Katrina Emergency Tax Relief Act of 2005
PL 109-73 (H.R.3768), enacted 09/23/2005

119 STAT. 2016
PUBLIC LAW 109–73—SEPT. 23, 2005
Public Law 109–73
109th Congress
An Act
To provide emergency tax relief for persons affected by Hurricane Katrina.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE, ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Katrina Emer-
gency Tax Relief Act of 2005’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act
is as follows:
Sec. 1. Short title, etc.
Sec. 2. Hurricane Katrina disaster area.
TITLE I—SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF
RELATING TO HURRICANE KATRINA
Sec. 101. Tax-favored withdrawals from retirement plans for relief relating to Hur-
ricane Katrina.
Sec. 102. Recontributions of withdrawals for home purchases cancelled due to Hur-
ricane Katrina.
Sec. 103. Loans from qualified plans for relief relating to Hurricane Katrina.
Sec. 104. Provisions relating to plan amendments.
TITLE II—EMPLOYMENT RELIEF
Sec. 201. Work opportunity tax credit for Hurricane Katrina employees.
Sec. 202. Employee retention credit for employers affected by Hurricane Katrina.
TITLE III—CHARITABLE GIVING INCENTIVES
Sec. 301. Temporary suspension of limitations on charitable contributions.
Sec. 302. Additional exemption for housing Hurricane Katrina displaced individ-
uals.
Sec. 303. Increase in standard mileage rate for charitable use of vehicles.
Sec. 304. Mileage reimbursements to charitable volunteers excluded from gross in-
come.
Sec. 305. Charitable deduction for contributions of food inventory.
Sec. 306. Charitable deduction for contributions of book inventories to public
schools.
TITLE IV—ADDITIONAL TAX RELIEF PROVISIONS
Sec. 401. Exclusions of certain cancellations of indebtedness by reason of Hurricane
Katrina.
Sec. 402. Suspension of certain limitations on personal casualty losses.
Sec. 403. Required exercise of authority under section 7508A for tax relief relating
to Hurricane Katrina.
Sec. 404. Special rules for mortgage revenue bonds.
Sec. 405. Extension of replacement period for nonrecognition of gain for property lo-
cated in Hurricane Katrina disaster area.
Sec. 406. Special rule for determining earned income.
Sec. 407. Secretarial authority to make adjustments regarding taxpayer and de-
pendency status.
TITLE V—EMERGENCY REQUIREMENT
Sec. 501. Emergency requirement.
26 USC 1 note.
Katrina
Emergency Tax
Relief Act of
2005.
Sept. 23, 2005
[H.R. 3768]
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PUBLIC LAW 109–73—SEPT. 23, 2005
SEC. 2. HURRICANE KATRINA DISASTER AREA.
For purposes of this Act—
(1) HURRICANE KATRINA DISASTER AREA.—The term ‘‘Hurri-
cane Katrina disaster area’’ means an area with respect to
which a major disaster has been declared by the President
before September 14, 2005, under section 401 of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act by
reason of Hurricane Katrina.
(2) CORE DISASTER AREA.—The term ‘‘core disaster area’’
means that portion of the Hurricane Katrina disaster area
determined by the President to warrant individual or individual
and public assistance from the Federal Government under such
Act.
TITLE I—SPECIAL RULES FOR USE OF
RETIREMENT FUNDS FOR RELIEF RE-
LATING TO HURRICANE KATRINA
SEC. 101. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS
FOR RELIEF RELATING TO HURRICANE KATRINA.
(a) IN GENERAL.—Section 72(t) of the Internal Revenue Code
of 1986 shall not apply to any qualified Hurricane Katrina distribu-
tion.
(b) AGGREGATE DOLLAR LIMITATION.—
(1) IN GENERAL.—For purposes of this section, the aggregate
amount of distributions received by an individual which may
be treated as qualified Hurricane Katrina distributions for any
taxable year shall not exceed the excess (if any) of—
(A) $100,000, over
(B) the aggregate amounts treated as qualified Hurri-
cane Katrina distributions received by such individual for
all prior taxable years.
