(D) section 56(b)(1)(E) of such Code shall 
not apply to so much of the standard deduction 
as is attributable to the increase under sub-
paragraph (C) of this paragraph. 
(2) NET DISASTER LOSS.—For purposes of this 
subsection, the term ‘‘net disaster loss’’ means the 
excess of qualified disaster-related personal casualty 
losses over personal casualty gains (as defined in 
section 165(h)(3)(A) of the Internal Revenue Code 
of 1986). 
(3) QUALIFIED DISASTER-RELATED PERSONAL 
CASUALTY
LOSSES.—For purposes of this sub-
section, the term ‘‘qualified disaster-related personal 
casualty losses’’ means losses described in section 
165(c)(3) of the Internal Revenue Code of 1986 
which arise in a qualified disaster area on or after 
the first day of the incident period of the qualified 
disaster to which such area relates, and which are 
attributable to such qualified disaster. 
SEC. 6. TREATMENT OF CERTAIN POSSESSIONS. 
(a) PAYMENTS
TO POSSESSIONS WITH MIRROR 
CODE TAX SYSTEMS.—The Secretary of the Treasury 
shall pay to each possession of the United States which 
has a mirror code tax system amounts equal to the loss 
(if any) to that possession by reason of the application 
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of the provisions of this Act. Such amounts shall be deter-
mined by the Secretary of the Treasury based on informa-
tion provided by the government of the respective posses-
sion. 
(b) PAYMENTS TO OTHER POSSESSIONS.—The Sec-
retary of the Treasury shall pay to each possession of the 
United States which does not have a mirror code tax sys-
tem amounts estimated by the Secretary of the Treasury 
as being equal to the aggregate benefits (if any) that 
would have been provided to residents of such possession 
by reason of the provisions of this Act if a mirror code 
tax system had been in effect in such possession. The pre-
ceding sentence shall not apply unless the respective pos-
session has a plan, which has been approved by the Sec-
retary of the Treasury, under which such possession will 
promptly distribute such payments to its residents. 
(c) MIRROR CODE TAX SYSTEM.—For purposes of 
this section, the term ‘‘mirror code tax system’’ means, 
with respect to any possession of the United States, the 
income tax system of such possession if the income tax 
liability of the residents of such possession under such sys-
tem is determined by reference to the income tax laws of 
the United States as if such possession were the United 
States. 
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(d) TREATMENT OF PAYMENTS.—For purposes of 
section 1324 of title 31, United States Code, the payments 
under this section shall be treated in the same manner 
as a refund due from a credit provision referred to in sub-
section (b)(2) of such section. 
SEC. 7. EXCLUSION OF AMOUNTS RECEIVED FROM STATE- 
BASED 
CATASTROPHE 
LOSS 
MITIGATION 
PROGRAMS. 
(a) IN GENERAL.—Section 139 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) 
the following new subsection: 
‘‘(h) STATE-BASED CATASTROPHE LOSS MITIGATION 
PROGRAMS.— 
‘‘(1) IN GENERAL.—Gross income shall not in-
clude any amount received by an individual as a 
qualified catastrophe mitigation payment under a 
program established by a State, or a political sub-
division or instrumentality thereof, for the purpose 
of making such payments. 
‘‘(2) QUALIFIED
CATASTROPHE
MITIGATION 
PAYMENT.—For purposes of this section, the term 
‘qualified catastrophe mitigation payment’ means 
any amount which is received by an individual to 
make improvements to such individual’s residence 
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for the sole purpose of reducing the damage that 
would be done to such residence by a windstorm, 
earthquake, or wildfire. 
‘‘(3) NO INCREASE IN BASIS.—Rules similar to 
the rules of subsection (g)(3) shall apply in the case 
of this subsection.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 139(d) is amended by striking ‘‘and 
qualified’’ and inserting ‘‘, qualified catastrophe 
mitigation payments, and qualified’’. 
(2) Section 139(i) (as redesignated by sub-
section (a)) is amended by striking ‘‘or qualified’’ 
and inserting ‘‘, qualified catastrophe mitigation 
payment, or qualified’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2020. 
SEC. 8. EXCLUSION FROM GROSS INCOME OF CERTAIN 
EMERGENCY AGRICULTURAL ASSISTANCE. 
(a) IN GENERAL.—Section 139 of the Internal Rev-
enue Code of 1986, as amended by the preceding provi-
sions of this Act, is amended by redesignating subsection 
(i) as subsection (j) and by inserting after subsection (h) 
the following new subsection: 
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‘‘(i) CERTAIN
AGRICULTURAL
ASSISTANCE.—For 
purposes of this section, the term ‘qualified disaster relief 
payment’ shall include any assistance received under any 
of the following: 
‘‘(1) Assistance received under the Wildfires 
and Hurricanes Indemnity Program Plus under sub-
part O of part 760 of title 7, Code of Federal Regu-
lations. 
‘‘(2) Assistance received under section 1501 of 
the Agricultural Act of 2014 (7 U.S.C. 9081). 
‘‘(3) Noninsured crop assistance under section 
196 of the Federal Agriculture Improvement and 
Reform Act of 1996 (7 U.S.C. 7333). 
‘‘(4) Assistance under a food assistance pro-
gram under part 9 of title 7, Code of Federal Regu-
lations. 
‘‘(5) Assistance under title IV of the Agricul-
tural Credit Act of 1978 (16 U.S.C. 2201 et seq.). 
‘‘(6) Assistance under the Quality Loss Assist-
ance Program.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2020. 
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