) Election An election under this subsection for any taxable year shall— (i) specify the items of Hurricane Sandy qualified disaster assistance property to which the election applies and the portion of the cost of each of such items which is to be taken into account under paragraph (1), and (ii) be made on the taxpayer’s return of the tax imposed by this chapter for the taxable year. (E) Special rules For purposes of this subsection, rules similar to the rules of subparagraph (E) of section 168(k)(2) shall apply, except that such subparagraph shall be applied— (i) by substituting the date of the Hurricane Sandy federally declared disaster December 31, 2007 (ii) by substituting January 1, 2016 January 1, 2014 (iii) by substituting Hurricane Sandy qualified section 179 disaster assistance property qualified property (5) Terms relating to Hurricane Sandy For purposes of this subsection, the terms Hurricane Sandy federally declared disaster Hurricane Sandy disaster area (6) Recapture For purposes of this subsection, rules similar to the rules under subsection (d)(10) shall apply with respect to any qualified section 179 disaster assistance property which ceases to be qualified section 179 disaster assistance property. . (b) Effective date The amendments made by this section shall apply to taxable years ending after October 28, 2012. 7. Increased limitation on charitable contributions for disaster relief (a) Individuals Paragraph (1) of section 170(b) is amended by redesignating subparagraphs (F) and (G) as subparagraphs (G) and (H), respectively, and by inserting after subparagraph (E) the following new subparagraph: (F) Qualified Hurricane Sandy disaster contributions (i) In general Any qualified Hurricane Sandy disaster contribution shall be allowed to the extent that the aggregate of such contributions does not exceed the excess of 80 percent of the taxpayer’s contribution base over the amount of all other charitable contributions allowable under this paragraph. (ii) Qualified Hurricane Sandy disaster contribution For purposes of this subparagraph, the term qualified Hurricane Sandy disaster contribution (I) such contribution— (aa) is paid during the period beginning on October 29, 2012, and ending on December 31, 2013, in cash to an organization described in subparagraph (A), and (bb) is made for relief efforts in the Hurricane Sandy disaster area related to the Hurricane Sandy federally declared disaster, (II) the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of subsection (f)(8)) that such contribution was used (or is to be used) for relief efforts in the Hurricane Sandy disaster area related to the Hurricane Sandy federally declared disaster, and (III) the taxpayer has elected the application of this subparagraph with respect to such contribution. (iii) Exception A qualified Hurricane Sandy disaster contribution shall not include a contribution by a donor if the contribution is— (I) to an organization described in section 509(a)(3), or (II) for establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2)). (iv) Carryover (I) In general If the aggregate amount of contributions described in clause (i) exceeds the limitation under clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 5 succeeding years in order of time. (II) Coordination with other subparagraphs For purposes of applying this subparagraph and subsection (d)(1), contributions described in clause (i) shall not be treated as described in subparagraph (A) and such subparagraph shall be applied without regard to such contributions. (v) Application of election to partnerships and S corporations In the case of a partnership or S corporation, the election under subparagraph (F)(ii)(III) shall be made separately by each partner or shareholder. (vi) Hurricane Sandy federally declared disaster and disaster area For purposes of this subparagraph, the terms Hurricane Sandy federally declared disaster Hurricane Sandy disaster area . (b) Corporations (1) In general Paragraph (2) of section 170(b) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph: (C) Qualified disaster contributions (i) In general Any qualified Hurricane Sandy disaster contribution shall be allowed to the extent that the aggregate of such contributions does not exceed the excess of 20 percent of the taxpayer’s taxable income over the amount of charitable contributions allowed under subparagraph (A). (ii) Carryover If the aggregate amount of contributions described in clause (i) exceeds the limitation under clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 5 succeeding years in order of time. (iii) Qualified disaster contribution The term qualified Hurricane Sandy disaster contribution . (2) Conforming amendments (A) Subparagraph (A) of section 170(b)(2) is amended by striking subparagraph (B) applies subparagraphs (B) and (C) apply (B) Subparagraph (B) of section 170(b)(2) is amended by striking subparagraph (A) subparagraphs (A) and (C) (c) Effective date The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. 