•HRES 454 EH 
aggregate amount of such contributions for 
any taxable year which may be taken into 
account under this section shall not exceed 
10 percent of the taxpayer’s aggregate net 
income for such taxable year from all 
trades or businesses from which such con-
tributions were made for such year, com-
puted without regard to this section. 
‘‘(iii) 
APPARENTLY
WHOLESOME 
FOOD.—For purposes of this subpara-
graph, the term ‘apparently wholesome 
food’ has the meaning given to such term 
by section 22(b)(2) of the Bill Emerson 
Good Samaritan Food Donation Act (42 
U.S.C. 1791(b)(2)), as in effect on the 
date of the enactment of this subpara-
graph. 
‘‘(iv) TERMINATION.—This subpara-
graph shall not apply to contributions 
made after December 31, 2005.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions made on or after 
August 28, 2005, in taxable years ending after such date.
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SEC. 306. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 
OF BOOK INVENTORIES TO PUBLIC SCHOOLS. 
(a) IN GENERAL.—Paragraph (3) of section 170(e) 
of the Internal Revenue Code of 1986 (relating to certain 
contributions of ordinary income and capital gain prop-
erty), as amended by section 305, is amended by redesig-
nating subparagraph (D) as subparagraph (E) and by in-
serting after subparagraph (C) the following new subpara-
graph: 
‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS 
OF BOOK INVENTORY TO PUBLIC SCHOOLS.—
‘‘(i) CONTRIBUTIONS OF BOOK INVEN-
TORY.—In determining whether a qualified 
book contribution is a qualified contribu-
tion, subparagraph (A) shall be applied 
without regard to whether the donee is an 
organization described in the matter pre-
ceding clause (i) of subparagraph (A). 
‘‘(ii) QUALIFIED
BOOK
CONTRIBU-
TION.—For purposes of this paragraph, 
the term ‘qualified book contribution’ 
means a charitable contribution of books to 
a public school which is an educational or-
ganization 
described 
in 
subsection 
(b)(1)(A)(ii) and which provides elemen-
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tary education or secondary education 
(kindergarten through grade 12). 
‘‘(iii) CERTIFICATION
BY
DONEE.—
Subparagraph (A) shall not apply to any 
contribution unless (in addition to the cer-
tifications required by subparagraph (A) 
(as modified by this subparagraph)), the 
donee certifies in writing that—
‘‘(I) the books are suitable, in 
terms of currency, content, and quan-
tity, for use in the donee’s educational 
programs, and 
‘‘(II) the donee will use the books 
in its educational programs. 
‘‘(iv) TERMINATION.—This subpara-
graph shall not apply to contributions 
made after December 31, 2005.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made on or after 
August 28, 2005, in taxable years ending after such date.
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TITLE IV—ADDITIONAL TAX 
RELIEF PROVISIONS 
SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN-
DEBTEDNESS BY REASON OF HURRICANE 
KATRINA. 
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986, gross income shall not include any 
amount which (but for this section) would be includible 
in gross income by reason of the discharge (in whole or 
in part) of indebtedness of a natural person described in 
subsection (b) by an applicable entity (as defined in sec-
tion 6050P(c)(1) of such Code). 
(b) PERSONS DESCRIBED.—A natural person is de-
scribed in this subsection if the principal place of abode 
of such person 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 person suf-
fered economic loss by reason of Hurricane Katrina. 
(c) EXCEPTIONS.—
(1) BUSINESS INDEBTEDNESS.—Subsection (a) 
shall not apply to any indebtedness incurred in con-
nection with a trade or business. 
(2) REAL PROPERTY OUTSIDE CORE DISASTER 
AREA.—Subsection (a) shall not apply to any dis-
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charge of indebtedness to the extent that real prop-
erty constituting security for such indebtedness is lo-
cated outside of the Hurricane Katrina disaster 
area. 
(d) DENIAL OF DOUBLE BENEFIT.—For purposes of 
the Internal Revenue Code of 1986, the amount excluded 
from gross income under subsection (a) shall be treated 
in the same manner as an amount excluded under section 
108(a) of such Code. 
(e) EFFECTIVE DATE.—This section shall apply to 
discharges made on or after August 25, 2005, and before 
January 1, 2007. 
