275 
‘‘(1) each county or other eligible unit of local 
government shall be entitled to payment under this 
chapter; and 
‘‘(2) sums shall be made available to the Sec-
retary of the Interior for obligation or expenditure in 
accordance with this chapter.’’. 
(2) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 69 of title 31, United States Code, 
is amended by striking the item relating to section 
6906 and inserting the following: 
‘‘6906. Funding.’’. 
(3) BUDGET SCOREKEEPING.— 
(A) IN
GENERAL.—Notwithstanding the 
Budget Scorekeeping Guidelines and the accom-
panying list of programs and accounts set forth 
in the joint explanatory statement of the com-
mittee of conference accompanying Conference 
Report 105–217, the section in this title regard-
ing Payments in Lieu of Taxes shall be treated 
in the baseline for purposes of section 257 of the 
Balanced Budget and Emergency Deficit Control 
Act of 1985 (as in effect prior to September 30, 
2002), and by the Chairmen of the House and 
Senate Budget Committees, as appropriate, for 
purposes of budget enforcement in the House and 
Senate, and under the Congressional Budget Act
276 
of 1974 as if Payment in Lieu of Taxes (14– 
1114–0–1–806) were an account designated as 
Appropriated Entitlements and Mandatories for 
Fiscal Year 1997 in the joint explanatory state-
ment of the committee of conference accom-
panying Conference Report 105–217. 
(B) EFFECTIVE
DATE.—This paragraph 
shall remain in effect for the fiscal years to 
which the entitlement in section 6906 of title 31, 
United States Code (as amended by paragraph 
(1)), applies. 
SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION 
FUND. 
Subparagraph (C) of section 402(i)(1) of the Surface 
Mining Control and Reclamation Act of 1977 (30 U.S.C. 
1232(i)(1)) is amended by striking ‘‘and $9,000,000 on Oc-
tober 1, 2009’’ and inserting ‘‘$9,000,000 on October 1, 
2009, and $9,000,000 on October 1, 2010’’. 
TITLE VII—DISASTER RELIEF 
Subtitle A—Heartland and 
Hurricane Ike Disaster Relief 
SEC. 701. SHORT TITLE. 
This subtitle may be cited as the ‘‘Heartland Disaster 
Tax Relief Act of 2008’’.
277 
SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED 
BY 2008 MIDWESTERN SEVERE STORMS, TOR-
NADOS, AND FLOODING. 
(a) IN GENERAL.—Subject to the modifications de-
scribed in this section, the following provisions of or relat-
ing to the Internal Revenue Code of 1986 shall apply to 
any Midwestern disaster area in addition to the areas to 
which such provisions otherwise apply: 
(1) GO ZONE BENEFITS.— 
(A) Section 1400N (relating to tax benefits) 
other than subsections (b), (d), (e), (i), (j), (m), 
and (o) thereof. 
(B) Section 1400O (relating to education 
tax benefits). 
(C) Section 1400P (relating to housing tax 
benefits). 
(D) Section 1400Q (relating to special rules 
for use of retirement funds). 
(E) Section 1400R(a) (relating to employee 
retention credit for employers). 
(F) Section 1400S (relating to additional 
tax relief) other than subsection (d) thereof. 
(G) Section 1400T (relating to special rules 
for mortgage revenue bonds). 
(2) OTHER
BENEFITS
INCLUDED
IN
KATRINA 
EMERGENCY TAX RELIEF ACT OF 2005.—Sections 302,
278 
303, 304, 401, and 405 of the Katrina Emergency 
Tax Relief Act of 2005. 
(b) MIDWESTERN DISASTER AREA.— 
(1) IN GENERAL.—For purposes of this section 
and for applying the substitutions described in sub-
sections (d) and (e), the term ‘‘Midwestern disaster 
area’’ means an area— 
(A) with respect to which a major disaster 
has been declared by the President on or after 
May 20, 2008, and before August 1, 2008, under 
section 401 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act by reason 
of severe storms, tornados, or flooding occurring 
in any of the States of Arkansas, Illinois, Indi-
ana, Iowa, Kansas, Michigan, Minnesota, Mis-
souri, Nebraska, and Wisconsin, and 
(B) determined by the President to warrant 
individual or individual and public assistance 
from the Federal Government under such Act 
with respect to damages attributable to such se-
vere storms, tornados, or flooding. 
(2) CERTAIN BENEFITS AVAILABLE TO AREAS EL-
IGIBLE ONLY FOR PUBLIC ASSISTANCE.—For purposes 
of applying this section to benefits under the following
279 
provisions, paragraph (1) shall be applied without re-
gard to subparagraph (B): 
(A) 
Sections 
1400Q, 
1400S(b), 
and 
1400S(d) of the Internal Revenue Code of 1986. 
(B) Sections 302, 401, and 405 of the 
Katrina Emergency Tax Relief Act of 2005. 
(c) REFERENCES.— 
(1) AREA.—Any reference in such provisions to 
the Hurricane Katrina disaster area or the Gulf Op-
portunity Zone shall be treated as a reference to any 
Midwestern disaster area and any reference to the 
Hurricane Katrina disaster area or the Gulf Oppor-
tunity Zone within a State shall be treated as a ref-
erence to all Midwestern disaster areas within the 
State. 
(2) ITEMS ATTRIBUTABLE TO DISASTER.—Any 
reference in such provisions to any loss, damage, or 
other item attributable to Hurricane Katrina shall be 
treated as a reference to any loss, damage, or other 
item attributable to the severe storms, tornados, or 
flooding giving rise to any Presidential declaration 
described in subsection (b)(1)(A). 
(3) APPLICABLE DISASTER DATE.—For purposes 
of applying the substitutions described in subsections 
(d) and (e), the term ‘‘applicable disaster date’’
280 
means, with respect to any Midwestern disaster area, 
the date on which the severe storms, tornados, or 
flooding giving rise to the Presidential declaration de-
scribed in subsection (b)(1)(A) occurred. 
(d) MODIFICATIONS TO 1986 CODE.—The following 
provisions of the Internal Revenue Code of 1986 shall be 
applied with the following modifications: 
(1) TAX-EXEMPT
BOND
FINANCING.—Section 
1400N(a)— 
(A) by substituting ‘‘qualified Midwestern 
disaster area bond’’ for ‘‘qualified Gulf Oppor-
tunity Zone Bond’’ each place it appears, except 
that in determining whether a bond is a quali-
fied Midwestern disaster area bond— 
(i) paragraph (2)(A)(i) shall be ap-
plied by only treating costs as qualified 
project costs if— 
(I) in the case of a project involv-
ing a private business use (as defined 
in section 141(b)(6)), either the person 
using the property suffered a loss in a 
trade or business attributable to the se-
vere storms, tornados, or flooding giv-
ing rise to any Presidential declara-
tion described in subsection (b)(1)(A)
281 
or is a person designated for purposes 
of this section by the Governor of the 
State in which the project is located as 
a person carrying on a trade or busi-
ness replacing a trade or business with 
respect to which another person suf-
fered such a loss, and 
(II) in the case of a project relat-
ing to public utility property, the 
project involves repair or reconstruc-
tion of public utility property dam-
aged by such severe storms, tornados, 
or flooding, and 
(ii) paragraph (2)(A)(ii) shall be ap-
plied by treating an issue as a qualified 
mortgage issue only if 95 percent or more of 
the net proceeds (as defined in section 
150(a)(3)) of the issue are to be used to pro-
vide financing for mortgagors who suffered 
damages to their principal residences at-
tributable to such severe storms, tornados, 
or flooding. 
