380 
clause (i) thereof shall be applied without re-
gard to ‘and January 1, 2005’ and clause (iv) 
thereof shall be applied by substituting ‘quali-
fied Hurricane Katrina Disaster Zone property’ 
for ‘qualified property’. 
‘‘(E) ALLOWANCE AGAINST ALTERNATIVE 
MINIMUM
TAX.—For purposes of this sub-
section, rules similar to the rules of section 
168(k)(2)(G) shall apply. 
‘‘(b) 5-YEAR RECOVERY PERIOD FOR DEPRECIATION 
OF CERTAIN LEASEHOLD IMPROVEMENTS.— 
‘‘(1) IN
GENERAL.—For purposes of section 
168, the term ‘5-year property’ includes any quali-
fied Hurricane Katrina Disaster Zone leasehold im-
provement property. 
‘‘(2) QUALIFIED
HURRICANE
KATRINA
DIS-
ASTER
ZONE
LEASEHOLD
IMPROVEMENT
PROP-
ERTY.—For purposes of this section, the term 
‘qualified Hurricane Katrina Disaster Zone leasehold 
improvement property’ means qualified leasehold im-
provement property (as defined in section 168(k)(3)) 
if— 
‘‘(A) such building is located in the Hurri-
cane Katrina Disaster Zone,
381 
‘‘(B) such improvement is placed in service 
after August 28, 2005, and before January 1, 
2007, and 
‘‘(C) no written binding contract for such 
improvement was in effect before August 28, 
2005. 
‘‘(3) REQUIREMENT
TO
USE
STRAIGHT
LINE 
METHOD.—The 
applicable 
depreciation 
method 
under section 168 shall be the straight line method 
in the case of qualified Hurricane Katrina Disaster 
Zone leasehold improvement property. 
‘‘(4) 9-YEAR RECOVERY PERIOD UNDER ALTER-
NATIVE SYSTEM.—For purposes of section 168(g), 
the class life of qualified Hurricane Katrina Disaster 
Zone leasehold improvement property shall be 9 
years. 
‘‘(c) TAX-EXEMPT BOND FINANCING.— 
‘‘(1) IN GENERAL.—For purposes of this title, 
any qualified Hurricane Katrina Disaster Bond shall 
be treated as an exempt facility bond. 
‘‘(2) QUALIFIED
HURRICANE
KATRINA
DIS-
ASTER BOND.—For purposes of this subsection, the 
term ‘qualified Hurricane Katrina Disaster Bond’ 
means any bond issued as part of an issue if—
382 
‘‘(A) 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of such 
issue are to be used for qualified project costs, 
‘‘(B) such bond is issued by a State or po-
litical subdivision in which a part of the Hurri-
cane Katrina Disaster Zone is located, 
‘‘(C) the Governor designates such bond 
for purposes of this section, and 
‘‘(D) such bond is issued after the date of 
the enactment of this section and before Janu-
ary 1, 2011. 
‘‘(3) LIMITATIONS ON AMOUNT OF BONDS.— 
‘‘(A) AGGREGATE AMOUNT DESIGNATED.— 
The maximum aggregate face amount of bonds 
which may be designated under this subsection 
shall not exceed $45,000,000,000. 
‘‘(B) MOVABLE
PROPERTY.—No bonds 
shall be issued which are to be used for movable 
fixtures and equipment. 
‘‘(4) QUALIFIED
PROJECT
COSTS.—For pur-
poses of this subsection, the term ‘qualified project 
costs’ means the cost of acquisition, construction, re-
construction, and renovation of— 
‘‘(A) nonresidential real property (includ-
ing nonprofit and commercial business, rec-
383 
reational, transportation, health care, and edu-
cation facilities), residential real property, and 
residential rental property (including fixed ten-
ant improvements associated with such prop-
erty) located in the Hurricane Katrina Disaster 
Zone, including related infrastructure, and 
‘‘(B) public utility property (as defined in 
section 168(i)(10)) located in the Hurricane 
Katrina Disaster Zone. 
‘‘(5) SPECIAL RULES.—In applying this title to 
any qualified Hurricane Katrina Disaster Bond, the 
following modifications shall apply: 
‘‘(A) Sections 146 (relating to volume 
cap), 147(f) (relating to public approval), and 
149(b) (relating to Federal guarantees) shall 
not apply. 
