†
HR 4440 EAS
‘‘(2) 5 YEAR NOL CARRYBACK OF CERTAIN TIM-
BER
LOSSES.—For purposes of determining any
farming loss under section 172(i), income and deduc-
tions which are allocable to the specified portion of
the taxable year and which are attributable to quali-
fied timber property any portion of which is located
in the Gulf Opportunity Zone, in that portion of the
Rita GO Zone which is not part of the Gulf Oppor-
tunity Zone, or in the Wilma GO Zone shall be treat-
ed as attributable to farming businesses.
‘‘(3) RULES NOT APPLICABLE TO CERTAIN ENTI-
TIES.—Paragraphs (1) and (2) shall not apply to
any taxpayer which—
‘‘(A) is a corporation the stock of which is
publicly traded on an established securities mar-
ket, or
‘‘(B) is a real estate investment trust.
‘‘(4) RULES NOT APPLICABLE TO LARGE TIMBER
PRODUCERS.—
‘‘(A) EXPENSING.—Paragraph (1) shall not
apply to any taxpayer if such taxpayer holds
more than 500 acres of qualified timber property
at any time during the taxable year.
†
HR 4440 EAS
‘‘(B) NOL 
CARRYBACK.—Paragraph (2)
shall not apply with respect to any qualified
timber property unless—
‘‘(i) such property was held by the
taxpayer—
‘‘(I) on August 28, 2005, in the
case of qualified timber property any
portion of which is located in the Gulf
Opportunity Zone,
‘‘(II) on September 23, 2005, in
the case of qualified timber property
(other than property described in sub-
clause (I)) any portion of which is lo-
cated in that portion of the Rita GO
Zone which is not part of the Gulf Op-
portunity Zone, or
‘‘(III) on October 23, 2005, in the
case of qualified timber property (other
than property described in subclause
(I) or (II)) any portion of which is lo-
cated in the Wilma GO Zone, and
‘‘(ii) such taxpayer held not more than
500 acres of qualified timber property on
such date.
†
HR 4440 EAS
‘‘(5) 
DEFINITIONS.—For 
purposes 
of 
this
subsection—
‘‘(A) SPECIFIED PORTION.—
‘‘(i) IN GENERAL.—The term ‘specified
portion’ means—
‘‘(I) in the case of qualified tim-
ber property any portion of which is
located in the Gulf Opportunity Zone,
that portion of the taxable year which
is on or after August 28, 2005, and be-
fore the termination date,
‘‘(II) in the case of qualified tim-
ber property (other than property de-
scribed in clause (i)) any portion of
which is located in the Rita GO Zone,
that portion of the taxable year which
is on or after September 23, 2005, and
before the termination date, or
‘‘(III) in the case of qualified tim-
ber property (other than property de-
scribed in clause (i) or (ii)) any por-
tion of which is located in the Wilma
GO Zone, that portion of the taxable
year which is on or after October 23,
2005, and before the termination date.
†
HR 4440 EAS
‘‘(ii) TERMINATION
DATE.—The term
‘termination date’ means—
‘‘(I) for purposes of paragraph
(1), January 1, 2008, and
‘‘(II) for purposes of paragraph
(2), January 1, 2007.
‘‘(B) QUALIFIED TIMBER PROPERTY.—The
term ‘qualified timber property’ has the meaning
given such term in section 194(c)(1).
‘‘(j) SPECIAL RULE FOR GULF OPPORTUNITY ZONE
PUBLIC UTILITY CASUALTY LOSSES.—
‘‘(1) IN GENERAL.—The amount described in sec-
tion 172(f)(1)(A) for any taxable year shall be in-
creased by the Gulf Opportunity Zone public utility
casualty loss for such taxable year.
‘‘(2) GULF OPPORTUNITY ZONE PUBLIC UTILITY
CASUALTY LOSS.—For purposes of this subsection, the
term ‘Gulf Opportunity Zone public utility casualty
loss’ means any casualty loss of public utility prop-
erty (as defined in section 168(i)(10)) located in the
Gulf Opportunity Zone if—
‘‘(A) such loss is allowed as a deduction
under section 165 for the taxable year,
‘‘(B) such loss is by reason of Hurricane
Katrina, and
†
HR 4440 EAS
‘‘(C) the taxpayer elects the application of
this subsection with respect to such loss.