(B) by substituting ‘‘any State in which a 
Midwestern disaster area is located’’ for ‘‘the
282 
State of Alabama, Louisiana, or Mississippi’’ in 
paragraph (2)(B), 
(C) by substituting ‘‘designated for purposes 
of this section (on the basis of providing assist-
ance to areas in the order in which such assist-
ance is most needed)’’ for ‘‘designated for pur-
poses of this section’’ in paragraph (2)(C), 
(D) by substituting ‘‘January 1, 2013’’ for 
‘‘January 1, 2011’’ in paragraph (2)(D), 
(E) in paragraph (3)(A)— 
(i) 
by 
substituting 
‘‘$1,000’’ 
for 
‘‘$2,500’’, and 
(ii) by substituting ‘‘before the earliest 
applicable disaster date for Midwestern dis-
aster areas within the State’’ for ‘‘before 
August 28, 2005’’, 
(F) by substituting ‘‘qualified Midwestern 
disaster area repair or construction’’ for ‘‘quali-
fied GO Zone repair or construction’’ each place 
it appears, 
(G) by substituting ‘‘after the date of the en-
actment of the Heartland Disaster Tax Relief 
Act of 2008 and before January 1, 2013’’ for 
‘‘after the date of the enactment of this para-
283 
graph and before January 1, 2011’’ in para-
graph (7)(C), and 
(H) by disregarding paragraph (8) thereof. 
(2) LOW-INCOME
HOUSING
CREDIT.—Section 
1400N(c)— 
(A) only with respect to calendar years 
2008, 2009, and 2010, 
(B) by substituting ‘‘Disaster Recovery As-
sistance housing amount’’ for ‘‘Gulf Opportunity 
housing amount’’ each place it appears, 
(C) in paragraph (1)(B)— 
(i) 
by 
substituting 
‘‘$8.00’’ 
for 
‘‘$18.00’’, and 
(ii) by substituting ‘‘before the earliest 
applicable disaster date for Midwestern dis-
aster areas within the State’’ for ‘‘before 
August 28, 2005’’, and 
(D) determined without regard to para-
graphs (2), (3), (4), (5), and (6) thereof. 
(3) EXPENSING FOR CERTAIN DEMOLITION AND 
CLEAN-UP COSTS.—Section 1400N(f)— 
(A) by substituting ‘‘qualified Disaster Re-
covery Assistance clean-up cost’’ for ‘‘qualified 
Gulf Opportunity Zone clean-up cost’’ each place 
it appears,
284 
(B) by substituting ‘‘beginning on the ap-
plicable disaster date and ending on December 
31, 2010’’ for ‘‘beginning on August 28, 2005, 
and ending on December 31, 2007’’ in para-
graph (2), and 
(C) by treating costs as qualified Disaster 
Recovery Assistance clean-up costs only if the re-
moval of debris or demolition of any structure 
was necessary due to damage attributable to the 
severe storms, tornados, or flooding giving rise to 
any Presidential declaration described in sub-
section (b)(1)(A). 
(4) EXTENSION
OF
EXPENSING
FOR
ENVIRON-
MENTAL REMEDIATION COSTS.—Section 1400N(g)— 
(A) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’ each place it ap-
pears, 
(B) by substituting ‘‘January 1, 2011’’ for 
‘‘January 1, 2008’’ in paragraph (1), 
(C) by substituting ‘‘December 31, 2010’’ for 
‘‘December 31, 2007’’ in paragraph (1), and 
(D) by treating a site as a qualified con-
taminated site only if the release (or threat of re-
lease) or disposal of a hazardous substance at the 
site was attributable to the severe storms, tor-
285 
nados, or flooding giving rise to any Presidential 
declaration described in subsection (b)(1)(A). 
(5) INCREASE IN REHABILITATION CREDIT.—Sec-
tion 1400N(h), as amended by this Act— 
(A) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’, 
(B) by substituting ‘‘December 31, 2011’’ 
for ‘‘December 31, 2009’’ in paragraph (1), and 
(C) by only applying such subsection to 
qualified rehabilitation expenditures with respect 
to any building or structure which was damaged 
or destroyed as a result of the severe storms, tor-
nados, or flooding giving rise to any Presidential 
declaration described in subsection (b)(1)(A). 
(6) TREATMENT OF NET OPERATING LOSSES AT-
TRIBUTABLE
TO
DISASTER
LOSSES.—Section 
1400N(k)— 
(A) by substituting ‘‘qualified Disaster Re-
covery Assistance loss’’ for ‘‘qualified Gulf Op-
portunity Zone loss’’ each place it appears, 
(B) by substituting ‘‘after the day before the 
applicable disaster date, and before January 1, 
2011’’ for ‘‘after August 27, 2005, and before 
January 1, 2008’’ each place it appears,
286 
(C) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’ in paragraph 
(2)(B)(ii)(I), 
(D) by substituting ‘‘qualified Disaster Re-
covery Assistance property’’ for ‘‘qualified Gulf 
Opportunity Zone property’’ in paragraph 
(2)(B)(iv), and 
(E) by substituting ‘‘qualified Disaster Re-
covery Assistance casualty loss’’ for ‘‘qualified 
Gulf Opportunity Zone casualty loss’’ each place 
it appears. 
(7) CREDIT
TO
HOLDERS
OF
TAX
CREDIT 
BONDS.—Section 1400N(l)— 
(A) by substituting ‘‘Midwestern tax credit 
bond’’ for ‘‘Gulf tax credit bond’’ each place it 
appears, 
(B) by substituting ‘‘any State in which a 
Midwestern disaster area is located or any in-
strumentality of the State’’ for ‘‘the State of Ala-
bama, Louisiana, or Mississippi’’ in paragraph 
(4)(A)(i), 
(C) by substituting ‘‘after December 31, 
2008 and before January 1, 2010’’ for ‘‘after De-
cember 31, 2005, and before January 1, 2007’’,
287 
(D) by substituting ‘‘shall not exceed 
$100,000,000 for any State with an aggregate 
population located in all Midwestern disaster 
areas within the State of at least 2,000,000, 
$50,000,000 for any State with an aggregate 
population located in all Midwestern disaster 
areas within the State of at least 1,000,000 but 
less than 2,000,000, and zero for any other State. 
The population of a State within any area shall 
be determined on the basis of the most recent cen-
sus estimate of resident population released by 
the Bureau of Census before the earliest applica-
ble disaster date for Midwestern disaster areas 
within the State.’’ for ‘‘shall not exceed’’ and all 
that follows in paragraph (4)(C), and 
(E) by substituting ‘‘the earliest applicable 
disaster date for Midwestern disaster areas with-
in the State’’ for ‘‘August 28, 2005’’ in para-
graph (5)(A). 
(8) EDUCATION TAX BENEFITS.—Section 1400O, 
by substituting ‘‘2008 or 2009’’ for ‘‘2005 or 2006’’. 
(9) HOUSING TAX BENEFITS.—Section 1400P, by 
substituting ‘‘the applicable disaster date’’ for ‘‘Au-
gust 28, 2005’’ in subsection (c)(1).
