347 
taxpayer shall, to the extent of the amount of 
the contribution, be treated as having received 
the qualified distribution in an eligible rollover 
distribution (as defined in section 402(c)(4) of 
such Code) and as having transferred the 
amount to the eligible retirement plan in a di-
rect trustee to trustee transfer within 60 days 
of the distribution. 
(B) TREATMENT
OF
REPAYMENTS
FOR 
DISTRIBUTIONS FROM IRAS.—For purposes of 
the Internal Revenue Code of 1986, if a con-
tribution is made pursuant to paragraph (1) 
with respect to a qualified distribution from an 
individual retirement plan (as so defined), then, 
to the extent of the amount of the contribution, 
the qualified distribution shall be treated as a 
distribution described in section 408(d)(3) of 
such Code and as having been transferred to 
the eligible retirement plan (as so defined) in a 
direct trustee to trustee transfer within 60 days 
of the distribution. 
(b) DEFINITIONS.—For purposes of this section— 
(1) 
QUALIFIED
DISTRIBUTION.—The 
term 
‘‘qualified distribution’’ means any distribution—
348 
(A) 
described 
in 
section 
401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 
to the extent such distribution relates to finan-
cial hardship), 403(b)(11)(B), or 72(t)(2)(F) of 
the Internal Revenue Code of 1986, 
(B) received after February 28, 2005, and 
before August 29, 2005, and 
(C) which was to be used to purchase or 
construct a principal residence in a Hurricane 
Katrina disaster area, but which was not so 
purchased or constructed. 
(2) DISASTER DECLARATION DATE.—The term 
‘‘disaster declaration date’’ means the date on which 
the President designated the area as a Hurricane 
Katrina disaster area. 
SEC. 704. LOANS FROM QUALIFIED PLANS TO VICTIMS OF 
HURRICANE KATRINA. 
(a) INCREASE IN LIMIT ON LOANS NOT TREATED AS 
DISTRIBUTIONS.—In the case of any loan from a qualified 
employer plan (as defined under section 72(p)(4) of the 
Internal Revenue Code of 1986) to a qualified individual 
(as defined in section 102(c)) made after the date of en-
actment of this Act and before the date which is 1 year 
after the disaster declaration date (as defined in section 
103(b)(2))—
349 
(1) clause (i) of section 72(p)(2)(A) of such 
Code shall be applied by substituting ‘‘$100,000’’ 
for ‘‘$50,000’’, and 
(2) clause (ii) of such section shall be applied 
by substituting ‘‘the present value of the nonforfeit-
able accrued benefit of the employee under the plan’’ 
for ‘‘one-half of the present value of the nonforfeit-
able accrued benefit of the employee under the 
plan’’. 
(b) DELAY OF REPAYMENT.—In the case of a quali-
fied individual (as defined in section 102(c)) with an out-
standing loan on or after August 26, 2005, from a quali-
fied employer plan (as defined in section 72(p)(4) of the 
Internal Revenue Code of 1986)— 
(1) if the due date pursuant to subparagraph 
(B) or (C) of section 72(p)(2) of such Code for any 
repayment with respect to such loan occurs during 
the period beginning after August 29, 2005, and 
ending before August 30, 2006, such due date shall 
be delayed for 1 year, 
(2) any subsequent repayments with respect to 
any such loan shall be appropriately adjusted to re-
flect the delay in the due date under paragraph (1) 
and any interest accruing during such delay, and
350 
(3) in determining the 5-year period and the 
term of a loan under subparagraph (B) or (C) of 
section 72(p)(2) of such Code, such period shall be 
disregarded. 
SEC. 705. PROVISIONS RELATING TO PLAN AMENDMENTS. 
(a) IN GENERAL.—If this section applies to any plan 
or contract amendment such plan or contract shall be 
treated as being operated in accordance with the terms 
of the plan during the period described in subsection 
(b)(2)(A). 
(b) AMENDMENTS TO WHICH SECTION APPLIES.— 
(1) IN GENERAL.—This section shall apply to 
any amendment to any plan or annuity contract 
which is made— 
(A) pursuant to any amendment made by 
this title, or pursuant to any regulation issued 
by the Secretary of the Treasury or the Sec-
retary of Labor under this title, and 
(B) on or before the last day of the first 
plan year beginning on or after January 1, 
2007, 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) of the Internal Revenue Code of 
1986), subparagraph (B) shall be applied by sub-
351 
stituting the date which is 2 years after the date 
otherwise applied under subparagraph (B). 
