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‘‘(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.
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‘‘(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
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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
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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
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loans described in subclause (II) of such 
subparagraph, as the case may be, with re-
spect to the issue of which such bond is a 
part, and 
‘‘(ii) any such payment or loan is 
made in equal amounts from the proceeds 
of such issue and from the amount pledged 
under clause (i). 
The requirement of clause (ii) shall be treated 
as met with respect to any such payment or 
loan made during the 1-year period beginning 
on the date of the issuance (or any successor 1- 
year period) if such requirement is met when 
applied with respect to the aggregate amount of 
such payments and loans made during such pe-
riod. 
‘‘(C) AGGREGATE
LIMIT
ON
BOND
DES-
IGNATIONS.—The maximum aggregate face 
amount of bonds which may be designated 
under this subsection by the Governor of a 
State shall not exceed— 
‘‘(i) $200,000,000 in the case of the 
State of Louisiana, 
‘‘(ii) $100,000,000 in the case of the 
State of Mississippi, and
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‘‘(iii) $50,000,000 in the case of the 
State of Alabama. 
‘‘(D) SPECIAL RULES RELATING TO ARBI-
TRAGE.—A bond which is part of an issue shall 
not be treated as a Gulf tax credit bond unless, 
with respect to the issue of which the bond is 
a part, the issuer satisfies the arbitrage require-
ments of section 148 with respect to proceeds 
of the issue and any loans made with such pro-
ceeds. 
‘‘(5) QUALIFIED BOND.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
bond’ means any obligation of a State or polit-
ical subdivision thereof which was outstanding 
on August 28, 2005. 
‘‘(B) EXCEPTION FOR PRIVATE ACTIVITY 
BONDS.—Such term shall not include any pri-
vate activity bond. 
‘‘(C) 
EXCEPTION
FOR
ADVANCE 
REFUNDINGS.—Such term shall not include any 
bond with respect to which there is any out-
standing refunded or refunding bond during the 
period in which a Gulf tax credit bond is out-
standing with respect to such bond.
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‘‘(6) CREDIT INCLUDED IN GROSS INCOME.— 
Gross income includes the amount of the credit al-
lowed to the taxpayer under this subsection (deter-
mined without regard to paragraph (3)) and the 
amount so included shall be treated as interest in-
come. 
‘‘(7) 
OTHER
DEFINITIONS
AND
SPECIAL 
RULES.—For purposes of this subsection— 
‘‘(A) BOND.—The term ‘bond’ includes 
any obligation. 
‘‘(B) PARTNERSHIP; S CORPORATION; AND 
OTHER PASS-THRU ENTITIES.— 
‘‘(i) IN GENERAL.—Under regulations 
prescribed by the Secretary, in the case of 
a partnership, trust, S corporation, or 
other pass-thru entity, rules similar to the 
rules of section 41(g) shall apply with re-
spect to the credit allowable under para-
graph (1). 
‘‘(ii) NO BASIS ADJUSTMENT.—In the 
case of a bond held by a partnership or an 
S corporation, rules similar to the rules 
under section 1397E(i) shall apply. 
‘‘(C) BONDS
HELD
BY
REGULATED
IN-
VESTMENT COMPANIES.—If any Gulf tax credit
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bond is held by a regulated investment com-
pany, the credit determined under paragraph 
(1) shall be allowed to shareholders of such 
company under procedures prescribed by the 
Secretary. 
‘‘(D) REPORTING.—Issuers of Gulf tax 
credit bonds shall submit reports similar to the 
reports required under section 149(e). 
‘‘(E) CREDIT
TREATED
AS
NONREFUND-
ABLE BONDHOLDER CREDIT.—For purposes of 
this title, the credit allowed by this subsection 
shall be treated as a credit allowable under sub-
part H of part IV of subchapter A of this chap-
ter. 
‘‘(m) TAX BENEFITS NOT AVAILABLE WITH RE-
SPECT TO FACILITIES FOR GAMBLING, ETC.— 
‘‘(1) TAX-EXEMPT
BOND
FINANCING.—Sub-
section (a) shall not apply to any bond issued as 
part of an issue if any portion of the proceeds of 
such issue is to be used to provide any property de-
scribed in section 144(c)(6)(B). 