288 
(10) SPECIAL RULES FOR USE OF RETIREMENT 
FUNDS.—Section 1400Q— 
(A) by substituting ‘‘qualified Disaster Re-
covery Assistance distribution’’ for ‘‘qualified 
hurricane distribution’’ each place it appears, 
(B) by substituting ‘‘on or after the applica-
ble disaster date and before January 1, 2010’’ for 
‘‘on or after August 25, 2005, and before Janu-
ary 1, 2007’’ in subsection (a)(4)(A)(i), 
(C) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’ in subsections 
(a)(4)(A)(i) and (c)(3)(B), 
(D) by disregarding clauses (ii) and (iii) of 
subsection (a)(4)(A) thereof, 
(E) by substituting ‘‘qualified storm dam-
age distribution’’ for ‘‘qualified Katrina dis-
tribution’’ each place it appears, 
(F) by substituting ‘‘after the date which is 
6 months before the applicable disaster date and 
before the date which is the day after the appli-
cable disaster date’’ for ‘‘after February 28, 
2005, and before August 29, 2005’’ in subsection 
(b)(2)(B)(ii), 
(G) by substituting ‘‘the Midwestern dis-
aster area, but not so purchased or constructed
289 
on account of severe storms, tornados, or flooding 
giving rise to the designation of the area as a 
disaster area’’ for ‘‘the Hurricane Katrina dis-
aster area, but not so purchased or constructed 
on account of Hurricane Katrina’’ in subsection 
(b)(2)(B)(iii), 
(H) by substituting ‘‘beginning on the ap-
plicable disaster date and ending on the date 
which is 5 months after the date of the enactment 
of the Heartland Disaster Tax Relief Act of 
2008’’ for ‘‘beginning on August 25, 2005, and 
ending on February 28, 2006’’ in subsection 
(b)(3)(A), 
(I) by substituting ‘‘qualified storm damage 
individual’’ for ‘‘qualified Hurricane Katrina 
individual’’ each place it appears, 
(J) by substituting ‘‘December 31, 2009’’ for 
‘‘December 31, 2006’’ in subsection (c)(2)(A), 
(K) by disregarding subparagraphs (C) and 
(D) of subsection (c)(3) thereof, 
(L) by substituting ‘‘beginning on the date 
of the enactment of the Heartland Disaster Tax 
Relief Act of 2008 and ending on December 31, 
2009’’ for ‘‘beginning on September 24, 2005,
290 
and ending on December 31, 2006’’ in subsection 
(c)(4)(A)(i), 
(M) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 25, 2005’’ in subsection 
(c)(4)(A)(ii), and 
(N) by substituting ‘‘January 1, 2010’’ for 
‘‘January 1, 2007’’ in subsection (d)(2)(A)(ii). 
(11) EMPLOYEE
RETENTION
CREDIT
FOR
EM-
PLOYERS AFFECTED BY SEVERE STORMS, TORNADOS, 
AND FLOODING.—Section 1400R(a)— 
(A) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’ each place it ap-
pears, 
(B) by substituting ‘‘January 1, 2009’’ for 
‘‘January 1, 2006’’ both places it appears, and 
(C) only with respect to eligible employers 
who employed an average of not more than 200 
employees on business days during the taxable 
year before the applicable disaster date. 
(12) TEMPORARY SUSPENSION OF LIMITATIONS 
ON CHARITABLE CONTRIBUTIONS.—Section 1400S(a), 
by substituting the following paragraph for para-
graph (4) thereof: 
‘‘(4) QUALIFIED CONTRIBUTIONS.—
291 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘qualified contribution’ 
means any charitable contribution (as defined in 
section 170(c)) if— 
‘‘(i) such contribution— 
‘‘(I) is paid during the period be-
ginning on the earliest applicable dis-
aster date for all States and ending on 
December 31, 2008, in cash to an orga-
nization 
described 
in 
section 
170(b)(1)(A), and 
‘‘(II) is made for relief efforts in 
1 or more Midwestern disaster areas, 
‘‘(ii) the taxpayer obtains from such 
organization contemporaneous written ac-
knowledgment (within the meaning of sec-
tion 170(f)(8)) that such contribution was 
used (or is to be used) for relief efforts in 
1 or more Midwestern disaster areas, and 
‘‘(iii) the taxpayer has elected the ap-
plication of this subsection with respect to 
such contribution. 
‘‘(B) EXCEPTION.—Such term shall not in-
clude a contribution by a donor if the contribu-
tion is—
292 
‘‘(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)). 
‘‘(C) APPLICATION OF ELECTION TO PART-
NERSHIPS AND S CORPORATIONS.—In the case of 
a partnership or S corporation, the election 
under subparagraph (A)(iii) shall be made sepa-
rately by each partner or shareholder.’’. 
(13) SUSPENSION OF CERTAIN LIMITATIONS ON 
PERSONAL CASUALTY LOSSES.—Section 1400S(b)(1), 
by substituting ‘‘the applicable disaster date’’ for 
‘‘August 25, 2005’’. 
(14) SPECIAL RULE FOR DETERMINING EARNED 
INCOME.—Section 1400S(d)— 
(A) by treating an individual as a qualified 
individual if such individual’s principal place of 
abode on the applicable disaster date was located 
in a Midwestern disaster area, 
(B) by treating the applicable disaster date 
with respect to any such individual as the appli-
cable date for purposes of such subsection, and 
(C) by treating an area as described in 
paragraph (2)(B)(ii) thereof if the area is a
293 
Midwestern disaster area only by reason of sub-
section (b)(2) of this section (relating to areas el-
igible only for public assistance). 
(15) ADJUSTMENTS REGARDING TAXPAYER AND 
DEPENDENCY
STATUS.—Section 1400S(e), by sub-
stituting ‘‘2008 or 2009’’ for ‘‘2005 or 2006’’. 
(e) MODIFICATIONS TO KATRINA EMERGENCY TAX RE-
LIEF ACT
OF 2005.—The following provisions of the 
Katrina Emergency Tax Relief Act of 2005 shall be applied 
with the following modifications: 
(1) ADDITIONAL EXEMPTION FOR HOUSING DIS-
PLACED INDIVIDUAL.—Section 302— 
(A) by substituting ‘‘2008 or 2009’’ for 
‘‘2005 or 2006’’ in subsection (a) thereof, 
(B) by substituting ‘‘Midwestern displaced 
individual’’ for ‘‘Hurricane Katrina displaced 
individual’’ each place it appears, and 
(C) by treating an area as a core disaster 
area for purposes of applying subsection (c) 
thereof if the area is a Midwestern disaster area 
without regard to subsection (b)(2) of this section 
(relating to areas eligible only for public assist-
ance). 
(2) INCREASE IN STANDARD MILEAGE RATE.— 
Section 303, by substituting ‘‘beginning on the appli-
294 
cable disaster date and ending on December 31, 2008’’ 
for ‘‘beginning on August 25, 2005, and ending on 
December 31, 2006’’. 
(3) MILEAGE
REIMBURSEMENTS
FOR
CHARI-
TABLE VOLUNTEERS.—Section 304— 
(A) by substituting ‘‘beginning on the ap-
plicable disaster date and ending on December 
31, 2008’’ for ‘‘beginning on August 25, 2005, 
and ending on December 31, 2006’’ in subsection 
(a), and 
(B) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 25, 2005’’ in subsection (a). 
