‘‘(2) 5 YEAR NOL CARRYBACK OF CERTAIN TIM-
BER LOSSES.—For purposes of determining farming 
loss under section 172(i), income and deductions 
which are allocable to the specified portion of the 
taxable year and which are attributable to qualified 
timber property any portion of which is located in 
the Gulf Opportunity Zone or in that portion of the 
Rita GO Zone which is not part of the Gulf Oppor-
tunity Zone shall be treated as attributable to farm-
ing businesses. 
‘‘(3) RULES NOT APPLICABLE TO LARGE TIM-
BER 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. 
‘‘(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, or
‘‘(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 
Opportunity Zone, and 
‘‘(ii) such taxpayer held not more 
than 500 acres of qualified timber property 
on such date. 
‘‘(C) AGGREGATION RULE.—For purposes 
of subparagraphs (A) and (B), related persons 
shall be treated as one taxpayer. For purposes 
of the preceding sentence, the following shall be 
treated as related persons— 
‘‘(i) 2 or more persons if the relation-
ship between such persons would result in 
a disallowance of losses under section 267 
or 707(b), and 
‘‘(ii) 2 or more persons which are 
members of the same controlled group 
(within 
the 
meaning 
of 
section 
194(b)(2)(A)) of corporations.
For purposes of clause (i), section 267 shall be 
applied without regard to subsection (b)(1) 
thereof. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) 
SPECIFIED
PORTION.—The 
term 
‘specified portion’ means— 
‘‘(i) in the case of qualified timber 
property any portion of which is located in 
the Gulf Opportunity Zone, that portion of 
the taxable year which is on or after Au-
gust 28, 2005, and before January 1, 
2007, and 
‘‘(ii) in the case of qualified timber 
property (other than property described 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 Sep-
tember 23, 2005, and before January 1, 
2007. 
‘‘(B) QUALIFIED TIMBER PROPERTY.—The 
term ‘qualified timber property’ has the mean-
ing 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 
section 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 UTIL-
ITY
CASUALTY
LOSS.—For purposes of this sub-
section, the term ‘Gulf Opportunity Zone public util-
ity casualty loss’ means any casualty loss of public 
utility property (as defined in section 168(i)(10)) lo-
cated 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 
‘‘(C) the taxpayer elects the application of 
this subsection with respect to such loss. 
‘‘(3) REDUCTION FOR GAINS FROM INVOLUN-
TARY
CONVERSION.—The amount of Gulf Oppor-
tunity Zone public utility casualty loss which would 
(but for this paragraph) be taken into account under 
paragraph (1) for any taxable year shall be reduced 
by the amount of any gain recognized by the tax-
payer for such year from the involuntary conversion 
by reason of Hurricane Katrina of public utility
property (as so defined) located in the Gulf Oppor-
tunity Zone. 
‘‘(4) COORDINATION WITH GENERAL DISASTER 
LOSS RULES.—Section 165(i) shall not apply to any 
Gulf Opportunity Zone public utility 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 
taxpayer’s return for the taxable year of the loss. 
Such election, once made for any taxable year, shall 
be irrevocable for such taxable year. 
‘‘(k) SPECIAL NOL CARRYBACK OF COST RECOVERY 
DEDUCTIONS FOR QUALIFIED GO ZONE PROPERTY.— 
‘‘(1) IN
GENERAL.—For purposes of section 
172, the GO Zone cost recovery loss for any taxable 
year ending on or after August 28, 2005, and before 
January 1, 2009, shall be a net operating loss 
carryback to each of the 5 taxable years preceding 
the taxable year of the loss. 
‘‘(2) GO ZONE
COST
RECOVERY
LOSS.—For 
purposes of this subsection, the term ‘GO Zone cost