ternal Revenue Code of 1986) for such year by 
reason of an election under section 165(i) of 
such Code. 
(2) INCREASE IN LIMITATION ON INDIVIDUAL 
LOSS
PER
CASUALTY.—The amendment made by 
subsection (c) shall apply to taxable years beginning 
after December 31, 2008. 
SEC. 3. EXPENSING OF QUALIFIED DISASTER EXPENSES. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 is amended by inserting after section 198 the fol-
lowing new section: 
‘‘SEC. 198A. EXPENSING OF QUALIFIED DISASTER EX-
PENSES. 
‘‘(a) IN GENERAL.—A taxpayer may elect to treat 
any qualified disaster expenses which are paid or incurred 
by the taxpayer as an expense which is not chargeable to 
capital account. Any expense which is so treated shall be 
allowed as a deduction for the taxable year in which it 
is paid or incurred. 
‘‘(b) QUALIFIED DISASTER EXPENSE.—For purposes 
of this section, the term ‘qualified disaster expense’ means 
any expenditure— 
‘‘(1) which is paid or incurred in connection 
with a trade or business or with business-related 
property, 
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‘‘(2) which is— 
‘‘(A) for the abatement or control of haz-
ardous substances that were released on ac-
count of a federally declared disaster, 
‘‘(B) for the removal of debris from, or the 
demolition of structures on, real property which 
is business-related property damaged or de-
stroyed as a result of a federally declared dis-
aster, or 
‘‘(C) for the repair of business-related 
property damaged as a result of a federally de-
clared disaster, and 
‘‘(3) is otherwise chargeable to capital account. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) 
BUSINESS-RELATED
PROPERTY.—The 
term ‘business-related property’ means property— 
‘‘(A) held by the taxpayer for use in a 
trade or business or for the production of in-
come, or 
‘‘(B) described in section 1221(a)(1) in the 
hands of the taxpayer. 
‘‘(2) FEDERALLY
DECLARED
DISASTER.—The 
term ‘federally declared disaster’ has the meaning 
given such term by section 165(h)(3)(C)(i), except 
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that such term shall not include any disaster occur-
ring before January 1, 2008, or after December 31, 
2011. 
‘‘(d) DEDUCTION RECAPTURED AS ORDINARY IN-
COME
ON SALE, ETC.—Solely for purposes of section 
1245, in the case of property to which a qualified disaster 
expense would have been capitalized but for this section— 
‘‘(1) the deduction allowed by this section for 
such expense shall be treated as a deduction for de-
preciation, and 
‘‘(2) such property (if not otherwise section 
1245 property) shall be treated as section 1245 
property solely for purposes of applying section 1245 
to such deduction. 
‘‘(e) COORDINATION WITH OTHER PROVISIONS.— 
Sections 198, 280B, and 468 shall not apply to amounts 
which are treated as expenses under this section. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 is amended by 
inserting after the item relating to section 198 the fol-
lowing new item: 
‘‘Sec. 198A. Expensing of Qualified Disaster Expenses.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
December 31, 2007. 
SEC. 4. NET OPERATING LOSSES ATTRIBUTABLE TO FED-
ERALLY DECLARED DISASTERS. 
(a) IN GENERAL.—Paragraph (1) of section 172(b) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(J) CERTAIN
LOSSES
ATTRIBUTABLE 
FEDERALLY
DECLARED
DISASTERS.—In the 
case of a taxpayer who has a qualified disaster 
loss (as defined in subsection (j)), such loss 
shall be a net operating loss carryback to each 
of the 5 taxable years preceding the taxable 
year of such loss.’’. 
(b) QUALIFIED DISASTER LOSS.—Section 172 is 
amended by redesignating subsections (j) and (k) as sub-
sections (k) and (l), respectively, and by inserting after 
subsection (i) the following new subsection: 
‘‘(j) RULES RELATING
TO QUALIFIED DISASTER 
LOSSES.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified dis-
aster loss’ means the lesser of— 
‘‘(A) the sum of— 
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‘‘(i) the losses allowable under section 
165 for the taxable year— 
‘‘(I) attributable to a federally 
declared disaster (as defined in sec-
tion 165(h)(3)(C)(i)) occurring after 
December 31, 2007, and before Janu-
ary 1, 2012, and 
‘‘(II) occurring in a disaster area 
(as 
defined 
in 
section 
165(h)(3)(C)(ii)), and 
‘‘(ii) the deduction for the taxable 
year for qualified disaster expenses which 
is allowable under section 198A(a) or 
which would be so allowable if not other-
wise treated as an expense, or 
‘‘(B) the net operating loss for such tax-
able year. 