(4) EXCLUSION OF CERTAIN CANCELLATION OF 
INDEBTEDNESS INCOME.—Section 401— 
(A) by treating an individual whose prin-
cipal place of abode on the applicable disaster 
date was in a Midwestern disaster area (deter-
mined without regard to subsection (b)(2) of this 
section) as an individual described in subsection 
(b)(1) thereof, and by treating an individual 
whose principal place of abode on the applicable 
disaster date was in a Midwestern disaster area 
solely by reason of subsection (b)(2) of this sec-
tion as an individual described in subsection 
(b)(2) thereof,
295 
(B) by substituting ‘‘the applicable disaster 
date’’ for ‘‘August 28, 2005’’ both places it ap-
pears, and 
(C) by substituting ‘‘January 1, 2010’’ for 
‘‘January 1, 2007’’ in subsection (e). 
(5) EXTENSION OF REPLACEMENT PERIOD FOR 
NONRECOGNITION
OF
GAIN.—Section 405, by sub-
stituting ‘‘on or after the applicable disaster date’’ for 
‘‘on or after August 25, 2005’’. 
SEC. 703. REPORTING REQUIREMENTS RELATING TO DIS-
ASTER RELIEF CONTRIBUTIONS. 
(a) IN GENERAL.—Section 6033(b) (relating to returns 
of certain organizations described in section 501(c)(3)) is 
amended by striking ‘‘and’’ at the end of paragraph (13), 
by redesignating paragraph (14) as paragraph (15), and 
by adding after paragraph (13) the following new para-
graph: 
‘‘(14) such information as the Secretary may re-
quire with respect to disaster relief activities, includ-
ing the amount and use of qualified contributions to 
which section 1400S(a) applies, and’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to returns the due date for which (deter-
mined without regard to any extension) occurs after Decem-
ber 31, 2008.
296 
SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND 
LOW-INCOME 
HOUSING 
TAX 
RELIEF 
FOR 
AREAS DAMAGED BY HURRICANE IKE. 
(a) 
TAX-EXEMPT
BOND
FINANCING.—Section 
1400N(a) of the Internal Revenue Code of 1986 shall apply 
to any Hurricane Ike disaster area in addition to any other 
area referenced in such section, but with the following modi-
fications: 
(1) By substituting ‘‘qualified Hurricane Ike 
disaster area bond’’ for ‘‘qualified Gulf Opportunity 
Zone Bond’’ each place it appears, except that in de-
termining whether a bond is a qualified Hurricane 
Ike disaster area bond— 
(A) paragraph (2)(A)(i) shall be applied by 
only treating costs as qualified project costs if— 
(i) in the case of a project involving a 
private business use (as defined in section 
141(b)(6)), either the person using the prop-
erty suffered a loss in a trade or business 
attributable to Hurricane Ike or is a person 
designated for purposes of this section by 
the Governor of the State in which the 
project is located as a person carrying on a 
trade or business replacing a trade or busi-
ness with respect to which another person 
suffered such a loss, and
297 
(ii) in the case of a project relating to 
public utility property, the project involves 
repair or reconstruction of public utility 
property damaged by Hurricane Ike, and 
(B) paragraph (2)(A)(ii) shall be applied 
by treating an issue as a qualified mortgage 
issue only if 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of the 
issue are to be used to provide financing for 
mortgagors who suffered damages to their prin-
cipal residences attributable to Hurricane Ike. 
(2) By substituting ‘‘any State in which any 
Hurricane Ike disaster area is located’’ for ‘‘the State 
of Alabama, Louisiana, or Mississippi’’ in paragraph 
(2)(B). 
(3) By substituting ‘‘designated for purposes of 
this section (on the basis of providing assistance to 
areas in the order in which such assistance is most 
needed)’’ for ‘‘designated for purposes of this section’’ 
in paragraph (2)(C). 
(4) By substituting ‘‘January 1, 2013’’ for ‘‘Jan-
uary 1, 2011’’ in paragraph (2)(D). 
(5) By substituting the following for subpara-
graph (A) of paragraph (3):
298 
‘‘(A) AGGREGATE AMOUNT DESIGNATED.— 
The maximum aggregate face amount of bonds 
which may be designated under this subsection 
with respect to any State shall not exceed the 
product of $2,000 multiplied by the portion of 
the State population which is in— 
‘‘(i) in the case of Texas, the counties 
of Brazoria, Chambers, Galveston, Jefferson, 
and Orange, and 
‘‘(ii) in the case of Louisiana, the par-
ishes of Calcasieu and Cameron, 
(as determined on the basis of the most recent 
census estimate of resident population released 
by the Bureau of Census before September 13, 
2008).’’. 
(6) By substituting ‘‘qualified Hurricane Ike 
disaster area repair or construction’’ for ‘‘qualified 
GO Zone repair or construction’’ each place it ap-
pears. 
(7) By substituting ‘‘after the date of the enact-
ment of the Heartland Disaster Tax Relief Act of 
2008 and before January 1, 2013’’ for ‘‘after the date 
of the enactment of this paragraph and before Janu-
ary 1, 2011’’ in paragraph (7)(C). 
(8) By disregarding paragraph (8) thereof.
299 
(9) By substituting ‘‘any Hurricane Ike disaster 
area’’ for ‘‘the Gulf Opportunity Zone’’ each place it 
appears. 
(b) 
LOW-INCOME
HOUSING
CREDIT.—Section 
1400N(c) of the Internal Revenue Code of 1986 shall apply 
to any Hurricane Ike disaster area in addition to any other 
area referenced in such section, but with the following modi-
fications: 
(1) Only with respect to calendar years 2008, 
2009, and 2010. 
(2) By substituting ‘‘any Hurricane Ike disaster 
area’’ for ‘‘the Gulf Opportunity Zone’’ each place it 
appears. 
(3) By substituting ‘‘Hurricane Ike Recovery As-
sistance housing amount’’ for ‘‘Gulf Opportunity 
housing amount’’ each place it appears. 
(4) By substituting the following for subpara-
graph (B) of paragraph (1): 
‘‘(B) HURRICANE IKE HOUSING AMOUNT.— 
For purposes of subparagraph (A), the term 
‘Hurricane Ike housing amount’ means, for any 
calendar year, the amount equal to the product 
of $16.00 multiplied by the portion of the State 
population which is in—
300 
‘‘(i) in the case of Texas, the counties 
of Brazoria, Chambers, Galveston, Jefferson, 
and Orange, and 
‘‘(ii) in the case of Louisiana, the par-
ishes of Calcasieu and Cameron, 
(as determined on the basis of the most recent 
census estimate of resident population released 
by the Bureau of Census before September 13, 
2008).’’. 
(5) Determined without regard to paragraphs 
(2), (3), (4), (5), and (6) thereof. 
(c) HURRICANE IKE DISASTER AREA.—For purposes 
of this section and for applying the substitutions described 
in subsections (a) and (b), the term ‘‘Hurricane Ike disaster 
area’’ means an area in the State of Texas or Louisiana— 
(1) with respect to which a major disaster has 
been declared by the President on September 13, 2008, 
under section 401 of the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act by reason of 
Hurricane Ike, and 
(2) determined by the President to warrant indi-
vidual or individual and public assistance from the 
Federal Government under such Act with respect to 
damages attributable to Hurricane Ike.
301 
Subtitle B—National Disaster 
Relief 
SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DE-
CLARED DISASTERS. 