‘‘(2) 
ADVANCE
REFUNDING
BONDS.—Sub-
section (b) shall not apply to any advance refunding 
of a bond which is issued as part of an issue if any 
portion of the proceeds of such issue (or any prior
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issue) was (or is to be) used to provide any property 
described in section 144(c)(6)(B). 
‘‘(3) LOW-INCOME HOUSING CREDIT.—For pur-
poses of subsection (c), property shall not be treated 
as located or placed in service in the Gulf Oppor-
tunity Zone if such property is described in section 
144(c)(6)(B). 
‘‘(4) SPECIAL ALLOWANCE FOR CERTAIN PROP-
ERTY; SECTION
179
EXPENSING; CARRYBACK
OF 
COST
RECOVERY
DEDUCTIONS.—For purposes of 
subsections (d), (e), and (k), the term ‘qualified Gulf 
Opportunity Zone property’ shall not include any 
property described in section 144(c)(6)(B). 
‘‘(5) DEMOLITION AND CLEAN-UP COSTS; RE-
MEDIATION; 
REHABILITATION
EXPENSES.—Sub-
sections (f), (g), and (h) shall not apply with respect 
to any amount paid or incurred with respect to any 
property described in section 144(c)(6)(B). 
‘‘(6) TIMBER
PRODUCERS.—For purposes of 
subsection (i), qualified timber property shall not in-
clude 
any 
property 
described 
in 
section 
144(c)(6)(B). 
‘‘(7) PUBLIC UTILITY CASUALTY LOSSES.—For 
purposes of subsection (j), public utility property
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shall not include any property described in section 
144(c)(6)(B). 
‘‘(8) GULF TAX CREDIT BONDS.—Subsection (l) 
shall not apply to any bond issued as part of an 
issue if any portion of the proceeds of such issue is 
to be used to provide any property described in sec-
tion 144(c)(6)(B).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 54(c) is amended 
by inserting ‘‘, section 1400N(l),’’ after ‘‘subpart 
C’’. 
(2) Subparagraph (A) of section 6049(d)(8) is 
amended— 
(A) by inserting ‘‘or 1400N(l)(6)’’ after 
‘‘section 54(g)’’, and 
(B) by inserting ‘‘or 1400N(l)(2)(D), as 
the case may be’’ after ‘‘section 54(b)(4)’’. 
(3) So much of subchapter Y of chapter 1 as 
precedes section 1400L is amended to read as fol-
lows: 
‘‘Subchapter Y—Short-term Regional Benefits 
‘‘PART I—TAX BENEFITS FOR NEW YORK LIBERTY ZONE 
‘‘PART II—TAX BENEFITS FOR GULF OPPORTUNITY ZONE
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‘‘PART I—TAX BENEFITS FOR NEW YORK LIBERTY 
ZONE 
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.’’. 
(4) The item relating to subchapter Y in the 
table of subchapters for chapter 1 is amended to 
read as follows: 
‘‘SUBCHAPTER Y—SHORT-TERM REGIONAL BENEFITS’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years ending on or after Au-
gust 28, 2005. 
(2) CARRYBACKS.—Subsections (i)(2), (j), and 
(k) of section 1400N of the Internal Revenue Code 
of 1986 (as added by this section) shall apply to 
losses arising in such taxable years. 
SEC. 102. FEDERAL GUARANTEE OF CERTAIN STATE 
BONDS. 
(a) STATE BONDS DESCRIBED.— 
(1) IN GENERAL.—This section shall apply to a 
bond issued as part of an issue if— 
(A) the issue of which such bond is part is 
an issue of the State of Alabama, Louisiana, or 
Mississippi,
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(B) the bond is a general obligation of the 
issuing State and is in registered form, 
(C) the proceeds of the bond are distrib-
uted to one or more political subdivisions of the 
issuing State, 
(D) the maturity of such bond does not ex-
ceed 5 years, 
(E) the bond is issued after the date of the 
enactment of this Act and before January 1, 
2008, and 
(F) the bond is designated by the Sec-
retary of the Treasury for purposes of this sec-
tion. 
(2) FACILITIES FOR GAMBLING, ETC.—The Sec-
retary of the Treasury may not designate any bond 
for purposes of this section if such bond is issued as 
part of an issue any portion of the proceeds of which 
is to be used to provide any property described in 
section 144(c)(6)(B). 