SEC. 402. SUSPENSION OF CERTAIN LIMITATIONS ON PER-
SONAL CASUALTY LOSSES. 
Paragraphs (1) and (2)(A) of section 165(h) of the 
Internal Revenue Code of 1986 shall not apply to losses 
described in section 165(c)(3) of such Code which arise 
in the Hurricane Katrina disaster area on or after August 
25, 2005, and which are attributable to Hurricane 
Katrina. In the case of any other losses, section 
165(h)(2)(A) of such Code shall be applied without regard 
to the losses referred to in the preceding sentence.
•HRES 454 EH 
SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SEC-
TION 7508A FOR TAX RELIEF RELATING TO 
HURRICANE KATRINA. 
(a) AUTHORITY INCLUDES SUSPENSION
OF PAY-
MENT OF EMPLOYMENT AND EXCISE TAXES.—Subpara-
graphs (A) and (B) of section 7508(a)(1) of the Internal 
Revenue Code of 1986 are amended to read as follows: 
‘‘(A) Filing any return of income, estate, 
gift, employment, or excise tax; 
‘‘(B) Payment of any income, estate, gift, 
employment, or excise tax or any installment 
thereof or of any other liability to the United 
States in respect thereof;’’. 
(b) APPLICATION WITH RESPECT TO HURRICANE 
KATRINA.—In the case of any taxpayer determined by the 
Secretary of the Treasury to be affected by the Presi-
dentially declared disaster relating to Hurricane Katrina, 
any relief provided by the Secretary of the Treasury under 
section 7508A of the Internal Revenue Code of 1986 shall 
be for a period ending not earlier than February 28, 2006, 
and shall be treated as applying to the filing of returns 
relating to, and the payment of, employment and excise 
taxes. 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply for any period for performing 
an act which has not expired before August 25, 2005.
•HRES 454 EH 
SEC. 404. SPECIAL RULES FOR MORTGAGE REVENUE 
BONDS. 
(a) IN GENERAL.—In the case of financing provided 
with respect to a qualified Hurricane Katrina recovery res-
idence, subsection (d) of section 143 of the Internal Rev-
enue Code of 1986 shall be applied as if such residence 
were a targeted area residence. 
(b) QUALIFIED HURRICANE KATRINA RECOVERY 
RESIDENCE.—For purposes of this section, the term 
‘‘qualified 
Hurricane 
Katrina 
recovery 
residence’’ 
means—
(1) any residence in the core disaster area, and 
(2) any other residence if—
(A) such other residence is located in the 
same State as the principal residence referred 
to in subparagraph (B), and 
(B) the mortgagor with respect to such 
other residence owned a principal residence on 
August 28, 2005, which—
(i) was located in the Hurricane 
Katrina disaster area, and 
(ii) was rendered uninhabitable by 
reason of Hurricane Katrina. 
(c) SPECIAL
RULE
FOR
HOME
IMPROVEMENT 
LOANS.—In the case of any loan with respect to a resi-
dence in the Hurricane Katrina disaster area, section
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143(k)(4) of such Code shall be applied 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 NON-
RECOGNITION OF GAIN FOR PROPERTY LO-
CATED 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 Hurri-
cane Katrina disaster area which is compulsorily or invol-
untarily 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 IN-
COME. 
(a) IN GENERAL.—In the case of a qualified indi-
vidual, 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
•HRES 454 EH 
the Internal Revenue Code of 1986 may, at the election 
of the taxpayer, be determined by substituting—
(1) such earned income for the preceding tax-
able 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 indi-
vidual 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 
purpose of subsection (a), in the case of a joint re-
turn for a taxable year which includes August 25, 
2005—
(A) such subsection shall apply if either 
spouse is a qualified individual, and
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(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 pre-
ceding 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 purposes 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 Revenue Code of 1986 shall be 
applied without regard to any substitution under 
subsection (a). 
SEC. 407. SECRETARIAL AUTHORITY TO MAKE ADJUST-
MENTS REGARDING TAXPAYER AND DEPEND-
ENCY STATUS. 
With respect to taxable years beginning in 2005 or 
2006, the Secretary of the Treasury or the Secretary’s del-
egate may make such adjustments in the application of 
the internal revenue laws as may be necessary to ensure