(a) WAIVER OF ADJUSTED GROSS INCOME LIMITA-
TION.— 
(1) IN GENERAL.—Subsection (h) of section 165 
is amended by redesignating paragraphs (3) and (4) 
as paragraphs (4) and (5), respectively, and by in-
serting after paragraph (2) the following new para-
graph: 
‘‘(3) SPECIAL RULE FOR LOSSES IN FEDERALLY 
DECLARED DISASTERS.— 
‘‘(A) IN GENERAL.—If an individual has a 
net disaster loss for any taxable year, the 
amount determined under paragraph (2)(A)(ii) 
shall be the sum of— 
‘‘(i) such net disaster loss, and 
‘‘(ii) so much of the excess referred to 
in the matter preceding clause (i) of para-
graph (2)(A) (reduced by the amount in 
clause (i) of this subparagraph) as exceeds 
10 percent of the adjusted gross income of 
the individual.
302 
‘‘(B) NET DISASTER LOSS.—For purposes of 
subparagraph (A), the term ‘net disaster loss’ 
means the excess of— 
‘‘(i) the personal casualty losses— 
‘‘(I) attributable to a federally de-
clared disaster occurring before Janu-
ary 1, 2010, and 
‘‘(II) occurring in a disaster area, 
over 
‘‘(ii) personal casualty gains. 
‘‘(C) FEDERALLY
DECLARED
DISASTER.— 
For purposes of this paragraph— 
‘‘(i) 
FEDERALLY
DECLARED
DIS-
ASTER.—The term ‘federally declared dis-
aster’ means any disaster subsequently de-
termined by the President of the United 
States to warrant assistance by the Federal 
Government under the Robert T. Stafford 
Disaster Relief and Emergency Assistance 
Act. 
‘‘(ii) DISASTER AREA.—The term ‘dis-
aster area’ means the area so determined to 
warrant such assistance.’’. 
(2) CONFORMING AMENDMENTS.—
303 
(A) Section 165(h)(4)(B) (as so redesig-
nated) is amended by striking ‘‘paragraph (2)’’ 
and inserting ‘‘paragraphs (2) and (3)’’. 
(B) Section 165(i)(1) is amended by strik-
ing ‘‘loss’’ and all that follows through ‘‘Act’’ 
and inserting ‘‘loss occurring in a disaster area 
(as defined by clause (ii) of subsection (h)(3)(C)) 
and attributable to a federally declared disaster 
(as defined by clause (i) of such subsection)’’. 
(C) Section 165(i)(4) is amended by strik-
ing ‘‘Presidentially declared disaster (as defined 
by section 1033(h)(3))’’ and inserting ‘‘federally 
declared disaster (as defined by subsection 
(h)(3)(C)(i)’’. 
(D)(i) So much of subsection (h) of section 
1033 as precedes subparagraph (A) of paragraph 
(1) thereof is amended to read as follows: 
‘‘(h) SPECIAL RULES FOR PROPERTY DAMAGED BY 
FEDERALLY DECLARED DISASTERS.— 
‘‘(1) PRINCIPAL RESIDENCES.—If the taxpayer’s 
principal residence or any of its contents is located 
in a disaster area and is compulsorily or involun-
tarily converted as a result of a federally declared dis-
aster—’’.
304 
(ii) Paragraph (2) of section 1033(h) is 
amended by striking ‘‘investment’’ and all that 
follows through ‘‘disaster’’ and inserting ‘‘invest-
ment located in a disaster area and compulsorily 
or involuntarily converted as a result of a feder-
ally declared disaster’’. 
(iii) Paragraph (3) of section 1033(h) is 
amended to read as follows: 
‘‘(3) FEDERALLY
DECLARED
DISASTER; DIS-
ASTER AREA.—The terms ‘‘federally declared disaster’’ 
and ‘‘disaster area’’ shall have the respective meaning 
given such terms by section 165(h)(3)(C).’’. 
(iv) Section 139(c)(2) is amended to read as 
follows: 
‘‘(2) federally declared disaster (as defined by 
section 165(h)(3)(C)(i)),’’. 
(v) 
Subclause 
(II) 
of 
section 
172(b)(1)(F)(ii) is amended by striking ‘‘Presi-
dentially declared disasters (as defined in section 
1033(h)(3))’’ and inserting ‘‘federally declared 
disasters (as defined by subsection (h)(3)(C)(i))’’. 
(vi) 
Subclause 
(III) 
of 
section 
172(b)(1)(F)(ii) is amended by striking ‘‘Presi-
dentially declared disasters’’ and inserting ‘‘fed-
erally declared disasters’’.
305 
(vii) Subsection (a) of section 7508A is 
amended by striking ‘‘Presidentially declared 
disaster (as defined in section 1033(h)(3))’’ and 
inserting ‘‘federally declared disaster (as defined 
by section 165(h)(3)(C)(i))’’. 
(b) INCREASE IN STANDARD DEDUCTION BY DISASTER 
CASUALTY LOSS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
63(c), as amended by the Housing Assistance Tax Act 
of 2008, is amended by striking ‘‘and’’ at the end of 
subparagraph (B), by striking the period at the end 
of subparagraph (C) and inserting ‘‘, and’’, and by 
adding at the end the following new subparagraph: 
‘‘(D) the disaster loss deduction.’’. 
(2) DISASTER LOSS DEDUCTION.—Subsection (c) 
of section 63, as amended by the Housing Assistance 
Tax Act of 2008, is amended by adding at the end 
the following new paragraph: 
‘‘(8) DISASTER LOSS DEDUCTION.—For the pur-
poses of paragraph (1), the term ‘disaster loss deduc-
tion’ means the net disaster loss (as defined in section 
165(h)(3)(B)).’’. 
(3) ALLOWANCE
IN
COMPUTING
ALTERNATIVE 
MINIMUM
TAXABLE
INCOME.—Subparagraph (E) of 
section 56(b)(1) is amended by adding at the end the
306 
following new sentence: ‘‘The preceding sentence shall 
not apply to so much of the standard deduction as is 
determined under section 63(c)(1)(D).’’. 
(c) INCREASE IN LIMITATION ON INDIVIDUAL LOSS 
PER CASUALTY.—Paragraph (1) of section 165(h) is 
amended by striking ‘‘$100’’ and inserting ‘‘$500 ($100 for 
taxable years beginning after December 31, 2009)’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section shall 
apply to disasters declared in taxable years beginning 
after December 31, 2007. 
(2) INCREASE
IN
LIMITATION
ON
INDIVIDUAL 
LOSS PER CASUALTY.—The amendment made by sub-
section (c) shall apply to taxable years beginning 
after December 31, 2008. 
SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 
1 is amended by inserting after section 198 the following 
new section: 
‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX-
PENSES. 
‘‘(a) IN GENERAL.—A taxpayer may elect to treat any 
qualified disaster expenses which are paid or incurred by 
the taxpayer as an expense which is not chargeable to cap-
307 
ital account. Any expense which is so treated shall be al-
lowed as a deduction for the taxable year in which it is 
paid or incurred. 