(2) CONDITIONS.—This section shall not apply 
to any amendment unless— 
(A) during the period— 
(i) beginning on the date the legisla-
tive or regulatory amendment described in 
paragraph (1)(A) takes effect (or in the 
case of a plan or contract amendment not 
required by such legislative or regulatory 
amendment, the effective date specified by 
the plan), and 
(ii) ending on the date described in 
paragraph (1)(B) (or, if earlier, the date 
the plan or contract amendment is adopt-
ed), 
the plan or contract is operated as if such plan 
or contract amendment were in effect; and 
(B) such plan or contract amendment ap-
plies retroactively for such period.
352 
CHAPTER II—EMPLOYMENT RELIEF 
SEC. 706. WORK OPPORTUNITY TAX CREDIT FOR HURRI-
CANE KATRINA EMPLOYEES. 
(a) IN GENERAL.—For purposes of section 51 of the 
Internal Revenue Code of 1986, a Hurricane Katrina em-
ployee shall be treated as a member of a targeted group. 
(b) HURRICANE KATRINA EMPLOYEE.—For pur-
poses of this section, the term ‘‘Hurricane Katrina em-
ployee’’ means any individual who, on August 28, 2005, 
had a principal place of abode in a Hurricane Katrina dis-
aster area. 
(c) SPECIAL RULES FOR DETERMINING CREDIT.— 
For purposes of applying subpart F of part IV of sub-
chapter A of chapter 1 of such Code to wages paid or in-
curred to any Hurricane Katrina employee— 
(1) section 51(c)(4) of such Code shall not 
apply, and 
(2) except in the case of an employee of the em-
ployer (within the meaning of section 51 of such 
Code) on August 28, 2005, or an employee initially 
hired after such date, section 51(i)(2) of such Code 
shall not apply. 
(d) APPLICATION OF SECTION.—This section shall 
apply only to wages (within the meaning on section 51(c) 
of such Code) paid or incurred to any individual who—
353 
(1) is being hired for a position the principal 
place of employment of which is located in a Hurri-
cane Katrina disaster area, and 
(2) who begins work for the employer during 
the 2-year period beginning on August 29, 2005. 
SEC. 707. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 
AFFECTED BY HURRICANE KATRINA. 
(a) IN GENERAL.—In the case of an eligible em-
ployer, there shall be allowed as a credit against the tax 
imposed by chapter 1 of the Internal Revenue Code of 
1986 for the taxable year an amount equal to 40 percent 
of the qualified wages with respect to each eligible em-
ployee of such employer for such taxable year. For pur-
poses of the preceding sentence, the amount of qualified 
wages which may be taken into account with respect to 
any individual shall not exceed $6,000. 
(b) DEFINITIONS.—For purposes of this section— 
(1) ELIGIBLE EMPLOYER.—The term ‘‘eligible 
employer’’ means any employer— 
(A) which conducted an active trade or 
business on August 28, 2005, in a Hurricane 
Katrina disaster area, and 
(B) with respect to whom the trade or 
business described in subparagraph (A) is inop-
erable on any day after August 28, 2005, and
354 
before January 1, 2006, as a result of damage 
sustained 
in 
connection 
with 
Hurricane 
Katrina. 
(2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible 
employee’’ means with respect to an eligible em-
ployer— 
(A) an employee whose principal place of 
employment on August 28, 2005, with such eli-
gible employer was in a Hurricane Katrina dis-
aster area, or 
(B) a Ready Reserve-National Guard em-
ployee of such eligible employer who is per-
forming qualified active duty and whose prin-
cipal place of employment immediately before 
the date on which such employee began per-
forming such qualified active duty was in a 
Hurricane Katrina disaster area. 
(3) QUALIFIED WAGES.—The term ‘‘qualified 
wages’’ means wages (as defined in section 51(c)(1) 
of the Internal Revenue Code of 1986, but without 
regard to section 3306(b)(2)(B) of such Code) paid 
or incurred by an eligible employer with respect to 
an eligible employee on any day after August 28, 
2005, and before January 1, 2006, which occurs 
during the period—
355 
(A) beginning on the date on which the 
trade or business described in paragraph (1) 
first became inoperable at the principal place of 
employment of the employee immediately before 
Hurricane Katrina, and 
(B) ending on the date on which such 
trade or business has resumed significant oper-
ations at such principal place of employment. 
Such term shall include wages paid without regard 
to whether the employee performs no services, per-
forms services at a different place of employment 
than such principal place of employment, or per-
forms services at such principal place of employment 
before significant operations have resumed. 
(4) READY
RESERVE-NATIONAL
GUARD
EM-
PLOYEE.—The 
term 
‘‘Ready 
Reserve-National 
Guard employee’’ means an employee who is a mem-
ber of the Ready Reserve of a reserve component of 
an Armed Force of the United States as described 
in section 10142 and 10101 of title 10, United 
States Code and who is performing qualified active 
duty. 
