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143(k)(4) of such Code shall be applied by substituting 
$150,000 for the dollar amount contained therein to the 
extent such loan is for the repair of damage by reason 
of Hurricane Katrina. 
(d) APPLICATION.—Subsection (a) shall not apply to 
financing provided after December 31, 2007. 
SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NON-
RECOGNITION OF GAIN FOR PROPERTY LO-
CATED IN HURRICANE KATRINA DISASTER 
AREA. 
Clause (i) of section 1033(a)(2)(B) of the Internal 
Revenue Code of 1986 shall be applied by substituting ‘‘5 
years’’ for ‘‘2 years’’ with respect to property in the Hurri-
cane Katrina disaster area which is compulsorily or invol-
untarily converted on or after August 25, 2005, by reason 
of Hurricane Katrina, but only if substantially all of the 
use of the replacement property is in such area. 
SEC. 406. SPECIAL RULE FOR DETERMINING EARNED IN-
COME. 
(a) IN GENERAL.—In the case of a qualified indi-
vidual, if the earned income of the taxpayer for the taxable 
year which includes August 25, 2005, is less than the 
earned income of the taxpayer for the preceding taxable 
year, the credits allowed under sections 24(d) and 32 of
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the Internal Revenue Code of 1986 may, at the election 
of the taxpayer, be determined by substituting— 
(1) such earned income for the preceding tax-
able year, for 
(2) such earned income for the taxable year 
which includes August 25, 2005. 
(b) QUALIFIED INDIVIDUAL.—For purposes of this 
section, the term ‘‘qualified individual’’ means any indi-
vidual whose principal place of abode on August 25, 2005, 
was located— 
(1) in the core disaster area, or 
(2) in the Hurricane Katrina disaster area (but 
outside the core disaster area) and such individual 
was displaced from such principal place of abode by 
reason of Hurricane Katrina. 
(c) EARNED INCOME.—For purposes of this section, 
the term ‘‘earned income’’ has the meaning given such 
term under section 32(c) of such Code. 
(d) SPECIAL RULES.— 
(1) APPLICATION
TO
JOINT
RETURNS.—For 
purpose of subsection (a), in the case of a joint re-
turn for a taxable year which includes August 25, 
2005— 
(A) such subsection shall apply if either 
spouse is a qualified individual, and
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(B) the earned income of the taxpayer for 
the preceding taxable year shall be the sum of 
the earned income of each spouse for such pre-
ceding taxable year. 
(2) UNIFORM
APPLICATION
OF
ELECTION.— 
Any election made under subsection (a) shall apply 
with respect to both section 24(d) and section 32 of 
such Code. 
(3) ERRORS
TREATED
AS
MATHEMATICAL 
ERROR.—For purposes of section 6213 of such 
Code, an incorrect use on a return of earned income 
pursuant to subsection (a) shall be treated as a 
mathematical or clerical error. 
(4) NO EFFECT ON DETERMINATION OF GROSS 
INCOME, ETC.—Except as otherwise provided in this 
section, the Internal Revenue Code of 1986 shall be 
applied without regard to any substitution under 
subsection (a). 
SEC. 407. SECRETARIAL AUTHORITY TO MAKE ADJUST-
MENTS REGARDING TAXPAYER AND DEPEND-
ENCY STATUS. 
With respect to taxable years beginning in 2005 or 
2006, the Secretary of the Treasury or the Secretary’s del-
egate may make such adjustments in the application of 
the internal revenue laws as may be necessary to ensure
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that taxpayers do not lose any deduction or credit or expe-
rience a change of filing status by reason of temporary 
relocations by reason of Hurricane Katrina. Any adjust-
ments made under the preceding sentence shall ensure 
that an individual is not taken into account by more than 
one taxpayer with respect to the same tax benefit. 
TITLE V—EMERGENCY 
REQUIREMENT 
SEC. 501. EMERGENCY REQUIREMENT. 
Any provision of this Act causing an effect on re-
ceipts, budget authority, or outlays is designated as an 
emergency requirement pursuant to section 402 of H. 
Con. Res. 95 (109th Congress). 
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