(2) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution
to an individual would (without regard to paragraph (1)) be
a qualified Hurricane Katrina distribution, a plan shall not
be treated as violating any requirement of the Internal Revenue
Code of 1986 merely because the plan treats such distribution
as a qualified Hurricane Katrina distribution, unless the aggre-
gate amount of such distributions from all plans maintained
by the employer (and any member of any controlled group
which includes the employer) to such individual exceeds
$100,000.
(3) CONTROLLED GROUP.—For purposes of paragraph (2),
the term ‘‘controlled group’’ means any group treated as a
single employer under subsection (b), (c), (m), or (o) of section
414 of such Code.
(c) AMOUNT DISTRIBUTED MAY BE REPAID.—
(1) IN GENERAL.—Any individual who receives a qualified
Hurricane Katrina distribution may, at any time during the
3-year period beginning on the day after the date on which
such distribution was received, make one or more contributions
in an aggregate amount not to exceed the amount of such
distribution to an eligible retirement plan of which such indi-
vidual is a beneficiary and to which a rollover contribution
of such distribution could be made under section 402(c),
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PUBLIC LAW 109–73—SEPT. 23, 2005
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as
the case may be.
(2) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM
ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.—For purposes
of such Code, if a contribution is made pursuant to paragraph
(1) with respect to a qualified Hurricane Katrina distribution
from an eligible retirement plan other than an individual retire-
ment plan, then the taxpayer shall, to the extent of the amount
of the contribution, be treated as having received the qualified
Hurricane Katrina distribution in an eligible rollover distribu-
tion (as defined in section 402(c)(4) of such Code) and as having
transferred the amount to the eligible retirement plan in a
direct trustee to trustee transfer within 60 days of the distribu-
tion.
(3) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM
IRAS.—For purposes of such Code, if a contribution is made
pursuant to paragraph (1) with respect to a qualified Hurricane
Katrina distribution from an individual retirement plan (as
defined by section 7701(a)(37) of such Code), then, to the extent
of the amount of the contribution, the qualified Hurricane
Katrina distribution shall be treated as a distribution described
in section 408(d)(3) of such Code and as having been transferred
to the eligible retirement plan in a direct trustee to trustee
transfer within 60 days of the distribution.
(d) DEFINITIONS.—For purposes of this section—
(1) QUALIFIED HURRICANE KATRINA DISTRIBUTION.—Except
as provided in subsection (b), the term ‘‘qualified Hurricane
Katrina distribution’’ means any distribution from an eligible
retirement plan made on or after August 25, 2005, and before
January 1, 2007, to an individual whose principal place of
abode on August 28, 2005, is located in the Hurricane Katrina
disaster area and who has sustained an economic loss by reason
of Hurricane Katrina.
(2) ELIGIBLE RETIREMENT PLAN.—The term ‘‘eligible retire-
ment plan’’ shall have the meaning given such term by section
402(c)(8)(B) of such Code.
(e) INCOME INCLUSION SPREAD OVER 3 YEAR PERIOD FOR QUALI-
FIED HURRICANE KATRINA DISTRIBUTIONS.—
(1) IN GENERAL.—In the case of any qualified Hurricane
Katrina distribution, unless the taxpayer elects not to have
this subsection apply for any taxable year, any amount required
to be included in gross income for such taxable year shall
be so included ratably over the 3-taxable year period beginning
with such taxable year.
(2) SPECIAL RULE.—For purposes of paragraph (1), rules
similar to the rules of subparagraph (E) of section 408A(d)(3)
of such Code shall apply.
(f) SPECIAL RULES.—
(1) EXEMPTION
OF
DISTRIBUTIONS
FROM
TRUSTEE
TO
TRUSTEE
TRANSFER
AND
WITHHOLDING
RULES.—For purposes
of sections 401(a)(31), 402(f), and 3405 of such Code, qualified
Hurricane Katrina distributions shall not be treated as eligible
rollover distributions.
(2) QUALIFIED HURRICANE KATRINA DISTRIBUTIONS TREATED
AS MEETING PLAN DISTRIBUTION REQUIREMENTS.—For purposes
of such Code, a qualified Hurricane Katrina distribution shall
be 
treated 
as 
meeting 
the 
requirements 
of 
sections
Applicability.
