‘‘(B) any qualified Gulf Opportunity Zone 
Bond described in paragraph (2)(A)(ii) shall be 
treated as a qualified mortgage bond. 
‘‘(2) QUALIFIED
GULF
OPPORTUNITY
ZONE 
BOND.—For purposes of this subsection, the term 
‘qualified Gulf Opportunity Zone Bond’ means any 
bond issued as part of an issue if—
‘‘(A)(i) 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of such 
issue are to be used for qualified project costs, 
or 
‘‘(ii) such issue meets the requirements of 
a qualified mortgage issue, except as otherwise 
provided in this subsection, 
‘‘(B) such bond is issued by the State of 
Alabama, Louisiana, or Mississippi, or any po-
litical subdivision thereof, 
‘‘(C) such bond is designated for purposes 
of this section by—
‘‘(i) in the case of a bond which is re-
quired under State law to be approved by 
the bond commission of such State, such 
bond commission, and 
‘‘(ii) in the case of any other bond, 
the Governor of such State, and
‘‘(D) such bond is issued after the date of 
the enactment of this section and before Janu-
ary 1, 2011. 
‘‘(3) LIMITATIONS ON BONDS.—
‘‘(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 $2,500 multiplied by the portion of 
the State population which is in the Gulf Op-
portunity Zone (as determined on the basis of 
the most recent census estimate of resident 
population released by the Bureau of Census 
before August 28, 2005). 
‘‘(B) MOVABLE
PROPERTY.—No bonds 
shall be issued which are to be used for movable 
fixtures and equipment. 
‘‘(4) QUALIFIED
PROJECT
COSTS.—For pur-
poses of this subsection, the term ‘qualified project 
costs’ means the cost of acquisition, construction, re-
construction, and renovation of—
‘‘(A) nonresidential real property and 
qualified residential rental property (as defined 
in section 142(d)) located in the Gulf Oppor-
tunity Zone, and
‘‘(B) public utility property (as defined in 
section 168(i)(10)) located in the Gulf Oppor-
tunity Zone. 
‘‘(5) SPECIAL RULES.—In applying this title to 
any qualified Gulf Opportunity Zone Bond, the fol-
lowing modifications shall apply: 
‘‘(A) Section 142(d)(1) (defining qualified 
residential rental project) shall be applied—
‘‘(i) by substituting ‘60 percent’ for 
‘50 percent’ in subparagraph (A) thereof, 
and 
‘‘(ii) by substituting ‘70 percent’ for 
‘60 percent’ in subparagraph (B) thereof. 
‘‘(B) Section 143 (relating to mortgage 
revenue bonds: qualified mortgage bond and 
qualified veterans’ mortgage bond) shall be ap-
plied—
‘‘(i) by treating only residences in the 
Gulf Opportunity Zone as owner-occupied 
residences, 
‘‘(ii) by treating any residence in the 
Gulf Opportunity Zone as a targeted area 
residence, and 
‘‘(iii) by substituting ‘$150,000’ for 
‘$15,000’ in subsection (k)(4) thereof.
‘‘(C) Except as provided in section 143, re-
payments of principal on financing provided by 
the issue of which such bond is a part may not 
be used to provide financing. 
‘‘(D) Section 146 (relating to volume cap) 
shall not apply. 
‘‘(E) Section 147(d)(2) (relating to acqui-
sition of existing property not permitted) shall 
be applied by substituting ‘50 percent’ for ‘15 
percent’ each place it appears. 
‘‘(F) Section 148(f)(4)(C) (relating to ex-
ception from rebate for certain proceeds to be 
used to finance construction expenditures) shall 
apply to the available construction proceeds of 
bonds which are part of an issue described in 
paragraph (2)(A)(i). 
‘‘(G) Section 57(a)(5) (relating to tax-ex-
empt interest) shall not apply. 
‘‘(6) SEPARATE
ISSUE
TREATMENT
OF
POR-
TIONS
OF
AN
ISSUE.—This subsection 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.
‘‘(b) ADVANCE REFUNDINGS OF CERTAIN TAX-EX-
EMPT BONDS.—
‘‘(1) IN GENERAL.—With respect to a bond de-
scribed in paragraph (3) which is not a qualified 
501(c)(3) bond, one additional advance refunding 
after the date of the enactment of this section and 
before January 1, 2011, shall be allowed under the 
applicable rules of section 149(d) if—
‘‘(A) the Governor of the State designates 
the advance refunding bond for purposes of this 
subsection, and 
‘‘(B) the requirements of paragraph (5) 
are met. 