8. Increase in new markets tax credit for investments in community development entities serving Hurricane Sandy disaster areas (a) In general Paragraph (1) of section 45D(f) is amended by striking the period at the end of subparagraph (G) and inserting , and (H) in the case of the Hurricane Sandy Federal disaster area, $250,000,000. . (b) Rules relating to Hurricane Sandy Subsection (f) of section 45D is amended by adding at the end the following new paragraph: (4) Increased special allocation for community development entities serving Hurricane Sandy Federal disaster areas (A) In general The limitation under paragraph (1)(H) shall be allocated among qualified community development entities to make qualified low-income community investments within the Hurricane Sandy disaster area (as defined in section 165(h)(3)(D)). (B) Allocation of increase The limitation under subparagraph (A) shall be allocated by the Secretary under paragraph (2) to qualified community development entities and shall give priority to such entities with a record of having successfully provided capital or technical assistance to businesses or communities within the Hurricane Sandy disaster area. (C) Separate carryover of unused limitation Paragraph (3) shall be applied separately with respect to the limitation under paragraph (1)(H). . (c) Effective date The amendments made by this section shall apply to calendar years beginning after 2011. 9. Extension of expensing for environmental remediation costs (a) In general Section 198 is amended by adding at the end the following: (i) Extension relating to Hurricane Sandy Subsection (h) shall not apply in the case of any qualified environmental remediation expenditure paid or incurred after the date of the Hurricane Sandy federally declared disaster (as defined in section 165(h)(3)(D)) and before January 1, 2015, by reason of such disaster at a qualified contaminated site located in the Hurricane Sandy disaster area (as so defined). . (b) Effective date The amendment made by subsection (a) shall apply to expenditures paid or incurred after October 28, 2012. 10. Special rule for public utility casualty losses (a) In general Subsection (f) of section 172 is amended by adding at the end the following: (7) Hurricane Sandy public utility casualty losses (A) In general The amount described in paragraph (1)(A) for any taxable year shall be increased by the Hurricane Sandy public utility casualty loss for such taxable year. (B) Hurricane Sandy public utility casualty loss For purposes of this paragraph, the term Hurricane Sandy public utility casualty loss (i) such loss is allowed as a deduction under section 165 for the taxable year, (ii) such loss is by reason of Hurricane Sandy, and (iii) the taxpayer elects the application of this paragraph with respect to such loss. (C) Reduction for gains from involuntary conversion The amount of any Hurricane Sandy public utility casualty loss which would (but for this subparagraph) be taken into account under subparagraph (A) for any taxable year shall be reduced by the amount of any gain recognized by the taxpayer for such year from the involuntary conversion by reason of Hurricane Sandy of public utility property (as so defined) located in the Hurricane Sandy disaster area. (D) Hurricane Sandy disaster area For purposes of this paragraph, the term Hurricane Sandy disaster area (E) Coordination with general disaster loss rules Section 168(k) and section 165(i) shall not apply to any Hurricane Sandy public utility casualty loss to the extent such loss is taken into account under subparagraph (A). (F) Election Any election under subparagraph (B)(iii) shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year. . (b) Effective date The amendment made by subsection (a) shall apply to losses arising in taxable years ending after October 28, 2012. 11. Determination of earned income for purposes of earned income credit and child tax credit (a) Earned income credit Section 32 is amended by adding at the end the following new subsection: (n) Special rule relating to Hurricane Sandy For purposes of this section and section 24(d)— (1) In general In the case of a qualified individual, if the earned income of the taxpayer for the taxable year which includes the applicable date is less than the earned income of the taxpayer for the preceding taxable year, the credit allowed under subsection (a) may, at the election of the taxpayer, be determined by substituting— (A) such earned income for the preceding taxable year, for (B) such earned income for the taxable year which includes the applicable date. (2) Qualified individual For purposes of this subsection, the term qualified individual (A) whose principal place of abode on the applicable date was located in the Hurricane Sandy disaster area and such individual was displaced from such principal place of abode by reason of the Hurricane Sandy federally declared disaster, or (B) who performed substantially all employment services in the disaster area and was so employed on the applicable