Claiming Losses After Disasters Act
Bill: S.3173 | Sponsor: Sen. Kennedy, John (R-LA)
Policy area: Taxation

Summary:
Claiming Losses After Disasters Act
This bill revises the tax deduction for personal casualty losses arising from major federally-declared disasters. It replaces the current requirement that such losses exceed 10% of a disaster victim's adjusted gross income before a deduction can be claimed with a minimum threshold of $500 in losses per disaster.

To amend the Internal Revenue Code of 1986 to provide special rules for 
         personal casualty losses arising from major disasters.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Claiming Losses After Disasters 
Act''.

SEC. 2. SPECIAL RULES FOR CASUALTY LOSSES ARISING FROM MAJOR DISASTERS.

    (a) Treatment of Losses.--
            (1) In general.--Section 165(h) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(6) Special rule for qualified disaster losses.--
                    ``(A) In general.--If an individual has a qualified 
                net disaster loss for any taxable year, the amount 
                determined under paragraph (2)(A)(ii) shall be the sum 
                of--
                            ``(i) such net disaster loss, and
                            ``(ii) so much of the excess referred to in 
                        the matter preceding clause (i) of paragraph 
                        (2)(A) (reduced by the amount in clause (i) of 
                        this subparagraph) as exceeds 10 percent of the 
                        adjusted gross income of the individual.
                    ``(B) Qualified net disaster loss.--For purposes of 
                subparagraph (A), the term `qualified net disaster 
                loss' means the excess of qualified disaster-related 
                personal casualty losses over personal casualty gains.
                    ``(C) Qualified disaster-related personal casualty 
                losses.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `qualified disaster-
                        related personal casualty losses' means losses 
                        described in subsection (c)(3) (determined 
                        after application of paragraph (1)) which arise 
                        in a qualified disaster area on or after the 
                        first day of the incident period of the 
                        qualified disaster to which such area relates, 
                        and which are attributable to such disaster.
                            ``(ii) Qualified disaster area.--
                                    ``(I) In general.--The term 
                                `qualified disaster area' means any 
                                area with respect to which a major 
                                disaster has been declared by the 
                                President under section 401 of the 
                                Robert T. Stafford Disaster Relief and 
                                Emergency Assistance Act if the 
                                incident period of the disaster with 
                                respect to which such declaration is 
                                made begins after December 27, 2020.
                                    ``(II) Exception.--Such term shall 
                                not include any area which is a 
                                qualified disaster area as defined in 
                                section 301 of the Taxpayer Certainty 
                                and Disaster Tax Relief Act of 2020.
                            ``(iii) Qualified disaster.--The term 
                        `qualified disaster' means, with respect to any 
                        qualified disaster area, the disaster by reason 
                        of which a major disaster was declared with 
                        respect to such area.
                            ``(iv) Incident period.--For purposes of 
                        this paragraph, the term `incident period' 
                        means, with respect to any qualified disaster, 
                        the period specified by the Federal Emergency 
                        Management Agency as the period during which 
                        such disaster occurred.''.
            (2) Conforming amendment.--Section 165(h)(5)(B)(ii) of such 
        Code is amended by inserting ``or (6)'' after ``paragraph 
        (2)(A)''.
    (b) Dollar Limitation.--Section 165(h)(1) of the Internal Revenue 
Code of 1986 is amended by striking ``$500 ($100 for taxable years 
beginning after December 31, 2009)'' and inserting ``$100 ($500 in the 
case of any net disaster loss to which paragraph (3) applies)''.
    (c) Standard Deduction.--
            (1) In general.--Section 63(c)(1) of the Internal Revenue 
        Code of 1986 is amended by striking ``and'' at the end of 
        subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting ``and'', and by adding at the 
        end the following new subparagraph:
                    ``(C) the disaster loss deduction.''.
            (2) Disaster loss deduction.--Section 63(c) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(8) Disaster loss deduction.--For the purposes of 
        paragraph (1), the term `disaster loss deduction' means the 
        excess of qualified net disaster losses (as defined in section 
        165(h)(6)(B)) over the amount of personal casualty gains (as 
        defined in section 165(h)(3)(A)) reduced by any portion of such 
        gains taken into account under section 165(h)(5)(B)(i).''.
    (d) Treatment Under Alternative Minimum Tax.--Section 56(b)(1)(D) 
of the Internal Revenue Code of 1986 is amended by inserting ``(other 
than the disaster loss deduction)'' after ``section 63(c)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to losses incurred in taxable years beginning after December 31, 
2019.
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