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PUBLIC LAW 109–73—SEPT. 23, 2005
401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of
such Code.
SEC. 102. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PUR-
CHASES CANCELLED DUE TO HURRICANE KATRINA.
(a) RECONTRIBUTIONS.—
(1) IN GENERAL.—Any individual who received a qualified
distribution may, during the period beginning on August 25,
2005, and ending on February 28, 2006, make one or more
contributions in an aggregate amount not to exceed the amount
of such qualified distribution to an eligible retirement plan
(as defined in section 402(c)(8)(B) of the Internal Revenue Code
of 1986) of which such individual is a beneficiary and to which
a rollover contribution of such distribution could be made under
section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such Code,
as the case may be.
(2) TREATMENT OF REPAYMENTS.—Rules similar to the rules
of paragraphs (2) and (3) of section 101(c) of this Act shall
apply for purposes of this section.
(b) QUALIFIED DISTRIBUTION DEFINED.—For purposes of this
section, the term ‘‘qualified distribution’’ means any distribution—
(1) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii)
(but only to the extent such distribution relates to financial
hardship), 403(b)(11)(B), or 72(t)(2)(F) of such Code,
(2) received after February 28, 2005, and before August
29, 2005, and
(3) which was to be used to purchase or construct a prin-
cipal residence in the Hurricane Katrina disaster area, but
which was not so purchased or constructed on account of Hurri-
cane Katrina.
SEC. 103. LOANS FROM QUALIFIED PLANS FOR RELIEF RELATING TO
HURRICANE KATRINA.
(a) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBU-
TIONS.—In the case of any loan from a qualified employer plan
(as defined under section 72(p)(4) of the Internal Revenue Code
of 1986) to a qualified individual made after the date of enactment
of this Act and before January 1, 2007—
(1) clause (i) of section 72(p)(2)(A) of such Code shall be
applied by substituting ‘‘$100,000’’ for ‘‘$50,000’’, and
(2) clause (ii) of such section shall be applied by substituting
‘‘the present value of the nonforfeitable accrued benefit of the
employee under the plan’’ for ‘‘one-half of the present value
of the nonforfeitable accrued benefit of the employee under
the plan’’.
(b) DELAY OF REPAYMENT.—In the case of a qualified individual
with an outstanding loan on or after August 25, 2005, from a
qualified employer plan (as defined in section 72(p)(4) of such
Code)—
(1) if the due date pursuant to subparagraph (B) or (C)
of section 72(p)(2) of such Code for any repayment with respect
to such loan occurs during the period beginning on August
25, 2005, and ending on December 31, 2006, such due date
shall be delayed for 1 year,
(2) any subsequent repayments with respect to any such
loan shall be appropriately adjusted to reflect the delay in
the due date under paragraph (1) and any interest accruing
during such delay, and
Applicability.
Applicability.
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PUBLIC LAW 109–73—SEPT. 23, 2005
(3) in determining the 5-year period and the term of a
loan under subparagraph (B) or (C) of section 72(p)(2) of such
Code, the period described in paragraph (1) shall be dis-
regarded.
(c) QUALIFIED INDIVIDUAL.—For purposes of this section, the
term ‘‘qualified individual’’ means an individual whose principal
place of abode on August 28, 2005, is located in the Hurricane
Katrina disaster area and who has sustained an economic loss
by reason of Hurricane Katrina.
SEC. 104. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) IN GENERAL.—If this section applies to any amendment
to any plan or annuity contract, such plan or contract shall be
treated as being operated in accordance with the terms of the
plan during the period described in subsection (b)(2)(A).
(b) AMENDMENTS TO WHICH SECTION APPLIES.—
(1) IN GENERAL.—This section shall apply to any amend-
ment to any plan or annuity contract which is made—
(A) pursuant to any amendment made by this title,
or pursuant to any regulation issued by the Secretary
of the Treasury or the Secretary of Labor under this title,
and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2007, or such later date
as the Secretary of the Treasury may prescribe.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), subparagraph
(B) shall be applied by substituting the date which is 2 years
after the date otherwise applied under subparagraph (B).
