‘‘(3) ELECTION.—Any taxpayer entitled to a 5- 
year carryback under subsection (b)(1)(J) from any 
loss year may elect to have the carryback period 
with respect to such loss year determined without re-
gard to subsection (b)(1)(J). Such election shall be 
made in such manner as may be prescribed by the 
Secretary and shall be made by the due date (includ-
ing extensions of time) for filing the taxpayer’s re-
turn for the taxable year of the net operating loss. 
Such election, once made for any taxable year, shall 
be irrevocable for such taxable year.’’. 
(c) LOSS DEDUCTION ALLOWED IN COMPUTING AL-
TERNATIVE MINIMUM TAXABLE INCOME.—Subsection (d) 
of section 56 of such Code (defining alternative tax net 
operating loss deduction) is amended by adding at the end 
the following new paragraph: 
‘‘(3) NET OPERATING LOSS ATTRIBUTABLE TO 
FEDERALLY DECLARED DISASTERS.—In the case of 
a taxpayer which has a qualified disaster loss (as de-
fined by section 172(b)(1)(J)) for the taxable year, 
paragraph (1) shall be applied by increasing the 
amount determined under subparagraph (A)(ii)(I) 
thereof by the sum of the carrybacks and carryovers 
of such loss.’’. 
(d) CONFORMING AMENDMENTS.— 
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(1) Clause (ii) of section 172(b)(1)(F) of such 
Code is amended by inserting ‘‘or qualified disaster 
loss (as defined in subsection (j))’’ before the period 
at the end of the last sentence. 
(2) Paragraph (1) of section 172(i) of such 
Code is amended by adding at the end the following 
new flush sentence: 
‘‘Such term shall not include any qualified disaster 
loss (as defined in subsection (j)).’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses arising in taxable years 
beginning after December 31, 2007. 
SEC. 5. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 
REQUIREMENTS FOLLOWING FEDERALLY DE-
CLARED DISASTERS. 
(a) IN GENERAL.—Paragraph (11) of section 143(k) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(11) SPECIAL
RULES
FOR
FEDERALLY
DE-
CLARED DISASTERS.— 
‘‘(A) 
PRINCIPAL
RESIDENCE
DE-
STROYED.—If the principal residence (within 
the meaning of section 121) of a taxpayer is— 
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‘‘(i) rendered unsafe for use as a resi-
dence by reason of a federally declared dis-
aster, or 
‘‘(ii) demolished or relocated by rea-
son of an order of the government of a 
State or political subdivision thereof on ac-
count of a federally declared disaster, 
then for the 2-year period beginning on the 
date of the disaster declaration, subsection 
(d)(1) shall not apply with respect to such tax-
payer and subsection (e) shall be applied by 
substituting ‘110’ for ‘90’ in paragraph (1) 
thereof. 
‘‘(B) PRINCIPLE RESIDENCE DAMAGED.— 
‘‘(i) IN
GENERAL.—If the principal 
residence (within the meaning of section 
121) of a taxpayer resulting from a feder-
ally declared disaster was damaged, any 
owner-financing provided in connection 
with the repair or reconstruction of such 
residence shall be treated as a qualified re-
habilitation loan. 
‘‘(ii) 
LIMITATION.—The 
aggregate 
owner-financing to which clause (i) applies 
shall not exceed the lesser of— 
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‘‘(I) the cost of such repair or re-
construction, or 
‘‘(II) $150,000. 
‘‘(C) FEDERALLY DECLARED DISASTER.— 
For purposes of this paragraph, the term ‘fed-
erally declared disaster’ has the meaning given 
such term by section 165(h)(3)(C)(i).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to disasters occurring after De-
cember 31, 2007. 
Æ 
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