‘‘(b) QUALIFIED DISASTER EXPENSE.—For purposes 
of this section, the term ‘qualified disaster expense’ means 
any expenditure— 
‘‘(1) which is paid or incurred in connection 
with a trade or business or with business-related 
property, 
‘‘(2) which is— 
‘‘(A) for the abatement or control of haz-
ardous substances that were released on account 
of a federally declared disaster occurring before 
January 1, 2010, 
‘‘(B) for the removal of debris from, or the 
demolition of structures on, real property which 
is business-related property damaged or de-
stroyed as a result of a federally declared dis-
aster occurring before such date, or 
‘‘(C) for the repair of business-related prop-
erty damaged as a result of a federally declared 
disaster occurring before such date, and 
‘‘(3) which is otherwise chargeable to capital ac-
count.
308 
‘‘(c) OTHER DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) BUSINESS-RELATED PROPERTY.—The term 
‘business-related property’ means property— 
‘‘(A) held by the taxpayer for use in a trade 
or business or for the production of income, or 
‘‘(B) described in section 1221(a)(1) in the 
hands of the taxpayer. 
‘‘(2) FEDERALLY
DECLARED
DISASTER.—The 
term ‘federally declared disaster’ has the meaning 
given such term by section 165(h)(3)(C)(i). 
‘‘(d) DEDUCTION RECAPTURED AS ORDINARY INCOME 
ON SALE, ETC.—Solely for purposes of section 1245, in the 
case of property to which a qualified disaster expense would 
have been capitalized but for this section— 
‘‘(1) the deduction allowed by this section for 
such expense shall be treated as a deduction for depre-
ciation, and 
‘‘(2) such property (if not otherwise section 1245 
property) shall be treated as section 1245 property 
solely for purposes of applying section 1245 to such 
deduction. 
‘‘(e) COORDINATION WITH OTHER PROVISIONS.—Sec-
tions 198, 280B, and 468 shall not apply to amounts which 
are treated as expenses under this section.
309 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
part VI of subchapter B of chapter 1 is amended by insert-
ing after the item relating to section 198 the following new 
item: 
‘‘Sec. 198A. Expensing of Qualified Disaster Expenses.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to amounts paid or incurred after De-
cember 31, 2007 in connection with disaster declared after 
such date. 
SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FED-
ERALLY DECLARED DISASTERS. 
(a) IN GENERAL.—Paragraph (1) of section 172(b) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(J) CERTAIN LOSSES ATTRIBUTABLE FED-
ERALLY DECLARED DISASTERS.—In the case of a 
taxpayer who has a qualified disaster loss (as de-
fined in subsection (j)), such loss shall be a net 
operating loss carryback to each of the 5 taxable 
years preceding the taxable year of such loss.’’. 
(b) QUALIFIED DISASTER LOSS.—Section 172 is 
amended by redesignating subsections (j) and (k) as sub-
310 
sections (k) and (l), respectively, and by inserting after sub-
section (i) the following new subsection: 
‘‘(j) RULES
RELATING
TO
QUALIFIED
DISASTER 
LOSSES.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified disaster 
loss’ means the lesser of— 
‘‘(A) the sum of— 
‘‘(i) the losses allowable under section 
165 for the taxable year— 
‘‘(I) attributable to a federally de-
clared disaster (as defined in section 
165(h)(3)(C)(i)) occurring before Janu-
ary 1, 2010, and 
‘‘(II) occurring in a disaster area 
(as defined in section 165(h)(3)(C)(ii)), 
and 
‘‘(ii) the deduction for the taxable year 
for qualified disaster expenses which is al-
lowable under section 198A(a) or which 
would be so allowable if not otherwise treat-
ed as an expense, or 
‘‘(B) the net operating loss for such taxable 
year. 
‘‘(2) COORDINATION WITH SUBSECTION (b)(2).— 
For purposes of applying subsection (b)(2), a quali-
311 
fied disaster loss for any taxable year shall be treated 
in a manner similar to the manner in which a speci-
fied liability loss is treated. 
‘‘(3) ELECTION.—Any taxpayer entitled to a 5- 
year carryback under subsection (b)(1)(J) from any 
loss year may elect to have the carryback period with 
respect to such loss year determined without regard to 
subsection (b)(1)(J). Such election shall be made in 
such manner as may be prescribed by the Secretary 
and shall be made by the due date (including exten-
sions of time) for filing the taxpayer’s return for the 
taxable year of the net operating loss. Such election, 
once made for any taxable year, shall be irrevocable 
for such taxable year. 
‘‘(4) EXCLUSION.—The term ‘qualified disaster 
loss’ shall not include any loss with respect to any 
property described in section 1400N(p)(3).’’. 
(c) LOSS DEDUCTION ALLOWED IN COMPUTING AL-
TERNATIVE MINIMUM TAXABLE INCOME.—Subsection (d) of 
section 56 is amended by adding at the end the following 
new paragraph: 
‘‘(3) NET OPERATING LOSS ATTRIBUTABLE TO 
FEDERALLY DECLARED DISASTERS.—In the case of a 
taxpayer which has a qualified disaster loss (as de-
fined by section 172(b)(1)(J)) for the taxable year,
312 
paragraph (1) shall be applied by increasing the 
amount determined under subparagraph (A)(ii)(I) 
thereof by the sum of the carrybacks and carryovers 
of such loss.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Clause (ii) of section 172(b)(1)(F) is amend-
ed by inserting ‘‘or qualified disaster loss (as defined 
in subsection (j))’’ before the period at the end of the 
last sentence. 
(2) Paragraph (1) of section 172(i) is amended 
by adding at the end the following new flush sentence: 
‘‘Such term shall not include any qualified disaster 
loss (as defined in subsection (j)).’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to losses arising in taxable years begin-
ning after December 31, 2007, in connection with disasters 
declared after such date. 
SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 
REQUIREMENTS FOLLOWING FEDERALLY DE-
CLARED DISASTERS. 
(a) IN GENERAL.—Subsection (k) of section 143 is 
amended by adding at the end the following new paragraph: 
‘‘(12) SPECIAL
RULES
FOR
RESIDENCES
DE-
STROYED IN FEDERALLY DECLARED DISASTERS.—
314 
construction of such residence shall be treat-
ed as a qualified rehabilitation loan. 
‘‘(ii) 
LIMITATION.—The 
aggregate 
owner-financing to which clause (i) applies 
shall not exceed the lesser of— 
‘‘(I) the cost of such repair or re-
construction, or 
‘‘(II) $150,000. 
‘‘(C) FEDERALLY
DECLARED
DISASTER.— 
For purposes of this paragraph, the term ‘feder-
ally declared disaster’ has the meaning given 
such term by section 165(h)(3)(C)(i). 
‘‘(D) ELECTION; DENIAL OF DOUBLE BEN-
EFIT.— 
‘‘(i) ELECTION.—An election under 
this paragraph may not be revoked except 
with the consent of the Secretary. 
‘‘(ii) DENIAL OF DOUBLE BENEFIT.—If 
a taxpayer elects the application of this 
paragraph, paragraph (11) shall not apply 
with respect to the purchase or financing of 
any residence by such taxpayer.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to disasters occurring after December 
31, 2007.
315 
SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALI-
FIED DISASTER PROPERTY. 
