‘‘SEC. 28. DISASTER MITIGATION EXPENDITURES. 
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this chapter for the taxable 
year an amount equal to 30 percent of the expenditures 
paid for qualifying mitigation activities paid or incurred 
by the taxpayer during such taxable year with respect to 
real property owned or leased by the taxpayer. 
‘‘(b) QUALIFIED
DISASTER
MITIGATION
ACTIVI-
TIES.—For purposes of this section— 
‘‘(1) QUALIFYING MITIGATION ACTIVITY.—The 
term ‘qualifying mitigation activity’ has the meaning 
given such term in section 207(j) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance 
Act. 
‘‘(2) TREATMENT OF REIMBURSEMENTS.—Any 
amount originally paid or incurred by the taxpayer 
which is reimbursed by a State under a qualified 
State disaster mitigation program shall be treated as 
paid by such State (and not by such taxpayer). 
‘‘(c) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—So much of the credit 
which would be allowed under subsection (a) for any 
taxable year (determined without regard to this sub-
section) that is attributable to expenditures made in 
the ordinary course of the taxpayer’s trade or busi-
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ness (or, in the case of expenditures made by a 
State, would have been expenditures made in the or-
dinary course of the taxpayer’s trade or business if 
made by the taxpayer) shall be treated as a credit 
listed in section 38(b) for taxable year (and not al-
lowed under subsection (a)). 
‘‘(2) PERSONAL CREDIT.—For purposes of this 
title, the credit allowed under subsection (a) for any 
taxable year (determined after application of para-
graph (1)) shall be treated as a credit allowable 
under subpart A for such taxable year. 
‘‘(d) REDUCTION OF CREDIT PERCENTAGE WHERE 
TAXPAYER EXPENDITURES LESS THAN 30 PERCENT.— 
‘‘(1) IN GENERAL.—If the expenditure percent-
age with respect to any item of expenditure de-
scribed under subsection (a) is less than 30 percent, 
subsection (a) shall be applied by substituting ‘the 
expenditure percentage’ for ‘30 percent’ with respect 
to such item of expenditure. 
‘‘(2) EXPENDITURE
PERCENTAGE.—For pur-
poses of this section, the term ‘expenditure percent-
age’ means, with respect to any item of expenditure 
described under subsection (a) any portion of which 
is paid or incurred by a State, the ratio (expressed 
as a percentage) of— 
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‘‘(A) the taxpayer’s expenditure for such 
item, divided by 
‘‘(B) the sum of the taxpayer’s and such 
State’s expenditures for such item. 
‘‘(e) SPECIAL RULES.— 
‘‘(1) TREATMENT OF EXPENDITURES RELATED 
TO MARKETABLE TIMBER.—An expenditure shall not 
be taken into account for purposes of this section 
(whether made by the taxpayer or a State) if such 
expenditure is properly allocable to timber which is 
sold or exchanged by the taxpayer. The preceding 
sentence shall not apply to the extent that such 
amount exceeds the gain on such sale or exchange. 
‘‘(2) BASIS REDUCTION.—For purposes of this 
subtitle, if the basis of any property would (but for 
this paragraph) be determined by taking into ac-
count any expenditure described under subsection 
(a), the basis of such property shall be reduced by 
the amount of the credit allowed under subsection 
(a) with respect to such expenditure (determined 
without regard to subsection (c)). 
‘‘(3) DENIAL
OF
DOUBLE
BENEFIT.—The 
amount of any deduction or other credit allowable 
under this chapter for any expenditure for which a 
credit is allowable under subsection (a) shall be re-
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duced by the amount of credit allowed under such 
subsection for such expenditure (determined without 
regard to subsection (c)).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) of such Code is amended by 
striking ‘‘plus’’ at the end of paragraph (40), by 
striking the period at the end of paragraph (41) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(42) the portion of the disaster mitigation ex-
penditures credit to which section 28(c)(1) applies.’’. 
(2) Section 1016(a) of such Code is amended 
by redesignating paragraphs (35) through (38) as 
paragraphs (36) through (39), respectively, and by 
inserting after paragraph (34) the following new 
paragraph: 
‘‘(35) to the extent provided in section 
28(e)(2),’’. 
(3) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 27 the following new item: 
‘‘Sec. 28. Qualified disaster mitigation expenditures.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
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after the date of the enactment of this Act, in taxable 
years ending after such date. 
Æ 
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