‘‘(B) Sections 142(d) and 150(b)(2) (relat-
ing to tenant targeting rules for residential 
rental property shall not apply, 
‘‘(C) Section 147(d) (relating to acquisi-
tion of existing property not permitted) shall be 
applied by substituting ‘50 percent’ for ‘15 per-
cent’ each place it appears. 
‘‘(D) Section 148(f)(4)(C) (relating to ex-
ception from rebate for certain proceeds to be
384 
used to finance construction expenditures) shall 
apply to the available construction proceeds of 
bonds issued under this section. 
‘‘(E) Repayments of principal on financing 
provided by the issue— 
‘‘(i) may not be used to provide fi-
nancing, and 
‘‘(ii) must be used not later than the 
close of the 1st semiannual period begin-
ning after the date of the repayment to re-
deem bonds which are part of such issue. 
The requirement of clause (ii) shall be treated 
as met with respect to amounts received within 
10 years after the date of issuance of the issue 
(or, in the case of a refunding bond, the date 
of issuance of the original bond) if such 
amounts are used by the close of such 10 years 
to redeem bonds which are part of such issue. 
‘‘(F) Section 57(a)(5) shall not apply. 
‘‘(6) SEPARATE
ISSUE
TREATMENT
OF
POR-
TIONS
OF
AN
ISSUE.—This subsection shall not 
apply to the portion of an issue which (if issued as 
a separate issue) would be treated as a qualified 
bond or as a bond that is not a private activity bond
385 
(determined without regard to paragraph (1)), if the 
issuer elects to so treat such portion. 
‘‘(7) INTEREST TREATED AS BANK ELIGIBLE.— 
Any interest with respect to any qualified Hurricane 
Katrina Disaster Bond shall not be treated as tax- 
exempt interest for purposes of section 265(b). 
‘‘(d) ADVANCE REFUNDINGS OF CERTAIN TAX-EX-
EMPT BONDS.— 
‘‘(1) IN GENERAL.—With respect to a bond de-
scribed in paragraph (2) issued as part of an issue 
90 percent (95 percent in the case of a bond de-
scribed in paragraph (2)(B)) or more of the net pro-
ceeds (as defined in section 150(a)(3)) of which were 
used to finance facilities located within the Hurri-
cane Katrina Disaster Zone (or property which is 
functionally related and subordinate to facilities lo-
cated in such Zone), one additional advanced refund-
ing after the date of the enactment of this section 
and before January 1, 2011, shall be allowed under 
the applicable rules of section 149(d) if— 
‘‘(A) the Governor designates the advance 
refunding bond for purposes of this subsection, 
and 
‘‘(B) the requirements of paragraph (4) 
are met.
386 
‘‘(2) BONDS DESCRIBED.—A bond is described 
in this paragraph if such bond was outstanding on 
August 28, 2005, and is— 
‘‘(A) a State or local bond (as defined in 
section 103(c)(1)) which is a general obligation 
a State or political subdivision in the Hurricane 
Katrina Disaster Zone, or 
‘‘(B) a qualified 501(c)(3) bond (as de-
fined in section 145(a)) issued by or on behalf 
of a State or political subdivision in the Hurri-
cane Katrina Disaster Zone. 
‘‘(3) ADDITIONAL
REQUIREMENTS.—The re-
quirements of this paragraph are met with respect 
to any advance refunding of a bond described in 
paragraph (2) if— 
‘‘(A) no advance refundings of such bond 
would be allowed under any provision of law 
after August 28, 2005, 
‘‘(B) the advance refunding bond is the 
only other outstanding bond with respect to the 
refunded bond, and 
‘‘(C) the requirements of section 148 are 
met with respect to all bonds issued under this 
subsection.
387 
‘‘(e) STATE AND LOCAL BONDS.—For purposes of 
this title, any State or local bond issued by a State or 
political subdivision in which a part of the Hurricane 
Katrina Disaster Zone is located— 
‘‘(1) for disaster cleanup purposes, may be 
issued without regard to any working capital financ-
ing restrictions under section 148 or Federal guar-
antee limitations under section 149(b), and 
‘‘(2) for student loans, may be issued without 
regard to any volume cap limitations under section 
146 or any special allowance payments in computing 
yield on such loans under section 148. 
