recovery loss’ means, with respect to any taxable 
year, the lesser of— 
‘‘(A) the aggregate amount of the deduc-
tions allowed under sections 167 and 168 with 
respect to qualified Gulf Opportunity Zone 
property (as defined in subsection (d)(2), but 
without regard to subparagraph (B)(iv) thereof) 
which is placed in service during such taxable 
year, or 
‘‘(B) the excess of— 
‘‘(i) the net operating loss for such 
taxable year, over 
‘‘(ii) the specified liability loss for 
such taxable year to which a 10-year 
carryback 
applies 
under 
section 
172(b)(1)(C). 
‘‘(3) COORDINATION WITH ORDERING RULE.— 
For purposes of applying section 172(b)(2), a GO 
Zone cost recovery loss to which paragraph (1) ap-
plies shall be treated in a manner similar to the 
manner in which a specified liability loss is treated. 
‘‘(4) ELECTION
OUT.—A rule similar to the 
rule of section 172(j) shall apply for purposes of this 
subsection.
‘‘(l) CREDIT TO HOLDERS OF GULF TAX CREDIT 
BONDS.— 
‘‘(1) ALLOWANCE OF CREDIT.—If a taxpayer 
holds a Gulf tax credit bond on one or more credit 
allowance dates of the bond occurring during any 
taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for the tax-
able year an amount equal to the sum of the credits 
determined under paragraph (2) with respect to 
such dates. 
‘‘(2) AMOUNT OF CREDIT.— 
‘‘(A) IN
GENERAL.—The amount of the 
credit determined under this paragraph with re-
spect to any credit allowance date for a Gulf 
tax credit bond is 25 percent of the annual 
credit determined with respect to such bond. 
‘‘(B) ANNUAL CREDIT.—The annual credit 
determined with respect to any Gulf tax credit 
bond is the product of— 
‘‘(i) the credit rate determined by the 
Secretary under subparagraph (C) for the 
day on which such bond was sold, multi-
plied by 
‘‘(ii) the outstanding face amount of 
the bond.
‘‘(C) DETERMINATION.—For purposes of 
subparagraph (B), with respect to any Gulf tax 
credit bond, the Secretary shall determine daily 
or cause to be determined daily a credit rate 
which shall apply to the first day on which 
there is a binding, written contract for the sale 
or exchange of the bond. The credit rate for 
any day is the credit rate which the Secretary 
or the Secretary’s designee estimates will per-
mit the issuance of Gulf tax credit bonds with 
a specified maturity or redemption date without 
discount and without interest cost to the issuer. 
‘‘(D) CREDIT
ALLOWANCE
DATE.—For 
purposes of this subsection, the term ‘credit al-
lowance date’ means March 15, June 15, Sep-
tember 15, and December 15. Such term also 
includes the last day on which the bond is out-
standing. 
‘‘(E) SPECIAL RULE FOR ISSUANCE AND 
REDEMPTION.—In the case of a bond which is 
issued during the 3-month period ending on a 
credit allowance date, the amount of the credit 
determined under this paragraph with respect 
to such credit allowance date shall be a ratable 
portion of the credit otherwise determined
based on the portion of the 3-month period dur-
ing which the bond is outstanding. A similar 
rule shall apply when the bond is redeemed or 
matures. 
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—The credit allowed under paragraph (1) for 
any taxable year shall not exceed the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under part IV of subchapter A (other than sub-
part C and this subsection). 
‘‘(4) GULF TAX CREDIT BOND.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘Gulf tax 
credit bond’ means any bond issued as part of 
an issue if— 
‘‘(i) the bond is issued by the State of 
Alabama, Louisiana, or Mississippi, 
‘‘(ii) 95 percent or more of the pro-
ceeds of such issue are to be used to— 
‘‘(I) pay principal, interest, or 
premiums on qualified bonds issued
by such State or any political subdivi-
sion of such State, or 
‘‘(II) make a loan to any political 
subdivision of such State to pay prin-
cipal, interest, or premiums on quali-
fied bonds issued by such political 
subdivision, 
‘‘(iii) the Governor of such State des-
ignates such bond for purposes of this sub-
section, 
‘‘(iv) the bond is a general obligation 
of such State and is in registered form 
(within the meaning of section 149(a)), 
‘‘(v) the maturity of such bond does 
not exceed 2 years, and 
‘‘(vi) the bond is issued after Decem-
ber 31, 2005, and before January 1, 2007. 
‘‘(B) STATE MATCHING REQUIREMENT.—A 
bond shall not be treated as a Gulf tax credit 
bond unless— 
‘‘(i) the issuer of such bond pledges as 
of the date of the issuance of the issue an 
amount equal to the face amount of such 
bond to be used for payments described in 
subclause (I) of subparagraph (A)(ii), or