(5) QUALIFIED
ACTIVE
DUTY.—The term 
‘‘qualified active duty’’ means—
356 
(A) active duty, other than the training 
duty specified in section 10147 of title 10, 
United States Code (relating to training re-
quirements for Ready Reserve), or section 
502(a) of title 32, United States Code (relating 
to required drills and field exercises for the Na-
tional Guard), in connection with which an em-
ployee is entitled to reemployment rights and 
other benefits or to a leave of absence from em-
ployment under chapter 43 of title 38, United 
States Code, and 
(B) hospitalization incident to such duty. 
(c) CERTAIN RULES TO APPLY.—For purposes of 
this section, rules similar to the rules of sections 51(i)(1), 
52, and 280C(a) of the Internal Revenue Code of 1986 
of the shall apply. 
(d) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—The credit allowed under this section shall be 
added to the current year business credit under section 
38(b) of the Internal Revenue Code of 1986 and shall be 
treated as a credit allowed under subpart D of part IV 
of subchapter A of chapter 1 of such Code.
357 
CHAPTER III—CHARITABLE GIVING 
INCENTIVES 
SEC. 711. TEMPORARY SUSPENSION OF LIMITATIONS ON 
CHARITABLE CONTRIBUTIONS. 
(a) IN GENERAL.—Except as otherwise provided in 
subsection (b), section 170(b) of the Internal Revenue 
Code of 1986 shall not apply to qualified contributions and 
such contributions shall not be taken into account for pur-
poses of subsections (b) and (d) of section 170 of the In-
ternal Revenue Code of 1986. 
(b) TREATMENT OF EXCESS CONTRIBUTIONS.—For 
purposes of section 170 of such Code— 
(1) INDIVIDUALS.—In the case of an indi-
vidual— 
(A) LIMITATION.—Any qualified contribu-
tion shall be allowed only to the extent that the 
aggregate of such contributions does not exceed 
the excess of the taxpayer’s contribution base 
(as defined in paragraph (1) of section 170(b) 
of such Code) over the amount of all other 
charitable contributions allowed under such 
paragraph. 
(B) 
CARRYOVER.—If 
the 
aggregate 
amount of qualified contributions made in the 
contribution year (within the meaning of section
358 
170(d)(1) of such Code) exceeds the limitation 
of subparagraph (A), such excess shall be added 
to the excess described in the portion of sub-
paragraph (A) of such section which precedes 
clause (i) thereof for purposes of applying such 
section. 
(2) CORPORATIONS.—In the case of a corpora-
tion— 
(A) LIMITATION.—Any qualified contribu-
tion shall be allowed only to the extent that the 
aggregate of such contributions does not exceed 
the excess of the taxpayer’s taxable income (as 
determined under paragraph (2) of section 
170(b) of such Code) over the amount of all 
other charitable contributions allowed under 
such paragraph. 
(B) CARRYOVER.—Rules similar to the 
rules of paragraph (1)(B) shall apply for pur-
poses of this paragraph. 
(c) EXCEPTION
TO
OVERALL
LIMITATION
ON 
ITEMIZED DEDUCTIONS.—So much of any deduction al-
lowed under section 170 of such Code as does not exceed 
the qualified contributions made during the taxable year 
shall not be treated as an itemized deduction for purposes 
of section 68 of such Code.
359 
(d) QUALIFIED CONTRIBUTIONS.—For purposes of 
this section, the term ‘‘qualified contribution’’ means any 
charitable contribution (as defined in section 170(c) of 
such Code)— 
(1) made during the period beginning on Au-
gust 28, 2005, and ending on December 31, 2005, 
in cash to an organization described in section 
170(b)(1)(A) of such Code (other than an organiza-
tion described in section 509(a)(3) of such Code), 
and 
(2) with respect to which the taxpayer has 
elected the application of this section. 
In the case of a partnership or S corporation, the election 
under paragraph (2) shall be made separately by each 
partner or shareholder. In the case of a corporation, a con-
tribution shall be treated as a qualified contribution only 
if the contribution is for relief efforts related to Hurricane 
Katrina. 
SEC. 712. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 
OF FOOD INVENTORIES. 