date. (3) Other definitions For purposes of this subsection— (A) Applicable date The term applicable date (B) Hurricane Sandy federally declared disaster and disaster area The terms Hurricane Sandy federally declared disaster Hurricane Sandy disaster area (4) Special rules (A) Application to joint returns For purposes of paragraph (1), in the case of a joint return for a taxable year which includes the applicable date— (i) such paragraph shall apply if either spouse is a qualified individual, and (ii) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year. (B) Uniform application of election Any election made under paragraph (1) shall apply with respect to both this section and section 24(d). (C) Errors treated as mathematical error For purposes of section 6213, an incorrect use on a return of earned income pursuant to paragraph (1) shall be treated as a mathematical or clerical error. (D) No effect on determination of gross income, etc Except as otherwise provided in this subsection, this title shall be applied without regard to any substitution under paragraph (1). . (b) Child tax credit Subsection (d) of section 24 is amended by adding at the end the following new paragraph: (5) Special rule relating to Hurricane Sandy See section 32(n) for determination of earned income with respect to the Hurricane Sandy federally declared disaster. . (c) Effective date The amendments made by this section shall apply to taxable years ending after October 28, 2012. 12. Work Opportunity Credit (a) In general Paragraph (1) of section 51(d) is amended by striking or , or (J) a Hurricane Sandy employee. . (b) Hurricane Sandy employee Subsection (d) of section 51 is amended by adding at the end the following: (15) Hurricane Sandy employee (A) In general The term Hurricane Sandy employee (i) who, on or after October 29, 2012, and on or before November 3, 2012, had a principal place of abode in the Hurricane Sandy disaster area, (ii) who did not apply for or receive unemployment compensation under State or Federal law in 2012 before October 29, 2012, but first applied for or received such compensation after such date and before February 15, 2013, (iii) who receives such compensation without a break until the earlier of exhausting such compensation under Federal or State law or the hiring date, and (iv) whose hiring date for a position the principal place of employment of which is located in the Hurricane Sandy disaster area (as defined in section 165(h)(3)(D)) is before January 1, 2014. (B) Reasonable identification acceptable In lieu of the certification requirement under subparagraph (A) of paragraph (13), an individual may provide to the employer reasonable evidence that the individual is a Hurricane Sandy employee, and subparagraph (B) of such paragraph shall be applied as if such evidence were a certification described in such subparagraph. (C) Special rules For purposes of this paragraph— (i) subsection (c)(4) shall not apply, and (ii) subsection (i)(2) shall not apply with respect to the first hire of such employee as a Hurricane Sandy employee, unless such employee was an employee of the employer on October 28, 2012. . (c) Effective date The amendments made by this section shall apply to taxable years ending after October 28, 2012. 13. Hurricane Sandy Bonds (a) In general Subpart A of part IV of subchapter B of chapter 1 is amended by inserting after section 146 the following new section: 146A. Hurricane Sandy Bonds (a) In general For purposes of this title, any qualified Hurricane Sandy Bond shall— (1) be treated as an exempt facility bond, and (2) not be subject to section 146. (b) Qualified Hurricane Sandy Bond For purposes of this section, the term qualified Hurricane Sandy bond (1) 95 percent or more of the net proceeds of such issue are to be used for qualified project costs, (2) such bond is issued by a State or any political subdivision thereof any part of which is in the Hurricane Sandy disaster area, (3) the Governor of the issuing State designates such bond for purposes of this section, and (4) such bond is issued after the date of the enactment of this section and before January 1, 2016. (c) Limitation on amount of bonds (1) In general The maximum aggregate face amount of bonds which may be designated under this section shall not exceed— (A) $3,200,000,000 in the case of Connecticut, (B) $9,200,000,000 in the case of New Jersey, and (C) $9,200,000,000 in the case of New York. (2) Reduction for failure to issue bonds (A) 2013 If after the date of enactment of this section and before January 1, 2014, less than 10 percent of the face amount of the bond limitation for a State has been issued, the authorized limitation for such State under paragraph (1) shall be reduced by the amount by which 10 percent of the face amount of the bond limitation for such State exceeds the face amount of issued bonds. (B) 2014 If after the date of enactment of this section and before January 1, 2015, less than 30 percent of the face amount of the bond limitation for a State has been