‘‘(f) INCREASE
IN EXPENSING UNDER SECTION 
179.— 
‘‘(1) IN
GENERAL.—For purposes of section 
179— 
‘‘(A) the limitation under section 179(b)(1) 
shall be increased by the lesser of— 
‘‘(i) $100,000, or 
‘‘(ii) the cost of section 179 property 
which is qualified Hurricane Katrina Dis-
aster Zone property placed in service dur-
ing the taxable year, and 
‘‘(B) the amount taken into account under 
section 179(b)(2) with respect to any section
388 
179 property which is qualified Hurricane 
Katrina Disaster Zone property shall be 50 per-
cent of the cost thereof. 
‘‘(2) QUALIFIED
HURRICANE
KATRINA
DIS-
ASTER ZONE PROPERTY.—For purposes of this sub-
section, the term ‘qualified Hurricane Katrina Dis-
aster Zone property’ has the meaning given such 
term by subsection (b)(2), except that the termi-
nation date is December 31, 2007. 
‘‘(3) RECAPTURE.—Rules similar to the rules 
under section 179(d)(10) shall apply with respect to 
any qualified Hurricane Katrina Disaster Zone prop-
erty which ceases to be used in the Hurricane 
Katrina Disaster Zone. 
‘‘(g) HURRICANE KATRINA DISASTER ZONE.—For 
purposes of this section, the term ‘Hurricane Katrina Dis-
aster Zone’ means an area— 
‘‘(1) with respect to which a major disaster has 
been declared by the President before September 14, 
2005, under section 401 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act in 
connection with Hurricane Katrina, and 
‘‘(2) which is determined by the President be-
fore such date to warrant individual assistance, or
389 
individual and public assistance, from the Federal 
Government under such Act.’’. 
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by adding at the end 
the following new item: 
‘‘SUBCHAPTER Z—HURRICANE KATRINA DISASTER ZONE BENEFITS.’’. 
(c) SATISFACTION OF COMMUNITY REINVESTMENT 
ACT REQUIREMENTS.—A financial institution that pur-
chases any bond described in subsection (c) or (d) of sec-
tion 1400M of the Internal Revenue Code of 1986 shall 
be considered, for purposes of an evaluation under section 
804 of the Community Reinvestment Act of 1977 (12 
U.S.C. 2903), to be meeting the credit needs of its entire 
community, including low- and moderate-income neighbor-
hoods. 
SEC. 742. PREMIUMS FOR MORTGAGE INSURANCE. 
(a) IN GENERAL.—For purposes of section 163(h)(3) 
of the Internal Revenue Code of 1986, premiums paid or 
accrued for qualified mortgage insurance by a taxpayer 
during the taxable year in connection with acquisition in-
debtedness with respect to a qualified residence of the tax-
payer located in a Hurricane Katrina Disaster Zone (as 
defined in section 1400M(g) of such Code) shall be treated 
as qualified residence interest.
390 
(b) QUALIFIED MORTGAGE INSURANCE.—For pur-
poses of this section, the term ‘‘qualified mortgage insur-
ance’’ means— 
(1) mortgage insurance provided by the Vet-
erans Administration, the Federal Housing Adminis-
tration, or the Rural Housing Administration, and 
(2) private mortgage insurance (as defined by 
section 2 of the Homeowners Protection Act of 1998 
(12 U.S.C. 4901), as in effect on the date of the en-
actment of this section). 
(c) SPECIAL RULES FOR PREPAID QUALIFIED MORT-
GAGE INSURANCE.—For purposes of subsection (a), any 
amount paid by the taxpayer for qualified mortgage insur-
ance that is properly allocable to any mortgage the pay-
ment of which extends to periods that are after the close 
of the taxable year in which such amount is paid shall 
be chargeable to capital account and shall be treated as 
paid in such periods to which so allocated. No deduction 
shall be allowed for the unamortized balance of such ac-
count if such mortgage is satisfied before the end of its 
term. The preceding sentences shall not apply to amounts 
paid for qualified mortgage insurance provided by the Vet-
erans Administration or the Rural Housing Administra-
tion. 
(d) INFORMATION RETURNS.—
391 
(1) IN GENERAL.—The Secretary of the Treas-
ury may prescribe, by regulations, that any person 
who, in the course of a trade or business, receives 
from any individual premiums for mortgage insur-
ance with respect to a qualified residence of the tax-
payer located in a Hurricane Katrina Disaster Zone 
(as so defined) aggregating $600 or more for any 
calendar year, shall make a return with respect to 
each such individual. Such return shall be in such 
form, shall be made at such time, and shall contain 
such information as the Secretary of the Treasury 
may prescribe. 