(a) IN GENERAL.—Subsection (e) of section 170 (re-
lating to certain contributions of ordinary income and cap-
ital gain property) is amended by adding at the end the 
following new paragraph:
360 
‘‘(7) APPLICATION OF PARAGRAPH (3) TO CER-
TAIN
CONTRIBUTIONS
OF
FOOD
INVENTORY.—For 
purposes of this section— 
‘‘(A) EXTENSION TO INDIVIDUALS.—In the 
case of a charitable contribution of apparently 
wholesome food— 
‘‘(i) paragraph (3)(A) shall be applied 
without regard to whether the contribution 
is made by a C corporation, and 
‘‘(ii) in the case of a taxpayer other 
than a C corporation, the aggregate 
amount of such contributions for any tax-
able year which may be taken into account 
under this section shall not exceed 10 per-
cent of the taxpayer’s net income for such 
taxable year from all trades or businesses 
from which such contributions were made 
for such taxable year, computed without 
regard to this section. 
‘‘(B) LIMITATION ON REDUCTION.—In the 
case of a charitable contribution of apparently 
wholesome food, notwithstanding paragraph 
(3)(B), the amount of the reduction determined 
under paragraph (1)(A) shall not exceed the 
amount by which the fair market value of such
361 
property exceeds twice the basis of such prop-
erty. 
‘‘(C) DETERMINATION
OF
BASIS.—If a 
taxpayer— 
‘‘(i) does not account for inventories 
under section 471, and 
‘‘(ii) is not required to capitalize indi-
rect costs under section 263A, 
the taxpayer may elect, solely for purposes of 
paragraph (3)(B), to treat the basis of any ap-
parently wholesome food as being equal to 25 
percent of the fair market value of such food. 
‘‘(D) DETERMINATION
OF
FAIR
MARKET 
VALUE.—In the case of a charitable contribu-
tion of apparently wholesome food which is a 
qualified contribution (within the meaning of 
paragraph (3), as modified by subparagraph 
(A) of this paragraph) and which, solely by rea-
son of internal standards of the taxpayer or 
lack of market, cannot or will not be sold, the 
fair market value of such contribution shall be 
determined— 
‘‘(i) without regard to such internal 
standards or such lack of market and
362 
‘‘(ii) by taking into account the price 
at which the same or substantially the 
same food items (as to both type and qual-
ity) are sold by the taxpayer at the time of 
the contribution (or, if not so sold at such 
time, in the recent past). 
‘‘(E) APPARENTLY WHOLESOME FOOD.— 
For purposes of this paragraph, the term ‘ap-
parently wholesome food’ has the meaning given 
such term by section 22(b)(2) of the Bill Emer-
son Good Samaritan Food Donation Act (42 
U.S.C. 1791(b)(2)), as in effect on the date of 
the enactment of this paragraph. 
‘‘(F) APPLICATION.—This paragraph shall 
apply to contributions made after August 28, 
2005, and before January 1, 2006.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made after August 
28, 2005. 
SEC. 713. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 
OF BOOK INVENTORIES. 
(a) IN GENERAL.—Section 170(e)(3) (relating to cer-
tain contributions of ordinary income and capital gain 
property) is amended by redesignating subparagraph (C)
363 
as subparagraph (D) and by inserting after subparagraph 
(B) the following new subparagraph: 
‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS 
OF BOOK INVENTORY FOR EDUCATIONAL PUR-
POSES.— 
‘‘(i) CONTRIBUTIONS OF BOOK INVEN-
TORY.—In determining whether a qualified 
book contribution is a qualified contribu-
tion, subparagraph (A) shall be applied 
without regard to whether— 
‘‘(I) the donee is an organization 
described in the matter preceding 
clause (i) of subparagraph (A), and 
‘‘(II) the property is to be used 
by the donee solely for the care of the 
ill, the needy, or infants. 
‘‘(ii) AMOUNT OF REDUCTION.—Not-
withstanding 
subparagraph 
(B), 
the 
amount of the reduction determined under 
paragraph (1)(A) shall not exceed the 
amount by which the fair market value of 
the contributed property (as determined by 
the taxpayer using a bona fide published 
market price for such book) exceeds twice 
the basis of such property.
364 
‘‘(iii) QUALIFIED
BOOK
CONTRIBU-
TION.—For purposes of this paragraph, 
the term ‘qualified book contribution’ 
means a charitable contribution of books, 
but only if the requirements of clauses (iv) 
and (v) are met. 
‘‘(iv) IDENTITY OF DONEE.—The re-
quirement of this clause is met if the con-
tribution is to an organization— 
‘‘(I) described in subclause (I) or 
(III) of paragraph (6)(B)(i), or 
‘‘(II) 
described 
in 
section 
501(c)(3) and exempt from tax under 
section 501(a) (other than a private 
foundation, as defined in section 
509(a), which is not an operating 
foundation, as defined in section 
4942(j)(3)), which is organized pri-
marily to make books available to the 
general public at no cost or to operate 
a literacy program. 