‘‘(3) REDUCTION FOR GAINS FROM INVOLUNTARY
CONVERSION.—The amount of any Gulf Opportunity
Zone public utility casualty loss which would (but for
this paragraph) be taken into account under para-
graph (1) for any taxable year shall be reduced by the
amount of any gain recognized by the taxpayer for
such year from the involuntary conversion by reason
of Hurricane Katrina of public utility property (as
so defined) located in the Gulf Opportunity Zone.
‘‘(4) COORDINATION
WITH
GENERAL
DISASTER
LOSS RULES.—Subsection (k) and section 165(i) shall
not apply to any Gulf Opportunity Zone public util-
ity casualty loss to the extent such loss is taken into
account under paragraph (1).
‘‘(5) ELECTION.—Any election under paragraph
(2)(C) shall be made in such manner as may be pre-
scribed by the Secretary and shall be made by the due
date (including extensions of time) for filing the tax-
payer’s return for the taxable year of the loss. Such
election, once made for any taxable year, shall be ir-
revocable for such taxable year.
‘‘(k) TREATMENT OF NET OPERATING LOSSES ATTRIB-
UTABLE TO GULF OPPORTUNITY ZONE LOSSES.—
†
HR 4440 EAS
‘‘(1) IN GENERAL.—If a portion of any net oper-
ating loss of the taxpayer for any taxable year is a
qualified Gulf Opportunity Zone loss, the following
rules shall apply:
‘‘(A) EXTENSION OF CARRYBACK PERIOD.—
Section 172(b)(1) shall be applied with respect to
such portion—
‘‘(i) by substituting ‘5 taxable years’
for ‘2 taxable years’ in subparagraph (A)(i),
and
‘‘(ii) by not taking such portion into
account in determining any eligible loss of
the taxpayer under subparagraph (F) there-
of for the taxable year.
‘‘(B) SUSPENSION OF 90 PERCENT AMT LIM-
ITATION.—Section 56(d)(1) shall be applied by
increasing the amount determined under sub-
paragraph (A)(ii)(I) thereof by the sum of the
carrybacks and carryovers of any net operating
loss attributable to such portion.
‘‘(2) QUALIFIED
GULF
OPPORTUNITY
ZONE
LOSS.—For purposes of paragraph (1), the term
‘qualified Gulf Opportunity Zone loss’ means the less-
er of—
‘‘(A) the excess of—
†
HR 4440 EAS
‘‘(i) the net operating loss for such tax-
able year, over
‘‘(ii) the specified liability loss for such
taxable year to which a 10-year carryback
applies under section 172(b)(1)(C), or
‘‘(B) the aggregate amount of the following
deductions to the extent taken into account in
computing the net operating loss for such taxable
year:
‘‘(i) Any deduction for any qualified
Gulf Opportunity Zone casualty loss.
‘‘(ii) Any deduction for moving ex-
penses paid or incurred after August 27,
2005, and before January 1, 2008, and al-
lowable under this chapter to any taxpayer
in connection with the employment of any
individual—
‘‘(I) whose principal place of
abode was located in the Gulf Oppor-
tunity Zone before August 28, 2005,
‘‘(II) who was unable to remain
in such abode as the result of Hurri-
cane Katrina, and
‘‘(III) whose principal place of
employment with the taxpayer after
†
HR 4440 EAS
such expense is located in the Gulf Op-
portunity Zone.
For purposes of this clause, the term ‘mov-
ing expenses’ has the meaning given such
term by section 217(b), except that the tax-
payer’s former residence and new residence
may be the same residence if the initial
vacating of the residence was as the result
of Hurricane Katrina.
‘‘(iii) Any deduction allowable under
this chapter for expenses paid or incurred
after August 27, 2005, and before January
1, 2008, to temporarily house any employee
of the taxpayer whose principal place of em-
ployment is in the Gulf Opportunity Zone.