‘‘(2) 
COORDINATION
WITH
SUBSECTION 
(b)(2).—For purposes of applying subsection (b)(2), 
a qualified disaster loss for any taxable year shall be 
treated in a manner similar to the manner in which 
a specified liability loss is treated. 
‘‘(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 
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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 is amended by adding at the end the fol-
lowing 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.— 
(1) Clause (ii) of section 172(b)(1)(F) is 
amended by inserting ‘‘or qualified disaster loss (as 
defined in subsection (j))’’ before the period at the 
end of the last sentence. 
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(2) Paragraph (1) of section 172(i) is amended 
by adding at the end the following new flush sen-
tence: 
‘‘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 net operating losses for 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) 
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— 
‘‘(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, 
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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) PRINCIPAL 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— 
‘‘(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), except 
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that such term shall not include any disaster 
occurring before January 1, 2008, or after De-
cember 31, 2011.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to obligations issued after the 
date of the enactment of this Act. 
SEC. 6. DETERMINATION OF STANDARD MILEAGE RATE 
FOR CHARITABLE CONTRIBUTIONS DEDUC-
TION. 
(a) IN GENERAL.—Subsection (i) of section 170 (re-
lating to standard mileage rate for use of passenger auto-
mobile) is amended by adding at the end the following new 
sentence: ‘‘In the case of the use of a passenger auto-
mobile after the date of the enactment of this sentence 
and before January 1, 2012, the standard mileage rate 
shall be the rate determined by the Secretary, which rate 
shall not be less than the standard mileage rate used for 
purposes of section 213.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 7. ADDITIONAL LOW INCOME HOUSING ALLOCATIONS. 
(a) IN GENERAL.—Subsection (h) of section 42 of is 
amended by redesignating paragraph (8) as paragraph (9) 
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and by inserting after paragraph (7) the following new 
paragraph: 
‘‘(8) ADDITIONAL
ALLOCATIONS
FOR
DISAS-
TERS.— 
‘‘(A) IN
GENERAL.—In addition to any 
other allocation made under this subsection, the 
Secretary may, upon application by any State, 
make allocations of housing credit dollar 
amounts to such State for allocation to build-
ings in such State consistent with the require-
ments of subparagraph (C). 
‘‘(B) LIMITATIONS.—The aggregate quali-
fied disaster allocations made by the Secretary 
under 
this 
paragraph 
may 
not 
exceed 
$190,000,000. Any allocation which is termi-
nated by the Secretary (by reason of disuse or 
otherwise) shall not be treated as having been 
allocated for purposes of the preceding sen-
tence. 
‘‘(C) DISASTER HOUSING ALLOCATIONS.— 
For purposes of this section— 
‘‘(i) IN GENERAL.—Allocations under 
this paragraph may be made by the Sec-
retary only to States which include a dis-
aster area. 
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‘‘(ii) PRIORITY
FOR
HOUSING
LOSS 
DISASTER
AREAS.—In making allocation 
under this paragraph, the Secretary shall 
give priority to housing loss disaster areas. 
‘‘(iii) LIMITATION TO BUILDINGS LO-
CATED
IN
HOUSING
LOSS
DISASTER 
AREAS.—Any allocation of housing credit 
dollar amounts under this paragraph may 
be allocated by such State (or a housing 
credit agency of such State) only to— 
‘‘(I) buildings located in a dis-
aster area, and 
‘‘(II) in the case of any allocation 
made by reason of a priority under 
clause (ii), buildings located in the 
housing loss disaster area with respect 
to which such priority was given. 
‘‘(iv) PRO RATA ALLOCATIONS.—The 
allocations made by the Secretary under 
this paragraph shall be made ratably over 
the period described in subparagraph (F) 
unless the Secretary determines, on the 
basis of the severity or frequency of disas-
ters, that a different allocation is appro-
priate. 
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‘‘(D) HOUSING
LOSS
DISASTER
AREA.— 
For purposes of this paragraph, the term ‘hous-
ing loss disaster area’ means any county or mu-
nicipality— 
‘‘(i) with respect to which the Gov-
ernor of the State in which such county or 
municipality is located demonstrates to the 
satisfaction of the Secretary that the lesser 
of— 
‘‘(I) 1,000 dwelling units, or 
‘‘(II) 10 percent of the dwelling 
units located in such county or mu-
nicipality, 
have been rendered uninhabitable by rea-
son of damage to or destruction of such 
units caused by a federally declared dis-
aster, and 
‘‘(ii) which is located in a disaster 
area. 
