H. R. 3768—13
by substituting $150,000 for the dollar amount contained therein 
to the extent such loan is for the repair of damage by reason 
of Hurricane Katrina. 
(d) APPLICATION.—Subsection (a) shall not apply to financing 
provided after December 31, 2007. 
SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNI-
TION OF GAIN FOR PROPERTY LOCATED IN HURRICANE 
KATRINA DISASTER AREA. 
Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code 
of 1986 shall be applied by substituting ‘‘5 years’’ for ‘‘2 years’’ 
with respect to property in the Hurricane Katrina disaster area 
which is compulsorily or involuntarily converted on or after August 
25, 2005, by reason of Hurricane Katrina, but only if substantially 
all of the use of the replacement property is in such area. 
SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME. 
(a) IN GENERAL.—In the case of a qualified individual, if the 
earned income of the taxpayer for the taxable year which includes 
August 25, 2005, is less than the earned income of the taxpayer 
for the preceding taxable year, the credits allowed under sections 
24(d) and 32 of the Internal Revenue Code of 1986 may, at the 
election of the taxpayer, be determined by substituting—
(1) such earned income for the preceding taxable year, 
for 
(2) such earned income for the taxable year which includes 
August 25, 2005. 
(b) QUALIFIED INDIVIDUAL.—For purposes of this section, the 
term ‘‘qualified individual’’ means any individual whose principal 
place of abode on August 25, 2005, was located—
(1) in the core disaster area, or 
(2) in the Hurricane Katrina disaster area (but outside 
the core disaster area) and such individual was displaced from 
such principal place of abode by reason of Hurricane Katrina. 
(c) EARNED INCOME.—For purposes of this section, the term 
‘‘earned income’’ has the meaning given such term under section 
32(c) of such Code. 
(d) SPECIAL RULES.—
(1) APPLICATION TO JOINT RETURNS.—For purposes of sub-
section (a), in the case of a joint return for a taxable year 
which includes August 25, 2005—
(A) such subsection shall apply if either spouse is a 
qualified individual, and 
(B) the earned income of the taxpayer for the preceding 
taxable year shall be the sum of the earned income of 
each spouse for such preceding taxable year. 
(2) UNIFORM APPLICATION OF ELECTION.—Any election made 
under subsection (a) shall apply with respect to both section 
24(d) and section 32 of such Code. 
(3) ERRORS TREATED AS MATHEMATICAL ERROR.—For pur-
poses of section 6213 of such Code, an incorrect use on a 
return of earned income pursuant to subsection (a) shall be 
treated as a mathematical or clerical error. 
(4) NO EFFECT ON DETERMINATION OF GROSS INCOME, ETC.—
Except as otherwise provided in this section, the Internal Rev-
enue Code of 1986 shall be applied without regard to any 
substitution under subsection (a).
H. R. 3768—14
SEC. 
407. 
SECRETARIAL 
AUTHORITY 
TO 
MAKE 
ADJUSTMENTS 
REGARDING TAXPAYER AND DEPENDENCY STATUS. 
With respect to taxable years beginning in 2005 or 2006, the 
Secretary of the Treasury or the Secretary’s delegate may make 
such adjustments in the application of the internal revenue laws 
as may be necessary to ensure that taxpayers do not lose any 
deduction or credit or experience a change of filing status by reason 
of temporary relocations by reason of Hurricane Katrina. Any 
adjustments made under the preceding sentence shall ensure that 
an individual is not taken into account by more than one taxpayer 
with respect to the same tax benefit. 
TITLE V—EMERGENCY REQUIREMENT 
SEC. 501. EMERGENCY REQUIREMENT. 
Any provision of this Act causing an effect on receipts, budget 
authority, or outlays is designated as an emergency requirement 
pursuant to section 402 of H. Con. Res. 95 (109th Congress).
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.