‘‘(iv) Any deduction for depreciation
(or amortization in lieu of depreciation) al-
lowable under this chapter with respect to
any qualified Gulf Opportunity Zone prop-
erty (as defined in subsection (d)(2), but
without regard to subparagraph (B)(iv)
thereof)) for the taxable year such property
is placed in service.
‘‘(v) Any deduction allowable under
this chapter for repair expenses (including
†
HR 4440 EAS
expenses for removal of debris) paid or in-
curred after August 27, 2005, and before
January 1, 2008, with respect to any dam-
age attributable to Hurricane Katrina and
in connection with property which is lo-
cated in the Gulf Opportunity Zone.
‘‘(3) QUALIFIED GULF OPPORTUNITY ZONE CAS-
UALTY LOSS.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (2)(B)(i), the term ‘qualified Gulf Oppor-
tunity Zone casualty loss’ means any uncompen-
sated section 1231 loss (as defined in section
1231(a)(3)(B)) of property located in the Gulf
Opportunity Zone if—
‘‘(i) such loss is allowed as a deduction
under section 165 for the taxable year, and
‘‘(ii) such loss is by reason of Hurri-
cane Katrina.
‘‘(B) REDUCTION FOR GAINS FROM INVOL-
UNTARY CONVERSION.—The amount of qualified
Gulf Opportunity Zone casualty loss which
would (but for this subparagraph) be taken into
account under subparagraph (A) for any taxable
year shall be reduced by the amount of any gain
recognized by the taxpayer for such year from
†
HR 4440 EAS
the involuntary conversion by reason of Hurri-
cane Katrina of property located in the Gulf Op-
portunity Zone.
‘‘(C) COORDINATION
WITH
GENERAL
DIS-
ASTER LOSS RULES.—Section 165(i) shall not
apply to any qualified Gulf Opportunity Zone
casualty loss to the extent such loss is taken into
account under this subsection.
‘‘(4) SPECIAL
RULES.—For purposes of para-
graph (1), rules similar to the rules of paragraphs (2)
and (3) of section 172(i) shall apply with respect to
such portion.
‘‘(l) CREDIT
TO HOLDERS
OF GULF TAX CREDIT
BONDS.—
‘‘(1) ALLOWANCE
OF
CREDIT.—If a taxpayer
holds a Gulf tax credit bond on one or more credit al-
lowance dates of the bond occurring during any tax-
able year, there shall be allowed as a credit against
the tax imposed by this chapter for the taxable year
an amount equal to the sum of the credits determined
under paragraph (2) with respect to such dates.
‘‘(2) AMOUNT OF CREDIT.—
‘‘(A) IN
GENERAL.—The amount of the
credit determined under this paragraph with re-
spect to any credit allowance date for a Gulf tax
†
HR 4440 EAS
credit bond is 25 percent of the annual credit de-
termined with respect to such bond.
‘‘(B) ANNUAL CREDIT.—The annual credit
determined with respect to any Gulf tax credit
bond is the product of—
‘‘(i) the credit rate determined by the
Secretary under subparagraph (C) for the
day on which such bond was sold, multi-
plied by
‘‘(ii) the outstanding face amount of
the bond.
‘‘(C) DETERMINATION.—For purposes of
subparagraph (B), with respect to any Gulf tax
credit bond, the Secretary shall determine daily
or cause to be determined daily a credit rate
which shall apply to the first day on which there
is a binding, written contract for the sale or ex-
change of the bond. The credit rate for any day
is the credit rate which the Secretary or the Sec-
retary’s designee estimates will permit the
issuance of Gulf tax credit bonds with a specified
maturity or redemption date without discount
and without interest cost to the issuer.
‘‘(D) CREDIT ALLOWANCE DATE.—For pur-
poses of this subsection, the term ‘credit allow-
†
HR 4440 EAS
ance date’ means March 15, June 15, September
15, and December 15. Such term also includes
the last day on which the bond is outstanding.
‘‘(E) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is
issued during the 3-month period ending on a
credit allowance date, the amount of the credit
determined under this paragraph with respect to
such credit allowance date shall be a ratable por-
tion of the credit otherwise determined based on
the portion of the 3-month period during which
the bond is outstanding. A similar rule shall
apply when the bond is redeemed or matures.
‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under paragraph (1) for any tax-
able year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
‘‘(B) the sum of the credits allowable under
part IV of subchapter A (other than subpart C
and this subsection).
‘‘(4) GULF TAX CREDIT BONDor purposes of this
subsection—
†
HR 4440 EAS
‘‘(A) IN
GENERAL.—The term ‘Gulf tax
credit bond’ means any bond issued as part of
an issue if—
‘‘(i) the bond is issued by the State of
Alabama, Louisiana, or Mississippi,
‘‘(ii) 95 percent or more of the proceeds
of such issue are to be used to—
‘‘(I) pay principal, interest, or
premiums on qualified bonds issued by
such State or any political subdivision
of such State, or
‘‘(II) make a loan to any political
subdivision of such State to pay prin-
cipal, interest, or premiums on quali-
fied bonds issued by such political sub-
division,
‘‘(iii) the Governor of such State des-
ignates such bond for purposes of this sub-
section,
‘‘(iv) the bond is a general obligation
of such State and is in registered form
(within the meaning of section 149(a)),
‘‘(v) the maturity of such bond does not
exceed 2 years, and
†
HR 4440 EAS
‘‘(vi) the bond is issued after December
31, 2005, and before January 1, 2007.
‘‘(B) STATE MATCHING REQUIREMENT.—A
bond shall not be treated as a Gulf tax credit
bond unless—
‘‘(i) the issuer of such bond pledges as
of the date of the issuance of the issue an
amount equal to the face amount of such
bond to be used for payments described in
subclause (I) of subparagraph (A)(ii), or
loans described in subclause (II) of such
subparagraph, as the case may be, with re-
spect to the issue of which such bond is a
part, and
‘‘(ii) any such payment or loan is
made in equal amounts from the proceeds of
such issue and from the amount pledged
under clause (i).
The requirement of clause (ii) shall be treated as
met with respect to any such payment or loan
made during the 1-year period beginning on the
date of the issuance (or any successor 1-year pe-
riod) if such requirement is met when applied
with respect to the aggregate amount of such
payments and loans made during such period.
†
HR 4440 EAS
‘‘(C) AGGREGATE LIMIT ON BOND DESIGNA-
TIONS.—The maximum aggregate face amount of
bonds which may be designated under this sub-
section by the Governor of a State shall not
exceed—
‘‘(i) $200,000,000 in the case of the
State of Louisiana,
‘‘(ii) $100,000,000 in the case of the
State of Mississippi, and
‘‘(iii) $50,000,000 in the case of the
State of Alabama.
‘‘(D) SPECIAL RULES RELATING TO ARBI-
TRAGE.—A bond which is part of an issue shall
not be treated as a Gulf tax credit bond unless,
with respect to the issue of which the bond is a
part, the issuer satisfies the arbitrage require-
ments of section 148 with respect to proceeds of
the issue and any loans made with such pro-
ceeds.
‘‘(5) QUALIFIED
BOND.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
bond’ means any obligation of a State or polit-
ical subdivision thereof which was outstanding
on August 28, 2005.
†
HR 4440 EAS
‘‘(B) EXCEPTION
FOR
PRIVATE
ACTIVITY
BONDS.—Such term shall not include any pri-
vate activity bond.
‘‘(C) 
EXCEPTION
FOR
ADVANCE
REFUNDINGS.—Such term shall not include any
bond with respect to which there is any out-
standing refunded or refunding bond during the
period in which a Gulf tax credit bond is out-
standing with respect to such bond.
‘‘(D) USE OF PROCEEDS REQUIREMENT.—
Such term shall not include any bond issued as
part of an issue if any portion of the proceeds
of such issue was (or is to be) used to provide
any property described in section 144(c)(6)(B).
‘‘(6) CREDIT
INCLUDED
IN
GROSS
INCOME.—
Gross income includes the amount of the credit al-
lowed to the taxpayer under this subsection (deter-
mined without regard to paragraph (3)) and the
amount so included shall be treated as interest in-
come.
‘‘(7) 
OTHER
DEFINITIONS
AND
SPECIAL
RULES.—For purposes of this subsection—
‘‘(A) BOND.—The term ‘bond’ includes any
obligation.