issued, the authorized limitation for such State shall be reduced by the amount by which 10 percent of the face amount of the bond limitation for such State exceeds the face amount of issued bonds. (3) Movable property No bonds shall be issued which are to be used for movable fixtures and equipment. (4) Treatment of current refunding bonds Paragraph (1) shall not apply to any bond (or series of bonds) issued to refund a qualified Hurricane Sandy bond, if— (A) the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue, (B) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and (C) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond. For purposes of subparagraph (A), average maturity shall be determined in accordance with section 147(b)(2)(A). (d) Qualified project costs For purposes of this section, the term qualified project costs (1) residential rental property (as defined in section 142(d)), (2) nonresidential real property (including fixed improvements associated with such property), (3) a facility described in paragraph (2) or (3) of section 142(a), or (4) public utility property (as defined in section 168(i)(10)), which is located in the Hurricane Sandy Disaster area and was damaged or destroyed by reason of the Hurricane Sandy federally declared disaster. (e) Special rules In applying this title to any qualified Hurricane Sandy Bond, the following modifications shall apply: (1) Section 147(d) (relating to acquisition of existing property not permitted) shall be applied by substituting 50 percent 15 percent (2) Section 148(f)(4)(C) (relating to exception from rebate for certain proceeds to be used to finance construction expenditures) shall apply to the available construction proceeds of bonds issued under this section. For purposes of the preceding sentence, the following spending requirements shall apply in lieu of the requirements in clause (ii) of such section: (A) 40 percent of such available construction proceeds are spent for the governmental purposes of the issue within the 2-year period beginning on the date the bonds are issued, (B) 60 percent of such proceeds are spent for such purposes within the 3-year period beginning on such date, (C) 80 percent of such proceeds are spent for such purposes within the 4-year period beginning on such date, and (D) 100 percent of such proceeds are spent for such purposes within the 5-year period beginning on such date. (3) Repayments of principal on financing provided by the issue— (A) may not be used to provide financing, and (B) must be used not later than the close of the 1st semiannual period beginning after the date of the repayment to redeem bonds which are part of such issue. The requirement of subparagraph (B) shall be treated as met with respect to amounts received within 5 years after the date of issuance of the issue (or, in the case of a refunding bond, the date of issuance of the original bond) if such amounts are used by the close of such 5 years to redeem bonds which are part of such issue. (4) Section 57(a)(5) shall not apply. (f) Separate issue treatment of portions of an issue This section shall not apply to the portion of an issue which (if issued as a separate issue) would be treated as a qualified bond or as a bond that is not a private activity bond (determined without regard to paragraph (1)), if the issuer elects to so treat such portion. (g) Hurricane Sandy federally declared disaster and disaster area The terms Hurricane Sandy federally declared disaster Hurricane Sandy disaster area . (b) Clerical amendment The table of sections for subpart A of part IV of subchapter B of chapter 1 is amended by inserting after the item relating to section 146 the following new item: Sec. 146A. Hurricane Sandy Bonds. . (c) Effective date The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 14. Additional low-income housing credit may be allocated in States damaged by Hurricane Sandy (a) In general Paragraph (3) of section 42(h) (relating to limitation on aggregate credit allowable with respect to projects located in a State) is amended by adding at the end the following new subparagraph: (J) Increase in State housing credit for States damaged by Hurricane Sandy (i) In general In the case of calendar year 2013, the State housing credit ceiling of each State any portion of which includes any portion of the Hurricane Sandy disaster area shall be increased by so much of the aggregate housing credit dollar amount as does not exceed the applicable limitation allocated by the State housing credit agency of such State for such calendar year to buildings located in such disaster area. (ii) Applicable limitation For purposes of clause (i), the applicable limitation is the greater of— (I) $8 multiplied by the population of the area described in clause (vii)(I), or (II) 50 percent of the State housing credit ceiling (determined without regard to this subparagraph) for 2013. (iii) Applicable percentage For purposes of this section, the applicable percentage with respect to any building to which amounts allocated