(2) STATEMENT TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return 
under paragraph (1) shall furnish to each individual 
with respect to whom a return is made a written 
statement showing such information as the Sec-
retary of the Treasury may prescribe. Such written 
statement shall be furnished on or before January 
31 of the year following the calendar year for which 
the return under paragraph (1) was required to be 
made. 
(3) SPECIAL RULES.—For purposes of this sub-
section, rules similar to the rules of section
392 
6050H(c) of the Internal Revenue Code of 1986 
shall apply. 
(d) EFFECTIVE DATE.—This section shall apply to 
amounts paid or accrued after the date of the enactment 
of this Act in taxable years ending after such date, and 
before the date which is 3 years after such date. 
SEC. 743. SUSPENSION OF AIR TRANSPORTATION EXCISE 
TAXES. 
No tax imposed under section 4261 or 4271 of the 
Internal Revenue Code of 1986 shall apply with respect 
to any segment of taxable transportation (as defined in 
sections 4262 and 4272 of such Code) beginning or ending 
in any airport located in a Hurricane Katrina Disaster 
Zone (as defined in section 1400M(g) of such Code) dur-
ing the 3-year period beginning on August 28, 2005. 
SEC. 744. RELOCATION TAX CREDIT FOR VICTIMS OF HUR-
RICANE KATRINA. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
‘‘SEC. 30D. RELOCATION EXPENSES FOR VICTIMS OF HUR-
RICANE KATRINA. 
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this chapter for the applica-
393 
ble taxable year an amount equal to the qualified reloca-
tion expenses of the taxpayer. 
‘‘(b) QUALIFIED RELOCATION EXPENSES; APPLICA-
BLE TAXABLE YEAR.—For purposes of this section— 
‘‘(1) QUALIFIED RELOCATION EXPENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
relocation expenses’ means the reasonable relo-
cation expenses incurred after August 26, 2005, 
and before January 1, 2008, with respect to— 
‘‘(i) in the case of an individual who 
had a principal place of abode in a Hurri-
cane Katrina disaster area on August 26, 
2005— 
‘‘(I) the relocation such indi-
vidual to any area within the United 
States, and 
‘‘(II) the relocation of such indi-
vidual after a relocation described in 
subclause (I) to a location in the Hur-
ricane Katrina disaster area in which 
the individual had a principal place of 
abode on August 26, 2005, and 
‘‘(ii) in the case of a trade or business 
which was located in a Hurricane Katrina 
disaster area on August 26, 2005—
394 
‘‘(I) the relocation of such trade 
or business to any area within the 
United States, and 
‘‘(II) the relocation of such trade 
or business after a relocation de-
scribed in subclause (I) to a location 
in the Hurricane Katrina disaster 
area in which the trade or business 
was located on August 26, 2005. 
‘‘(B) RELOCATION EXPENSES.—The term 
‘relocation expenses’ means— 
‘‘(i) in the case of expenses incurred 
with respect to an individual described in 
subparagraph (A)(i), expenses described in 
section 217(b)(1), and 
‘‘(ii) in the case of expenses incurred 
with respect to a trade or business de-
scribed in subparagraph (A)(ii), expenses 
(other than expenses for meals)— 
‘‘(I) of moving any inventory or 
other item necessary for carrying on 
such trade or business, and 
‘‘(II) 
of 
traveling 
from 
the 
former location to the new location.
395 
‘‘(2) TAXABLE YEAR IN WHICH EXPENSES ARE 
ALLOWED.—The term ‘applicable taxable year’ 
means— 
‘‘(A) in the case of relocation expenses de-
scribed in paragraph (1)(A)(i), the taxable year 
of the individual in which the individual relo-
cates to a location in the Hurricane Katrina 
disaster area in which the individual had a 
principal place of abode on August 26, 2005. 
‘‘(B) in the case of relocation expenses de-
scribed in paragraph (1)(A)(ii), the taxable year 
in which the trade or business of the taxpayer 
is relocated to a location in the Hurricane 
Katrina disaster area in which the trade or 
business was located on August 26, 2005. 
‘‘(3) HURRICANE KATRINA DISASTER AREA.— 
The term ‘Hurricane Katrina disaster area’ means 
an area— 
‘‘(A) with respect to which a major dis-
aster has been declared by the President before 
September 14, 2005, under section 401 of the 
Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act in connection with Hurri-
cane Katrina, and