‘‘(v) CERTIFICATION BY DONEE.—The 
requirement of this clause is met if, in ad-
dition to the certifications required by sub-
paragraph (A) (as modified by this sub-
365 
paragraph), the donee certifies in writing 
that— 
‘‘(I) the books are suitable, in 
terms of currency, content, and quan-
tity, for use in the donee’s educational 
programs, and 
‘‘(II) the donee will use the books 
in its educational programs. 
‘‘(vi) BONA FIDE PUBLISHED MARKET 
PRICE.—For purposes of this subpara-
graph, the term ‘bona fide published mar-
ket price’ means, with respect to any book, 
a price— 
‘‘(I) determined using the same 
printing and edition, 
‘‘(II) determined in the usual 
market in which such a book has been 
customarily sold by the taxpayer, and 
‘‘(III) for which the taxpayer can 
demonstrate to the satisfaction of the 
Secretary that the taxpayer custom-
arily sold such books in arm’s length 
transactions within 7 years preceding 
the contribution of such a book.
366 
‘‘(vii) APPLICATION.—This subpara-
graph shall apply to contributions made 
after August 28, 2005, and before January 
1, 2006.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after August 
28, 2005. 
SEC. 714. ADDITIONAL EXEMPTION FOR HOUSING HURRI-
CANE KATRINA DISPLACED INDIVIDUALS. 
(a) IN GENERAL.—In the case of taxable years of a 
natural person beginning in 2005 and 2006, for purposes 
of the Internal Revenue Code of 1986, taxable income 
shall be reduced by $500 for each Hurricane Katrina dis-
placed individual of the taxpayer for the taxable year. 
(b) LIMITATIONS.— 
(1) DOLLAR LIMITATION.—The reduction under 
subsection (a) shall not exceed $2,000, reduced by 
the amount of the reduction under this section for 
all previous taxable years. 
(2) INDIVIDUALS TAKEN INTO ACCOUNT ONLY 
ONCE.—An individual shall not be taken into ac-
count under subsection (a) if such individual was 
taken into account under such subsection by the tax-
payer in any prior taxable year.
367 
(c) HURRICANE KATRINA DISPLACED INDIVIDUAL.— 
For purposes of this subsection, the term ‘‘Hurricane 
Katrina displaced individual’’ means, with respect to any 
taxpayer for any taxable year, a natural person who— 
(1) was (as of August 28, 2005) a resident of 
any Hurricane Katrina disaster area, 
(2) is displaced from the person’s residence lo-
cated in the area described in paragraph (1), and 
(3) is provided housing free of charge by the 
taxpayer in the principal residence of the taxpayer 
for a period of 60 consecutive days which ends in 
such taxable year. 
Such term shall not include the spouse or any dependent 
of the taxpayer. 
SEC. 715. INCREASE IN STANDARD MILEAGE RATE FOR 
CHARITABLE 
USE 
OF 
PASSENGER 
AUTO-
MOBILE. 
Notwithstanding section 170(i) of the Internal Rev-
enue Code of 1986, for purposes of computing the deduc-
tion under section 170 of such Code for use of a vehicle 
described in subsection (f)(12)(E)(i) for provision of relief 
related to Hurricane Katrina during the period beginning 
on August 29, 2005, and ending before January 1, 2007, 
the standard mileage rate shall be 70 percent of the stand-
ard mileage rate in effect under section 162(a) of such
368 
Code at the time of such use. Any increase under this sec-
tion shall be rounded to the next highest cent. 
SEC. 716. MILEAGE REIMBURSEMENTS TO CHARITABLE 
VOLUNTEERS EXCLUDED FROM GROSS IN-
COME. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 is amended by inserting after section 139A the fol-
lowing new section: 
‘‘SEC. 139B. MILEAGE REIMBURSEMENTS TO CHARITABLE 
VOLUNTEERS. 
‘‘(a) IN GENERAL.—Gross income of an individual 
does not include amounts received, from an organization 
described in section 170(c), as reimbursement of operating 
expenses with respect to use of a passenger automobile 
for the benefit of such organization. The preceding sen-
tence shall apply only to the extent that the expenses 
which are reimbursed would be deductible under this chap-
ter if section 274(d) were applied— 
‘‘(1) by using the standard business mileage 
rate established under such section, and 
‘‘(2) as if the individual were an employee of an 
organization not described in section 170(c). 
‘‘(b) 
APPLICATION
TO
VOLUNTEER
SERVICES 
ONLY.—Subsection (a) shall not apply with respect to any