under clause (i) shall be determined under subsection (b)(2), except that subparagraph (A) thereof shall be applied by substituting December 31, 2015 December 31, 2013 (iv) Allocations treated as made first from additional allocation amount for purposes of determining carryover For purposes of determining the unused State housing credit ceiling under subparagraph (C) for any calendar year, any increase in the State housing credit ceiling under clause (i) shall be treated as an amount described in clause (ii) of such subparagraph. (v) Difficult development area (I) In general In the case of property placed in service during 2013, 2014, or 2015, the Hurricane Sandy disaster area shall be treated as a difficult development area designated under subclause (I) of subsection (d)(5)(B)(iii), and shall not be taken into account for purposes of applying the limitation under subclause (II) of such subsection. (II) Application of clause Subclause (I) shall apply only to— (aa) housing credit dollar amounts allocated during 2013, and (bb) to the extent that paragraph (1) does not apply to any building by reason of paragraph (4), only with respect to bonds issued after December 31, 2012. (vi) Hurricane Sandy disaster area and Hurricane Sandy federally declared disaster For purposes of this subparagraph— (I) Disaster area The term Hurricane Sandy disaster area (II) Hurricane Sandy federally declared disaster and disaster area The term Hurricane Sandy federally declared disaster . (b) Effective date The amendment made by this section shall take effect on the date of the enactment of this Act. 15. Special rules for use of retirement funds (a) Early withdrawal from retirement plans Paragraph (2) of section 72(t) is amended by adding at the end the following new subparagraph: (H) Hurricane Sandy distributions Distributions to an individual which are Hurricane Sandy distributions (as defined in paragraph (11)). . (b) Special rules Subsection (t) of section 72 is amended by adding at the end the following: (11) Special rules relating to use of retirement funds relating to Hurricane Sandy (A) Distributions For purposes of this paragraph— (i) In general The term Hurricane Sandy distribution (ii) Aggregate dollar limitation (I) In general For purposes of this paragraph, the aggregate amount of distributions received by an individual which may be treated as Hurricane Sandy distributions for any taxable year shall not exceed the excess (if any) of— (aa) $100,000, over (bb) the aggregate amounts treated as Hurricane Sandy distributions received by such individual for all prior taxable years. (II) Treatment of plan distributions If a distribution to an individual would (without regard to subclause (I)) be a Hurricane Sandy distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such distribution as a Hurricane Sandy distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000. (III) Controlled group For purposes of subclause (II), the term controlled group (iii) Amount distributed may be repaid (I) In general Any individual who receives a Hurricane Sandy distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as the case may be. (II) Treatment of repayments of distributions from eligible retirement plans other than IRAs For purposes of this title, if a contribution is made pursuant to subclause (I) with respect to a Hurricane Sandy distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the Hurricane Sandy distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (III) Treatment of repayments for distributions from IRAs For purposes of this title, if a contribution is made pursuant to subclause (I) with respect to a Hurricane Sandy distribution from an individual retirement plan (as defined by section 7701(a)(37)), then, to the extent of the amount of the contribution, the Hurricane Sandy distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (iv) Income inclusion spread over 3-year period (I) In general In the case of any Hurricane Sandy distribution, unless the taxpayer elects not to have this clause apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable year period beginning with such taxable year. (II) Special rule For purposes of subclause (I), rules similar to the rules of subparagraph (E) of section 408A(d)(3) shall apply. (v) Special rules (I) Exemption of distributions from trustee to trustee transfer and withholding rules For purposes of sections 401(a)(31), 402(f), and 3405, Hurricane Sandy distributions shall not be treated as eligible rollover distributions. (II) Hurricane Sandy distributions treated as meeting plan distribution requirements For purposes this title, a Hurricane Sandy distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A). (B) Recontributions of withdrawals for home purchases (i) In general Any individual who received a distribution described in clause (ii) may, during the applicable period, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan (as defined in section 402(c)(8)(B)) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may