‘‘(2) CERTAIN
PRIVATE
ACTIVITY
BONDS.—
With respect to a bond described in paragraph (3) 
which is an exempt facility bond described in para-
graph (1) or (2) of section 142(a), one advance re-
funding after the date of the enactment of this sec-
tion and before January 1, 2011, shall be allowed 
under the applicable rules of section 149(d) (not-
withstanding paragraph (2) thereof) if the require-
ments of subparagraphs (A) and (B) of paragraph 
(1) are met. 
‘‘(3) BONDS DESCRIBED.—A bond is described 
in this paragraph if such bond was outstanding on
August 28, 2005, and is issued by the State of Ala-
bama, Louisiana, or Mississippi, or a political sub-
division thereof. 
‘‘(4) AGGREGATE LIMIT.—The maximum aggre-
gate face amount of bonds which may be designated 
under this subsection by the Governor of a State 
shall not exceed—
‘‘(A) $4,500,000,000 in the case of the 
State of Louisiana, 
‘‘(B) $2,250,000,000 in the case of the 
State of Mississippi, and 
‘‘(C) $1,125,000,000 in the case of the 
State of Alabama. 
‘‘(5) ADDITIONAL
REQUIREMENTS.—The re-
quirements of this paragraph are met with respect 
to any advance refunding of a bond described in 
paragraph (3) if—
‘‘(A) no advance refundings of such bond 
would be allowed under this title on or after 
August 28, 2005, 
‘‘(B) the advance refunding bond is the 
only other outstanding bond with respect to the 
refunded bond, and
‘‘(C) the requirements of section 148 are 
met with respect to all bonds issued under this 
subsection. 
‘‘(c) LOW-INCOME HOUSING CREDIT.—
‘‘(1) ADDITIONAL
HOUSING
CREDIT
DOLLAR 
AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of sec-
tion 42, in the case of calendar years 2006, 
2007, and 2008, the State housing credit ceil-
ing of each State, any portion of which is lo-
cated in the Gulf Opportunity Zone, shall be in-
creased by the lesser of—
‘‘(i) the aggregate housing credit dol-
lar amount allocated by the State housing 
credit agency of such State to buildings lo-
cated in the Gulf Opportunity Zone for 
such calendar year, or 
‘‘(ii) the Gulf Opportunity housing 
amount for such State for such calendar 
year. 
‘‘(B) 
GULF
OPPORTUNITY
HOUSING 
AMOUNT.—For purposes of subparagraph (A), 
the term ‘Gulf Opportunity housing amount’ 
means, for any calendar year, the amount equal 
to the product of $18.00 multiplied by the por-
tion of the State population which is in the Gulf 
Opportunity Zone (as determined on the basis 
of the most recent census estimate of resident 
population released by the Bureau of Census 
before August 28, 2005). 
‘‘(C) ALLOCATIONS
TREATED
AS
MADE 
FIRST FROM ADDITIONAL ALLOCATION AMOUNT 
FOR
PURPOSES
OF
DETERMINING
CARRY-
OVER.—For purposes of determining the un-
used State housing credit ceiling under section 
42(h)(3)(C) for any calendar year, any increase 
in the State housing credit ceiling under sub-
paragraph (A) shall be treated as an amount 
described in clause (ii) of such section. 
‘‘(2) DIFFICULT DEVELOPMENT AREA.—
‘‘(A) IN GENERAL.—For purposes of sec-
tion 42, in the case of property placed in service 
during 2006, 2007, or 2008, the Gulf Oppor-
tunity Zone—
‘‘(i) shall be treated as a difficult de-
velopment area designated under subclause 
(I) of section 42(d)(5)(C)(iii), and 
‘‘(ii) shall not be taken into account 
for purposes of applying the limitation 
under subclause (II) of such section.
‘‘(B) APPLICATION.—Subparagraph (A) 
shall apply only to—
‘‘(i) housing credit dollar amounts al-
located during the period beginning on 
January 1, 2006, and ending on December 
31, 2008, and 
‘‘(ii) buildings placed in service during 
such period to the extent that paragraph 
(1) of section 42(h) does not apply to any 
building by reason of paragraph (4) there-
of, but only with respect to bonds issued 
after December 31, 2005. 
‘‘(3) SPECIAL
RULE
FOR
APPLYING
INCOME 
TESTS.—In the case of property placed in service—
‘‘(A) during 2006, 2007, or 2008, 
‘‘(B) in the Gulf Opportunity Zone, and 
‘‘(C) in a nonmetropolitan area (as defined 
in section 42(d)(5)(C)(iv)(IV)), 
section 42 shall be applied by substituting ‘national 
nonmetropolitan median gross income (determined 
under rules similar to the rules of section 
142(d)(2)(B))’ for ‘area median gross income’ in 
subparagraphs (A) and (B) of section 42(g)(1).