(a) IN GENERAL.—Section 168, as amended by this 
Act, is amended by adding at the end the following new 
subsection: 
‘‘(n) SPECIAL ALLOWANCE FOR QUALIFIED DISASTER 
ASSISTANCE PROPERTY.— 
‘‘(1) IN GENERAL.—In the case of any qualified 
disaster assistance property— 
‘‘(A) the depreciation deduction provided by 
section 167(a) for the taxable year in which such 
property is placed in service shall include an al-
lowance equal to 50 percent of the adjusted basis 
of the qualified disaster assistance property, and 
‘‘(B) the adjusted basis of the qualified dis-
aster assistance property shall be reduced by the 
amount of such deduction before computing the 
amount otherwise allowable as a depreciation de-
duction under this chapter for such taxable year 
and any subsequent taxable year. 
‘‘(2) QUALIFIED
DISASTER
ASSISTANCE
PROP-
ERTY.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘qualified dis-
aster assistance property’ means any property— 
‘‘(i)(I) which is described in subsection 
(k)(2)(A)(i), or
316 
‘‘(II) which is nonresidential real 
property or residential rental property, 
‘‘(ii) substantially all of the use of 
which is— 
‘‘(I) in a disaster area with re-
spect to a federally declared disaster 
occurring before January 1, 2010, and 
‘‘(II) in the active conduct of a 
trade or business by the taxpayer in 
such disaster area, 
‘‘(iii) which— 
‘‘(I) rehabilitates property dam-
aged, or replaces property destroyed or 
condemned, as a result of such feder-
ally declared disaster, except that, for 
purposes of this clause, property shall 
be treated as replacing property de-
stroyed or condemned if, as part of an 
integrated plan, such property replaces 
property which is included in a con-
tinuous area which includes real prop-
erty destroyed or condemned, and 
‘‘(II) is similar in nature to, and 
located in the same county as, the
317 
property being rehabilitated or re-
placed, 
‘‘(iv) the original use of which in such 
disaster area commences with an eligible 
taxpayer on or after the applicable disaster 
date, 
‘‘(v) which is acquired by such eligible 
taxpayer by purchase (as defined in section 
179(d)) on or after the applicable disaster 
date, but only if no written binding con-
tract for the acquisition was in effect before 
such date, and 
‘‘(vi) which is placed in service by such 
eligible taxpayer on or before the date which 
is the last day of the third calendar year 
following the applicable disaster date (the 
fourth calendar year in the case of nonresi-
dential real property and residential rental 
property). 
‘‘(B) EXCEPTIONS.— 
‘‘(i) OTHER
BONUS
DEPRECIATION 
PROPERTY.—The term ‘qualified disaster 
assistance property’ shall not include—
318 
‘‘(I) any property to which sub-
section (k) (determined without regard 
to paragraph (4)), (l), or (m) applies, 
‘‘(II) any property to which sec-
tion 1400N(d) applies, and 
‘‘(III) any property described in 
section 1400N(p)(3). 
‘‘(ii) 
ALTERNATIVE
DEPRECIATION 
PROPERTY.—The term ‘qualified disaster 
assistance property’ shall not include any 
property to which the alternative deprecia-
tion system under subsection (g) applies, de-
termined without regard to paragraph (7) 
of subsection (g) (relating to election to have 
system apply). 
‘‘(iii) TAX-EXEMPT
BOND
FINANCED 
PROPERTY.—Such term shall not include 
any property any portion of which is fi-
nanced with the proceeds of any obligation 
the interest on which is exempt from tax 
under section 103. 
‘‘(iv) 
QUALIFIED
REVITALIZATION 
BUILDINGS.—Such term shall not include 
any qualified revitalization building with 
respect to which the taxpayer has elected the
319 
application of paragraph (1) or (2) of sec-
tion 1400I(a). 
‘‘(v) ELECTION
OUT.—If a taxpayer 
makes an election under this clause with re-
spect to any class of property for any tax-
able year, this subsection shall not apply to 
all property in such class placed in service 
during such taxable year. 
‘‘(C) SPECIAL RULES.—For purposes of this 
subsection, rules similar to the rules of subpara-
graph (E) of subsection (k)(2) shall apply, except 
that such subparagraph shall be applied— 
‘‘(i) by substituting ‘the applicable dis-
aster date’ for ‘December 31, 2007’ each 
place it appears therein, 
‘‘(ii) without regard to ‘and before 
January 1, 2009’ in clause (i) thereof, and 
‘‘(iii) by substituting ‘qualified dis-
aster assistance property’ for ‘qualified 
property’ in clause (iv) thereof. 
‘‘(D) ALLOWANCE
AGAINST
ALTERNATIVE 
MINIMUM TAX.—For purposes of this subsection, 
rules similar to the rules of subsection (k)(2)(G) 
shall apply.
320 
‘‘(3) OTHER DEFINITIONS.—For purposes of this 
subsection— 
‘‘(A) APPLICABLE
DISASTER
DATE.—The 
term ‘applicable disaster date’ means, with re-
spect to any federally declared disaster, the date 
on which such federally declared disaster occurs. 
‘‘(B) FEDERALLY
DECLARED
DISASTER.— 
The term ‘federally declared disaster’ has the 
meaning 
given 
such 
term 
under 
section 
165(h)(3)(C)(i). 
‘‘(C) DISASTER AREA.—The term ‘disaster 
area’ has the meaning given such term under 
section 165(h)(3)(C)(ii). 
‘‘(D) ELIGIBLE TAXPAYER.—The term ‘eli-
gible taxpayer’ means a taxpayer who has suf-
fered an economic loss attributable to a federally 
declared disaster. 
‘‘(4) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified 
disaster assistance property which ceases to be quali-
fied disaster assistance property.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to property placed in service after De-
321 
cember 31, 2007, with respect disasters declared after such 
date. 
SEC. 711. INCREASED EXPENSING FOR QUALIFIED DIS-
ASTER ASSISTANCE PROPERTY. 
(a) IN GENERAL.—Section 179 is amended by adding 
at the end the following new subsection: 
‘‘(e) SPECIAL RULES FOR QUALIFIED DISASTER AS-
SISTANCE PROPERTY.— 
‘‘(1) IN
GENERAL.—For purposes of this sec-
tion— 
‘‘(A) the dollar amount in effect under sub-
section (b)(1) for the taxable year shall be in-
creased by the lesser of— 
‘‘(i) $100,000, or 
‘‘(ii) the cost of qualified section 179 
disaster assistance property placed in serv-
ice during the taxable year, and 
‘‘(B) the dollar amount in effect under sub-
section (b)(2) for the taxable year shall be in-
creased by the lesser of— 
‘‘(i) $600,000, or 
‘‘(ii) the cost of qualified section 179 
disaster assistance property placed in serv-
ice during the taxable year.
322 
‘‘(2) QUALIFIED SECTION 179 DISASTER ASSIST-
ANCE PROPERTY.—For purposes of this subsection, the 
term ‘qualified section 179 disaster assistance prop-
erty’ means section 179 property (as defined in sub-
section (d)) which is qualified disaster assistance 
property (as defined in section 168(n)(2)). 
‘‘(3) COORDINATION WITH EMPOWERMENT ZONES 
AND RENEWAL COMMUNITIES.—For purposes of sec-
tions 1397A and 1400J, qualified section 179 disaster 
assistance property shall not be treated as qualified 
zone property or qualified renewal property, unless 
the taxpayer elects not to take such qualified section 
179 disaster assistance property into account for pur-
poses of this subsection. 
‘‘(4) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under subsection 
(d)(10) shall apply with respect to any qualified sec-
tion 179 disaster assistance property which ceases to 
be qualified section 179 disaster assistance property.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to property placed in service after De-
cember 31, 2007, with respect disasters declared after such 
date.