‘‘(E) DEFINITIONS AND SPECIAL RULES.— 
For purposes of this paragraph— 
‘‘(i) 
FEDERALLY
DECLARED
DIS-
ASTER; DISASTER AREA.—The terms ‘‘fed-
erally declared disaster’’ and ‘‘disaster 
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area’’ shall have the respective meaning 
given such terms by section 165(h)(3)(C). 
‘‘(ii) NO EFFECT ON CARRYOVERS.— 
An allocation of housing credit dollar 
amount to a State under this paragraph 
shall not be taken into account under para-
graph (3). 
‘‘(iii) CONSULTATION WITH FEMA.— 
Any allocation made under this paragraph 
by the Secretary shall be made after con-
sultation with the Director of the Federal 
Emergency Management Agency. 
‘‘(F) TERMINATION.—Allocations under 
this paragraph may be made only with respect 
to disasters occurring during the period begin-
ning on January 1, 2008, and ending on De-
cember 31, 2011. No allocation under this 
paragraph may be made to any building after 
December 31, 2012.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to allocations made after the date 
of the enactment of this Act. 
SEC. 8. PRIVATE ACTIVITY DISASTER BONDS. 
(a) IN GENERAL.—Section 144 is amended by adding 
at the end the following new subsection: 
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‘‘(d) QUALIFIED DISASTER BOND.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘qualified disaster bond’ means any bond 
issued as part of an issue if— 
‘‘(A) 95 percent or more of the net pro-
ceeds of the issue are to be used for the re-
placement, repair, reconstruction, or renovation 
of property of a character subject to the allow-
ance for depreciation which was damaged or de-
stroyed as a result of a federally declared dis-
aster, and 
‘‘(B) such bond is designated by a State 
for purposes of this subsection. 
‘‘(2) DESIGNATION OF BONDS.— 
‘‘(A) DESIGNATION BY STATE.—The max-
imum aggregate face amount of bonds des-
ignated under paragraph (1)(B) by any State 
may not exceed the bond limitation allocated to 
such State by the Secretary under subpara-
graph (B). 
‘‘(B) ALLOCATION
OF
BOND
LIMITA-
TION.— 
‘‘(i) IN
GENERAL.—The Secretary 
may, upon application by any State, make 
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allocation of bond limitation to such State 
if such State includes a disaster area. 
‘‘(ii) 
LIMITATION.—The 
aggregate 
amount of bond limitation allocated to the 
States by the Secretary under clause (i) 
may not exceed $13,000,000,000. Any allo-
cation which is terminated by the Sec-
retary (by reason of disuse or otherwise) 
shall not be treated as having been allo-
cated for purposes of the preceding sen-
tence. 
‘‘(iii) PRIORITY FOR BUSINESS LOSS 
DISASTER
AREAS.—In making allocation 
under this subsection, the Secretary shall 
give priority to business loss disaster areas. 
‘‘(iv) LIMITATION TO BUILDINGS LO-
CATED
IN
BUSINESS
LOSS
DISASTER 
AREAS.—Any allocation of bond limitation 
under this subsection may be used by such 
State only to issue bonds with respect to— 
‘‘(I) property located in a dis-
aster area, and 
‘‘(II) in the case of any allocation 
made by reason of a priority under 
clause (iii), property located in the 
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business loss disaster area with re-
spect to which such priority was 
given. 
‘‘(v) PRO
RATA
ALLOCATIONS.—The 
allocations made by the Secretary under 
this subparagraph shall be made ratably 
over the period described in paragraph (5) 
unless the Secretary determines, on the 
basis of the severity or frequency of disas-
ters, that a different allocation is appro-
priate. 
‘‘(3) BUSINESS
LOSS
DISASTER
AREA.—For 
purposes of this subsection, the term ‘business loss 
disaster area’ means any county or municipality— 
‘‘(A) with respect to which the Governor of 
the State in which such county or municipality 
is located demonstrates to the satisfaction of 
the Secretary that business property located in 
such county or municipality has sustained dam-
ages by reason of a federally declared disaster 
of at least the lesser of— 
‘‘(i) $50,000,000, or 
‘‘(ii) 5 percent of the value of all such 
business property (determined immediately 
before such disaster on the basis of prop-
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erty tax records or such other method as 
the Secretary determines appropriate), and 
‘‘(B) which is located in a disaster area. 
‘‘(4) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) FEDERALLY
DECLARED
DISASTER; 
DISASTER
AREA.—The terms ‘‘federally de-
clared disaster’’ and ‘‘disaster area’’ shall have 
the respective meaning given such terms by sec-
tion 165(h)(3)(C). 
‘‘(B) 
CERTAIN
USES
PROHIBITED.—A 
bond which is part of an issue shall not be 
treated as a qualified disaster bond if any pro-
ceeds of such issue are to be used for any prop-
erty described in section 1400N(p)(3). 
