shall apply to net operating losses arising in taxable 
years beginning after December 31, 2007. 
(2) TRANSITION RULE.—In the case of a net 
operating loss for a taxable year ending before the 
date of the enactment of this Act— 
(A) any election made under subsection 
(b)(1)(H)(iii) or (b)(3) of section 172 of such 
Code with respect to such loss may (notwith-
standing such section) be revoked before the 
due date (including extension of time) for filing 
the return for the taxpayer’s last taxable year 
beginning during 2010, and 
(B) any application under section 6411(a) 
of such Code with respect to such loss shall be 
treated as timely filed if filed before such due 
date. 
SEC. 4. HARDSHIP WITHDRAWALS. 
(a) IN GENERAL.—Paragraph (2) of section 72(t) of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subparagraph: 
‘‘(H) DISTRIBUTIONS TO REPLACE QUALI-
FIED FRAUDULENT INVESTMENT LOSSES.—Any 
distribution which was made during the 10-year 
period beginning on the date on which a quali-
fied fraudulent investment loss (as defined in 
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section 165(m)(2)) was discovered to the extent 
the aggregate of such distributions do not ex-
ceed such qualified fraudulent investment 
loss.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 5. CATCH-UP CONTRIBUTIONS. 
(a) IN GENERAL.—Section 219(b)(5) of the Internal 
Revenue Code of 1986 is amended by redesignating sub-
paragraphs (C) and (D) as subparagraphs (D) and (E), 
respectively, and by inserting after subparagraph (B) the 
following new subparagraph: 
‘‘(C) CATCHUP CONTRIBUTIONS RELATING 
TO
QUALIFIED
FRAUDULENT
INVESTMENT 
LOSSES.— 
‘‘(i) IN GENERAL.—In the case of any 
applicable individual who elects to make a 
qualified retirement contribution in addi-
tion to the amount determined under sub-
paragraph (A), the deductible amount for 
any taxable year shall be increased by an 
amount equal to the lesser of— 
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‘‘(I) 100 percent of the amount 
determined under subparagraph (A) 
for such taxable year, or 
‘‘(II) the excess of the qualified 
fraudulent investment loss described 
in clause (ii) over the amount of con-
tributions allowed as a deduction by 
reason of this subparagraph for all 
preceding taxable years. 
‘‘(ii) APPLICABLE
INDIVIDUAL.—For 
purposes of this subparagraph, the term 
‘applicable individual’ means, with respect 
to any taxable year, any individual with a 
qualified fraudulent investment loss (as de-
fined in section 165(m)(2)) in an indi-
vidual retirement plan in any of the 10 im-
mediately preceding taxable years if the 
amount of such loss exceeded 50 percent of 
the value of such individual retirement 
plan on the day immediately preceding the 
discovery of the qualified fraudulent invest-
ment loss.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
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SEC. 6. EXTENSION OF LIMITATION FOR CREDITS AND RE-
FUNDS FOR GIFTS AND BEQUESTS OF ASSETS 
WITH QUALIFIED FRAUDULENT INVESTMENT 
LOSSES. 
(a) IN GENERAL.—Section 6511 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(i) as subsection (j) and by inserting after subsection (h) 
the following new subsection: 
‘‘(i) SPECIAL RULES APPLICABLE TO ESTATE AND 
GIFT TAXES WITH RESPECT TO ASSETS WITH QUALI-
FIED FRAUDULENT INVESTMENT LOSSES.— 
‘‘(1) IN GENERAL.—If a claim for a credit or 
refund relates to an overpayment of taxes imposed 
under subtitle B in connection with a gift or bequest 
of an interest in an investment with respect to which 
there is a qualified fraudulent investment loss (as 
defined in section 165(m)(2)) and the taxpayer did 
not know, and reasonably should not have known, 
about the criminal behavior in connection with such 
loss, such credit or refund may be allowed or made 
if claim therefor is filed on or before the date that 
is 6 years after the return to which the credit or 
overpayment relates was filed. 
‘‘(2) DETERMINATION OF VALUE.— 
‘‘(A) GIFT
TAXES.—In determining the 
amount of any credit or refund described in 
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