323 
SEC. 712. COORDINATION WITH HEARTLAND DISASTER RE-
LIEF. 
The amendments made by this subtitle, other than the 
amendments made by sections 706(a)(2), 710, and 711, 
shall not apply to any disaster described in section 
702(c)(1)(A), or to any expenditure or loss resulting from 
such disaster. 
TITLE VIII—SPENDING REDUC-
TIONS 
AND 
APPROPRIATE 
REVENUE RAISERS FOR NEW 
TAX RELIEF POLICY 
SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM 
CERTAIN TAX INDIFFERENT PARTIES. 
(a) IN GENERAL.—Subpart B of part II of subchapter 
E of chapter 1 is amended by inserting after section 457 
the following new section: 
‘‘SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION 
FROM CERTAIN TAX INDIFFERENT PARTIES. 
‘‘(a) IN GENERAL.—Any compensation which is de-
ferred under a nonqualified deferred compensation plan of 
a nonqualified entity shall be includible in gross income 
when there is no substantial risk of forfeiture of the rights 
to such compensation. 
‘‘(b) NONQUALIFIED ENTITY.—For purposes of this 
section, the term ‘nonqualified entity’ means—
324 
‘‘(1) any foreign corporation unless substantially 
all of its income is— 
‘‘(A) effectively connected with the conduct 
of a trade or business in the United States, or 
‘‘(B) subject to a comprehensive foreign in-
come tax, and 
‘‘(2) any partnership unless substantially all of 
its income is allocated to persons other than— 
‘‘(A) foreign persons with respect to whom 
such income is not subject to a comprehensive 
foreign income tax, and 
‘‘(B) organizations which are exempt from 
tax under this title. 
‘‘(c) DETERMINABILITY OF AMOUNTS OF COMPENSA-
TION.— 
‘‘(1) IN GENERAL.—If the amount of any com-
pensation is not determinable at the time that such 
compensation is otherwise includible in gross income 
under subsection (a)— 
‘‘(A) such amount shall be so includible in 
gross income when determinable, and 
‘‘(B) the tax imposed under this chapter for 
the taxable year in which such compensation is 
includible in gross income shall be increased by 
the sum of—
325 
‘‘(i) the amount of interest determined 
under paragraph (2), and 
‘‘(ii) an amount equal to 20 percent of 
the amount of such compensation. 
‘‘(2) INTEREST.—For purposes of paragraph 
(1)(B)(i), the interest determined under this para-
graph for any taxable year is the amount of interest 
at the underpayment rate under section 6621 plus 1 
percentage point on the underpayments that would 
have occurred had the deferred compensation been in-
cludible in gross income for the taxable year in which 
first deferred or, if later, the first taxable year in 
which such deferred compensation is not subject to a 
substantial risk of forfeiture. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—For 
purposes of this section— 
‘‘(1) SUBSTANTIAL RISK OF FORFEITURE.— 
‘‘(A) IN GENERAL.—The rights of a person 
to compensation shall be treated as subject to a 
substantial risk of forfeiture only if such person’s 
rights to such compensation are conditioned 
upon the future performance of substantial serv-
ices by any individual.
326 
‘‘(B) 
EXCEPTION
FOR
COMPENSATION 
BASED ON GAIN RECOGNIZED ON AN INVESTMENT 
ASSET.— 
‘‘(i) IN GENERAL.—To the extent pro-
vided in regulations prescribed by the Sec-
retary, if compensation is determined solely 
by reference to the amount of gain recog-
nized on the disposition of an investment 
asset, such compensation shall be treated as 
subject to a substantial risk of forfeiture 
until the date of such disposition. 
‘‘(ii) INVESTMENT
ASSET.—For pur-
poses of clause (i), the term ‘investment 
asset’ means any single asset (other than an 
investment fund or similar entity)— 
‘‘(I) acquired directly by an in-
vestment fund or similar entity, 
‘‘(II) with respect to which such 
entity does not (nor does any person 
related to such entity) participate in 
the active management of such asset 
(or if such asset is an interest in an 
entity, in the active management of the 
activities of such entity), and
327 
‘‘(III) substantially all of any 
gain on the disposition of which (other 
than such deferred compensation) is al-
located to investors in such entity. 
‘‘(iii) COORDINATION
WITH
SPECIAL 
RULE.—Paragraph (3)(B) shall not apply 
to any compensation to which clause (i) ap-
plies. 
‘‘(2) COMPREHENSIVE FOREIGN INCOME TAX.— 
The term ‘comprehensive foreign income tax’ means, 
with respect to any foreign person, the income tax of 
a foreign country if— 
‘‘(A) such person is eligible for the benefits 
of a comprehensive income tax treaty between 
such foreign country and the United States, or 
‘‘(B) such person demonstrates to the satis-
faction of the Secretary that such foreign country 
has a comprehensive income tax. 
‘‘(3) NONQUALIFIED DEFERRED COMPENSATION 
PLAN.— 
‘‘(A) IN GENERAL.—The term ‘nonqualified 
deferred compensation plan’ has the meaning 
given such term under section 409A(d), except 
that such term shall include any plan that pro-
vides a right to compensation based on the ap-
328 
preciation in value of a specified number of eq-
uity units of the service recipient. 
‘‘(B) EXCEPTION.—Compensation shall not 
be treated as deferred for purposes of this section 
if the service provider receives payment of such 
compensation not later than 12 months after the 
end of the taxable year of the service recipient 
during which the right to the payment of such 
compensation is no longer subject to a substan-
tial risk of forfeiture. 
‘‘(4) EXCEPTION
FOR
CERTAIN
COMPENSATION 
WITH
RESPECT
TO
EFFECTIVELY
CONNECTED
IN-
COME.—In the case a foreign corporation with income 
which is taxable under section 882, this section shall 
not apply to compensation which, had such com-
pensation had been paid in cash on the date that such 
compensation ceased to be subject to a substantial risk 
of forfeiture, would have been deductible by such for-
eign corporation against such income. 
‘‘(5) APPLICATION OF RULES.—Rules similar to 
the rules of paragraphs (5) and (6) of section 409A(d) 
shall apply. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including regulations
329 
disregarding a substantial risk of forfeiture in cases where 
necessary to carry out the purposes of this section.’’. 
(b) CONFORMING AMENDMENT.—Section 26(b)(2), as 
amended by the Housing Assistance Tax Act of 2008, is 
amended by striking ‘‘and’’ at the end of subparagraph (V), 
by striking the period at the end of subparagraph (W) and 
inserting ‘‘, and’’, and by adding at the end the following 
new subparagraph: 
‘‘(X) section 457A(c)(1)(B) (relating to de-
terminability of amounts of compensation).’’. 
(c) CLERICAL AMENDMENT.—The table of sections of 
subpart B of part II of subchapter E of chapter 1 is amend-
ed by inserting after the item relating to section 457 the 
following new item: 
‘‘Sec. 457A. Nonqualified deferred compensation from certain tax indifferent par-
ties.’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to amounts deferred which are attrib-
utable to services performed after December 31, 2008. 
(2) APPLICATION TO EXISTING DEFERRALS.—In 
the case of any amount deferred to which the amend-
ments made by this section do not apply solely by 
reason of the fact that the amount is attributable to 
services performed before January 1, 2009, to the ex-