‘‘(C) CONSULTATION
WITH
FEMA.—Any 
allocation made under this subsection by the 
Secretary shall be made after consultation with 
the Director of the Federal Emergency Man-
agement Agency. 
‘‘(5) TERMINATION.—Allocations under this 
subsection may be made only— 
‘‘(A) before December 31, 2012, and 
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‘‘(B) with respect to disasters occurring 
during the period beginning on January 1, 
2008, and ending on December 31, 2011.’’. 
(b) EXEMPTION
FROM
ALTERNATIVE
MINIMUM 
TAX.— 
(1) Subparagraph (C) of section 57(a)(5) is 
amended by redesignating clauses (iv) and (v) as 
clauses (v) and (vi) and by inserting after clause (iii) 
the following new clause: 
‘‘(iv) EXCEPTION FOR QUALIFIED DIS-
ASTER BONDS.—For purposes of clause (i), 
the term ‘private activity bond’ shall not 
include any qualified disaster bond (as de-
fined in section 144(d)).’’. 
(2) Clause (iii) of section 56(g)(4)(B) is amend-
ed— 
(A) by striking ‘‘section 57(a)(5)(C)(iii)’’ 
and inserting ‘‘clause (iii) or (iv) of section 
57(a)(5)(C)’’, and 
(B) by striking ‘‘HOUSING’’ in the heading 
thereof. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 141(e)(1) is amended by striking 
‘‘or’’ at the end of subparagraph (F), by striking the 
period at the end of subparagraph (G) and inserting 
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be taken into account for purposes of applying 
such paragraphs or subsection (d) to other con-
tributions. 
‘‘(B) TREATMENT OF EXCESS CONTRIBU-
TIONS.—For purposes of this section— 
‘‘(i) INDIVIDUALS.—In the case of an 
individual— 
‘‘(I) LIMITATION.—Any qualified 
disaster contribution shall be allowed 
only to the extent that the aggregate 
of such contributions does not exceed 
the excess of the taxpayer’s contribu-
tion base over the amount of all other 
charitable 
contributions 
allowable 
under paragraph (1). 
‘‘(II) CARRYOVER.—If the aggre-
gate amount of qualified disaster con-
tributions made in the contribution 
year (within the meaning of sub-
section (d)(1)) exceeds the limitation 
of subclause (I), such excess shall be 
added to the excess described in the 
portion of subparagraph (A) of such 
subsection which precedes clause (i) 
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thereof for purposes of applying such 
subsection. 
‘‘(ii) CORPORATIONS.—In the case of 
a corporation— 
‘‘(I) LIMITATION.—Any qualified 
disaster contribution shall be allowed 
only to the extent that the aggregate 
of such contributions does not exceed 
the excess of the taxpayer’s taxable 
income (as determined under para-
graph (2)) over the amount of all 
other charitable contributions allow-
able under such paragraph. 
‘‘(II) CARRYOVER.—Rules similar 
to the rules of clause (i)(II) shall 
apply for purposes of this clause. 
‘‘(C) EXCEPTION TO OVERALL LIMITATION 
ON ITEMIZED DEDUCTIONS.—So much of any 
deduction allowed under this section as does not 
exceed the qualified disaster contributions paid 
during the taxable year shall not be treated as 
an itemized deduction for purposes of section 
68. 
‘‘(D) QUALIFIED
DISASTER
CONTRIBU-
TIONS.— 
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‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘qualified disaster 
contribution’ means any charitable con-
tribution if— 
‘‘(I) such contribution is paid 
during the period beginning on the 
date of the enactment of this para-
graph, and ending on December 31, 
2009, in cash to an organization de-
scribed in paragraph (1)(A) (other 
than an organization described in sec-
tion 509(a)(3)), 
‘‘(II) such contribution is for re-
lief efforts related to a federally de-
clared disaster (as defined in section 
165(h)(3)(C)(i)), and 
‘‘(III) the taxpayer has elected 
the application of this subsection with 
respect to such contribution. 
‘‘(ii) EXCEPTION.—Such term shall 
not include a contribution if the contribu-
tion is for establishment of a new, or main-
tenance in a donor advised fund (as de-
fined in section 4966(d)(2)). 
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‘‘(iii) APPLICATION OF ELECTION TO 
PARTNERSHIPS AND S CORPORATIONS.—In 
the case of a partnership or S corporation, 
the election under clause (i)(III) shall be 
made separately by each partner or share-
holder.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
Æ 
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PO 00000
Frm 00030
Fmt 6652
Sfmt 6301
E:\BILLS\H7006.IH
H7006
mstockstill on PROD1PC66 with BILLS