To amend the Internal Revenue Code of 1986 to provide for the proper tax treatment of certain disaster mitigation payments.
PL 109-7 (H.R.1134), enacted 04/15/2005

119 STAT. 21
PUBLIC LAW 109–7—APR. 15, 2005
Public Law 109–7
109th Congress
An Act
To amend the Internal Revenue Code of 1986 to provide for the proper tax treatment
of certain disaster mitigation payments.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGA-
TION PAYMENTS.
(a) QUALIFIED
DISASTER
MITIGATION
PAYMENTS
EXCLUDED
FROM GROSS INCOME.—
(1) IN GENERAL.—Section 139 of the Internal Revenue Code
of 1986 (relating to disaster relief payments) is amended by
adding at the end the following new subsections:
‘‘(g) QUALIFIED DISASTER MITIGATION PAYMENTS.—
‘‘(1) IN
GENERAL.—Gross income shall not include any
amount received as a qualified disaster mitigation payment.
‘‘(2) QUALIFIED DISASTER MITIGATION PAYMENT DEFINED.—
For purposes of this section, the term ‘qualified disaster mitiga-
tion payment’ means any amount which is paid pursuant to
the Robert T. Stafford Disaster Relief and Emergency Assist-
ance Act (as in effect on the date of the enactment of this
subsection) or the National Flood Insurance Act (as in effect
on such date) to or for the benefit of the owner of any property
for hazard mitigation with respect to such property. Such term
shall not include any amount received for the sale or disposition
of any property.
‘‘(3) NO INCREASE IN BASIS.—Notwithstanding any other
provision of this subtitle, no increase in the basis or adjusted
basis of any property shall result from any amount excluded
under this subsection with respect to such property.
‘‘(h) DENIAL OF DOUBLE BENEFIT.—Notwithstanding any other
provision of this subtitle, no deduction or credit shall be allowed
(to the person for whose benefit a qualified disaster relief payment
or qualified disaster mitigation payment is made) for, or by reason
of, any expenditure to the extent of the amount excluded under
this section with respect to such expenditure.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (d) of section 139 of such Code is
amended by striking ‘‘a qualified disaster relief payment’’
and inserting ‘‘qualified disaster relief payments and quali-
fied disaster mitigation payments’’.
(B) Subsection (e) of section 139 of such Code is
amended by striking ‘‘and (f)’’ and inserting ‘‘, (f), and
(g)’’.
26 USC 139.
Apr. 15, 2005
[H.R. 1134]
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119 STAT. 22
PUBLIC LAW 109–7—APR. 15, 2005
LEGISLATIVE HISTORY—H.R. 1134:
CONGRESSIONAL RECORD, Vol. 151 (2005):
Mar. 14, considered and passed House.
Apr. 13, considered and passed Senate, amended.
Apr. 14, House concurred in Senate amendment.
(b) CERTAIN DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGA-
TION PROGRAMS TREATED AS INVOLUNTARY CONVERSIONS.—Section
1033 of such Code (relating to involuntary conversions) is amended
by redesignating subsection (k) as subsection (l) and by inserting
after subsection (j) the following new subsection:
‘‘(k) SALES OR EXCHANGES UNDER CERTAIN HAZARD MITIGATION
PROGRAMS.—For purposes of this subtitle, if property is sold or
otherwise transferred to the Federal Government, a State or local
government, or an Indian tribal government to implement hazard
mitigation under the Robert T. Stafford Disaster Relief and Emer-
gency Assistance Act (as in effect on the date of the enactment
of this subsection) or the National Flood Insurance Act (as in
effect on such date), such sale or transfer shall be treated as
an involuntary conversion to which this section applies.’’.
(c) EFFECTIVE DATE.—
(1) 
QUALIFIED
DISASTER
MITIGATION
PAYMENTS.—The
amendments made by subsection (a) shall apply to amounts
received before, on, or after the date of the enactment of this
Act.
(2) DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGATION
PROGRAMS.—The amendments made by subsection (b) shall
apply to sales or other dispositions before, on, or after the
date of the enactment of this Act.
Approved April 15, 2005.
26 USC 1033
note.
26 USC 139 note.
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