‘‘(4) DEFINITIONS.—Any term used in this sub-
section which is also used in section 42 shall have 
the same meaning as when used in such section. 
‘‘(d) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 
ACQUIRED ON OR AFTER AUGUST 28, 2005.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of 
any qualified Gulf Opportunity Zone 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 allowance equal to 50 percent of the ad-
justed basis of such property, and 
‘‘(B) the adjusted basis of the qualified 
Gulf Opportunity Zone property shall be re-
duced by the amount of such deduction before 
computing the amount otherwise allowable as a 
depreciation deduction under this chapter for 
such taxable year and any subsequent taxable 
year. 
‘‘(2) QUALIFIED
GULF
OPPORTUNITY
ZONE 
PROPERTY.— For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified 
Gulf Opportunity Zone property’ means prop-
erty—
‘‘(i)(I) which is described in section 
168(k)(2)(A)(i), or 
‘‘(II) which is nonresidential real 
property or residential rental property, 
‘‘(ii) substantially all of the use of 
which is in the Gulf Opportunity Zone and 
is in the active conduct of a trade or busi-
ness by the taxpayer in such Zone, 
‘‘(iii) the original use of which in the 
Gulf Opportunity Zone commences with 
the taxpayer on or after August 28, 2005, 
‘‘(iv) which is acquired by the tax-
payer by purchase (as defined in section 
179(d)) on or after August 28, 2005, but 
only if no written binding contract for the 
acquisition was in effect before August 28, 
2005, and 
‘‘(v) which is placed in service by the 
taxpayer on or before December 31, 2007 
(December 31, 2008, in the case of non-
residential real property and residential 
rental property). 
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION 
PROPERTY.—Such term shall not include
any 
property 
described 
in 
section 
168(k)(2)(D)(i). 
‘‘(ii) 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. 
‘‘(iii) 
QUALIFIED
REVITALIZATION 
BUILDINGS.—Such term shall not include 
any qualified revitalization building with 
respect to which the taxpayer has elected 
the application of paragraph (1) or (2) of 
section 1400I(a). 
‘‘(iv) ELECTION OUT.—If a taxpayer 
makes an election under this clause with 
respect to any class of property for any 
taxable year, this subsection shall not 
apply to all property in such class placed 
in service during such taxable year. 
‘‘(3) SPECIAL
RULES.—For purposes of this 
subsection, rules similar to the rules of subpara-
graph (E) of section 168(k)(2) shall apply, except 
that such subparagraph shall be applied—
‘‘(A) by substituting ‘August 27, 2005’ for 
‘September 10, 2001’ each place it appears 
therein, 
‘‘(B) by substituting ‘January 1, 2008’ for 
‘January 1, 2005’ in clause (i) thereof, and 
‘‘(C) by substituting ‘qualified Gulf Oppor-
tunity Zone property’ for ‘qualified property’ in 
clause (iv) thereof. 
‘‘(4) ALLOWANCE AGAINST ALTERNATIVE MIN-
IMUM TAX.—For purposes of this subsection, rules 
similar to the rules of section 168(k)(2)(G) shall 
apply. 
‘‘(5) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified 
Gulf Opportunity Zone property which ceases to be 
qualified Gulf Opportunity Zone property. 
‘‘(e) INCREASE
IN EXPENSING UNDER SECTION 
179.—
‘‘(1) IN
GENERAL.—For purposes of section 
179—
‘‘(A) the dollar amount in effect under sec-
tion 179(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 
Gulf Opportunity Zone property placed in 
service during the taxable year, and 
‘‘(B) the dollar amount in effect under sec-
tion 179(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 
Gulf Opportunity Zone property placed in 
service during the taxable year. 
‘‘(2) QUALIFIED
SECTION
179
GULF
OPPOR-
TUNITY ZONE PROPERTY.—For purposes of this sub-
section, the term ‘qualified section 179 Gulf Oppor-
tunity Zone property’ means section 179 property 
(as defined in section 179(d)) which is qualified Gulf 
Opportunity Zone property (as defined in subsection 
(d)(2)). 
‘‘(3) 
COORDINATION
WITH
EMPOWERMENT 
ZONES AND RENEWAL COMMUNITIES.—For purposes 
of sections 1397A and 1400J, qualified section 179 
Gulf Opportunity Zone property shall not be treated 
as qualified zone property or qualified renewal prop-
erty, unless the taxpayer elects not to take such 
qualified section 179 Gulf Opportunity Zone prop-
erty into account for purposes of this subsection.