be. (ii) Distribution described For purposes of clause (i), a distribution is described in this clause if the distribution— (I) is described in paragraph (2)(F) or section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), or 403(b)(11)(B), (II) is received after April 29, 2012, and before October 30, 2012, and (III) was to be used to purchase or construct a principal residence in the Hurricane Sandy disaster area (as defined in section 165(h)(3)(D)), but which was not so purchased or constructed on account of Hurricane Sandy. (iii) Applicable period For purposes of this subparagraph, the term applicable period Hurricane Sandy Tax Relief Act of 2013 (iv) Treatment of repayments Rules similar to the rules of subclauses (II) and (III) of subparagraph (A)(iii) shall apply for purposes of this subparagraph. . (c) Loans from qualified plans Subsection (p) of section 72 is amended by adding at the end the following: (6) Special rules relating to Hurricane Sandy (A) Increase in limit on loans not treated as distributions In the case of any loan from a qualified employer plan to a qualified individual made during the applicable period— (i) paragraph (2)(A)(i) shall be applied by substituting $100,000 $50,000 (ii) paragraph (2)(A)(ii) shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan (B) Delay of repayment In the case of a qualified individual with an outstanding loan on or after the qualified beginning date from a qualified employer plan— (i) if the due date pursuant to subparagraph (B) or (C) of paragraph (2) for any repayment with respect to such loan occurs during the period beginning on the qualified beginning date and ending on December 31, 2013, such due date shall be delayed for 1 year, (ii) any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under clause (i) and any interest accruing during such delay, and (iii) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of paragraph (2), the period described in clause (i) shall be disregarded. (C) Qualified individual For purposes of this paragraph— (i) In general The term qualified individual (ii) Qualified Hurricane Sandy individual The term qualified Hurricane Sandy individual (D) Other definitions For purposes of this paragraph— (i) Applicable period The applicable period is the period beginning on the date of enactment of the Hurricane Sandy Tax Relief Act of 2013 (ii) Qualified beginning date The qualified beginning date is October 29, 2012. . (d) Effective date The amendments made by this section shall apply to years ending after October 28, 2012. (e) Provisions relating to plan amendments (1) In general If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i). (2) Amendments to which subsection applies (A) In general This subsection shall apply to any amendment to any plan or annuity contract which is made— (i) pursuant to any provision of, or amendment made by. this section, or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under any provision of, or amendment made by, this section, and (ii) on or before the last day of the first plan year beginning on or after January 1, 2014, or such later date as the Secretary of the Treasury may prescribe. In the case of a governmental plan (as defined in section 414(d)), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii). (B) Conditions This subsection shall not apply to any amendment unless— (i) during the period— (I) beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and (II) ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted), the plan or contract is operated as if such plan or contract amendment were in effect; and (ii) such plan or contract amendment applies retroactively for such period.

Summary: Hurricane Sandy Tax Relief Act of 2013 - Amends the Internal Revenue Code to provide tax benefits for individuals and businesses affected by Hurricane Sandy, including: an exemption from the gross income limitation for deducting casualty losses attributable to Hurricane Sandy; expensing allowances for Hurricane Sandy disaster expenses, disaster assistance property, and environmental remediation expenses; treatment of losses attributable to Hurricane Sandy as net operating losses; suspension of mortgage revenue bond requirements for residences located in the Hurricane Sandy disaster area; an increased charitable tax deduction for Hurricane Sandy disaster relief contributions; a special allocation of the new markets tax credit for investments in community development entities serving the disaster area; special adjustments to the earned income tax credit and the child tax credit for individuals living in the disaster area; a work opportunity tax credit for hiring employees residing in the Hurricane Sandy disaster area; authorization for issuance of Hurricane Sandy bonds to finance disaster relief projects; an additional allocation of low-income housing credits in states affected by Hurricane Sandy; and an exemption from the 10% penalty for premature distributions from a retirement plan to individuals residing in the Hurricane Sandy disaster area.