(b) APPLICATION.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury may only designate a bond for purposes of this 
section pursuant to an application submitted to the 
Secretary by the State which demonstrates the need
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for such designation on the basis of the criteria 
specified in paragraph (2). 
(2) CRITERIA.—For purposes of paragraph (1), 
the criteria specified in this paragraph are— 
(A) the loss of revenue base of one or more 
political subdivisions of the State by reason of 
Hurricane Katrina, 
(B) the need for resources to fund infra-
structure within, or operating expenses of, any 
such political subdivision, 
(C) the lack of access of such political sub-
division to capital, and 
(D) any other criteria as may be deter-
mined by the Secretary. 
(3) GUIDANCE FOR SUBMISSION AND CONSID-
ERATION OF APPLICATIONS.—The Secretary of the 
Treasury shall prescribe regulations or other guid-
ance which provide for the time and manner for the 
submission and consideration of applications under 
this subsection. 
(c) FEDERAL GUARANTEE.—A bond described in 
subsection (a) is guaranteed by the United States in an 
amount equal to 50 percent of the outstanding principal 
with respect to such bond.
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(d) AGGREGATE LIMIT ON BOND DESIGNATIONS.— 
The maximum aggregate face amount of bonds which may 
be 
issued 
under 
this 
section 
shall 
not 
exceed 
$3,000,000,000. 
TITLE 
II—TAX 
BENEFITS 
RE-
LATED TO HURRICANES RITA 
AND WILMA 
SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RE-
LIEF FOR HURRICANE KATRINA TO HURRI-
CANES RITA AND WILMA. 
(a) IN GENERAL.—Part II of subchapter Y of chap-
ter 1 (as added by this Act) is amended by adding at the 
end the following new sections: 
‘‘SEC. 1400O. SPECIAL RULES FOR USE OF RETIREMENT 
FUNDS. 
‘‘(a) TAX-FAVORED WITHDRAWALS FROM RETIRE-
MENT PLANS.— 
‘‘(1) IN
GENERAL.—Section 72(t) shall not 
apply to any qualified hurricane distribution. 
‘‘(2) AGGREGATE DOLLAR LIMITATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the aggregate amount of distribu-
tions received by an individual which may be 
treated as qualified hurricane distributions for
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any taxable year shall not exceed the excess (if 
any) of— 
‘‘(i) $100,000, over 
‘‘(ii) the aggregate amounts treated as 
qualified hurricane distributions received 
by such individual for all prior taxable 
years. 
‘‘(B) TREATMENT
OF
PLAN
DISTRIBU-
TIONS.—If a distribution to an individual would 
(without regard to subparagraph (A)) be a 
qualified hurricane distribution, a plan shall not 
be treated as violating any requirement of this 
title merely because the plan treats such dis-
tribution as a qualified hurricane distribution, 
unless the aggregate amount of such distribu-
tions from all plans maintained by the employer 
(and any member of any controlled group which 
includes the employer) to such individual ex-
ceeds $100,000. 
‘‘(C) CONTROLLED GROUP.—For purposes 
of subparagraph (B), the term ‘controlled 
group’ means any group treated as a single em-
ployer under subsection (b), (c), (m), or (o) of 
section 414. 
‘‘(3) AMOUNT DISTRIBUTED MAY BE REPAID.—
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‘‘(A) IN
GENERAL.—Any individual who 
receives a qualified hurricane distribution may, 
at any time during the 3-year period beginning 
on the day after the date on which such dis-
tribution was received, make one or more con-
tributions in an aggregate amount not to exceed 
the amount of such distribution to an eligible 
retirement plan of which such individual is a 
beneficiary and to which a rollover contribution 
of such distribution could be made under sec-
tion 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 
457(e)(16), as the case may be. 
‘‘(B) TREATMENT
OF
REPAYMENTS
OF 
DISTRIBUTIONS
FROM
ELIGIBLE
RETIREMENT 
PLANS
OTHER
THAN
IRAS.—For purposes of 
this title, if a contribution is made pursuant to 
subparagraph (A) with respect to a qualified 
hurricane distribution from an eligible retire-
ment plan other than an individual retirement 
plan, then the taxpayer shall, to the extent of 
the amount of the contribution, be treated as 
having received the qualified hurricane distribu-
tion in an eligible rollover distribution (as de-
fined in section 402(c)(4)) and as having trans-
ferred the amount to the eligible retirement