I 
110TH CONGRESS 
2D SESSION 
H. R. 6640 
To amend the Internal Revenue Code of 1986 to provide relief in the case 
of federally declared disasters. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 29, 2008 
Mr. KIND (for himself, Mr. LEWIS of Georgia, Mr. TANNER, Mr. MEEK of 
Florida, Mr. DAVIS of Alabama, Ms. MOORE of Wisconsin, Mr. SENSEN-
BRENNER, Mr. MELANCON, Mr. CAZAYOUX, Mr. JEFFERSON, Mr. 
CARNAHAN, Mr. PAUL, Mr. MICHAUD, and Mr. BISHOP of New York) in-
troduced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
relief in the case of federally declared disasters. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Fair Disaster Tax Re-
lief Act of 2008’’. 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
SEC. 2. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED 
DISASTERS. 
(a) WAIVER OF ADJUSTED GROSS INCOME LIMITA-
TION.— 
(1) IN
GENERAL.—Subsection (h) of section 
165 of the Internal Revenue Code of 1986 is amend-
ed by redesignating paragraphs (3) and (4) as para-
graphs (4) and (5), respectively, and by inserting 
after paragraph (2) the following new paragraph: 
‘‘(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. 
‘‘(B) NET DISASTER LOSS.—For purposes 
of subparagraph (A), the term ‘net disaster 
loss’ means the excess of— 
‘‘(i) the personal casualty losses— 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
‘‘(I) attributable to a federally 
declared disaster, 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 Fed-
eral Government under the Robert T. Staf-
ford Disaster Relief and Emergency Assist-
ance Act. 
‘‘(ii) DISASTER AREA.—The term ‘dis-
aster area’ means the area so determined 
to warrant such assistance.’’. 
(2) CONFORMING AMENDMENTS.— 
(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) of such Code is 
amended by striking ‘‘loss’’ and all that follows 
through ‘‘Act’’ and inserting ‘‘loss occurring in 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
a disaster area (as defined by clause (ii) of sub-
section (h)(3)(C)) and attributable to a feder-
ally declared disaster (as defined by clause (i) 
of such subsection)’’. 
(C) Section 165(i)(4) of such Code is 
amended by striking ‘‘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 of such Code 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 tax-
payer’s principal residence or any of its contents is 
located in a disaster area and is compulsorily or in-
voluntarily converted as a result of a federally de-
clared disaster—’’. 
(ii) Paragraph (2) of section 1033(h) of 
such Code is amended by striking ‘‘investment’’ 
and all that follows through ‘‘disaster’’ and in-
serting ‘‘investment located in a disaster area 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
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) of such 
Code (relating to treatment of casualty gains and losses) 
is amended by striking ‘‘$100’’ and inserting ‘‘$500’’. 
(d) EFFECTIVE DATES.— 
(1) Except as provided by paragraph (2), the 
amendments made by this section shall apply to tax-
able years beginning after December 31, 2007. 
(2) The amendment made by subsection (c) 
shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 3. EXPENSING OF QUALIFIED DISASTER EXPENSES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
itemized deductions for individuals and corporations) 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 
capital account. Any expense which is so treated shall be 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
allowed 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 ac-
count of a federally declared disaster, 
‘‘(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, or 
‘‘(C) for the repair of business-related 
property damaged as a result of a federally de-
clared disaster, and 
‘‘(3) is otherwise chargeable to capital account. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) 
BUSINESS-RELATED
PROPERTY.—The 
term ‘business-related property’ means property— 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
‘‘(A) held by the taxpayer for use in a 
trade or business or for the production of in-
come, 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 IN-
COME
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 de-
preciation, 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.— 
Sections 198, 280B, and 468 shall not apply to amounts 
which are treated as expenses under this section. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section.’’. 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
(b) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 of such Code 
is amended by inserting 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 
December 31, 2007. 
SEC. 4. NET OPERATING LOSSES ATTRIBUTABLE TO FED-
ERALLY DECLARED DISASTERS. 
(a) IN GENERAL.—Paragraph (1) of section 172(b) 
of the Internal Revenue Code of 1986 (relating to years 
to which loss may be carried) is amended by adding at 
the end the following new subparagraph: 
‘‘(J) CERTAIN LOSSES ATTRIBUTABLE TO 
FEDERALLY
DECLARED
DISASTERS.—In the 
case of a taxpayer who has a qualified disaster 
loss (as defined 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 of 
such Code (relating to net operating loss deduction) is 
amended by redesignating subsections (j) and (k) as sub-
sections (k) and (l), respectively, and by inserting after 
subsection (i) the following new subsection: 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS
‘‘(j) RULES RELATING
TO QUALIFIED DISASTER 
LOSSES.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified dis-
aster 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 
declared disaster (as defined in sec-
tion 165(h)(3)(C)(i)), 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 allowable under section 198A(a) or 
which would be so allowable if not other-
wise treated as an expense, or 
‘‘(B) the net operating loss for such tax-
able year. 
‘‘(2) 
COORDINATION
WITH
SUBSECTION 
(b)(2).—For purposes of applying subsection (b)(2), 
a qualified disaster loss for any taxable year shall be 
treated in a manner similar to the manner in which 
a specified liability loss is treated. 
VerDate Aug 31 2005 
23:09 Jul 30, 2008
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H6640.IH
H6640
PWALKER on PROD1PC71 with BILLS