(2) CONDITIONS.—This section shall not apply to any
amendment unless—
(A) during the period—
(i) beginning on the date the legislative or regu-
latory amendment described in paragraph (1)(A) takes
effect (or in the case of a plan or contract amendment
not required by such legislative or regulatory amend-
ment, the effective date specified by the plan), and
(ii) ending on the date described in paragraph
(1)(B) (or, if earlier, the date the plan or contract
amendment is adopted),
the plan or contract is operated as if such plan or contract
amendment were in effect; and
(B) such plan or contract amendment applies retro-
actively for such period.
TITLE II—EMPLOYMENT RELIEF
SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA
EMPLOYEES.
(a) IN GENERAL.—For purposes of section 51 of the Internal
Revenue Code of 1986, a Hurricane Katrina employee shall be
treated as a member of a targeted group.
(b) HURRICANE KATRINA EMPLOYEE.—For purposes of this sec-
tion, the term ‘‘Hurricane Katrina employee’’ means—
(1) any individual who on August 28, 2005, had a principal
place of abode in the core disaster area and who is hired
Effective date.
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during the 2-year period beginning on such date for a position
the principal place of employment of which is located in the
core disaster area, and
(2) any individual who on such date had a principal place
of abode in the core disaster area, who is displaced from such
abode by reason of Hurricane Katrina, and who is hired during
the period beginning on such date and ending on December
31, 2005.
(c) REASONABLE IDENTIFICATION ACCEPTABLE.—In lieu of the
certification requirement under subparagraph (A) of section
51(d)(12) of such Code, an individual may provide to the employer
reasonable evidence that the individual is a Hurricane Katrina
employee, and subparagraph (B) of such section shall be applied
as if such evidence were a certification described in such subpara-
graph.
(d) SPECIAL RULES FOR DETERMINING CREDIT.—For purposes
of applying subpart F of part IV of subchapter A of chapter 1
of such Code to wages paid or incurred to any Hurricane Katrina
employee—
(1) section 51(c)(4) of such Code shall not apply, and
(2) section 51(i)(2) of such Code shall not apply with respect
to the first hire of such employee as a Hurricane Katrina
employee, unless such employee was an employee of the
employer on August 28, 2005.
SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED
BY HURRICANE KATRINA.
(a) IN GENERAL.—In the case of an eligible employer, there
shall be allowed as a credit against the tax imposed by chapter
1 of the Internal Revenue Code of 1986 for the taxable year an
amount equal to 40 percent of the qualified wages with respect
to each eligible employee of such employer for such taxable year.
For purposes of the preceding sentence, the amount of qualified
wages which may be taken into account with respect to any indi-
vidual shall not exceed $6,000.
(b) DEFINITIONS.—For purposes of this section—
(1) ELIGIBLE
EMPLOYER.—The term ‘‘eligible employer’’
means any employer—
(A) which conducted an active trade or business on
August 28, 2005, in a core disaster area, and
(B) with respect to whom the trade or business
described in subparagraph (A) is inoperable on any day
after August 28, 2005, and before January 1, 2006, as
a result of damage sustained by reason of Hurricane
Katrina.
(2) ELIGIBLE
EMPLOYEE.—The term ‘‘eligible employee’’
means with respect to an eligible employer an employee whose
principal place of employment on August 28, 2005, with such
eligible employer was in a core disaster area.
(3) QUALIFIED WAGES.—The term ‘‘qualified wages’’ means
wages (as defined in section 51(c)(1) of such Code, but without
regard to section 3306(b)(2)(B) of such Code) paid or incurred
by an eligible employer with respect to an eligible employee
on any day after August 28, 2005, and before January 1,
2006, which occurs during the period—
(A) beginning on the date on which the trade or busi-
ness described in paragraph (1) first became inoperable
Applicability.
Applicability.
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at the principal place of employment of the employee imme-
diately before Hurricane Katrina, and
(B) ending on the date on which such trade or business
has resumed significant operations at such principal place
of employment.
Such term shall include wages paid without regard to whether
the employee performs no services, performs services at a dif-
ferent place of employment than such principal place of employ-
ment, or performs services at such principal place of employ-
ment before significant operations have resumed.
(c) CREDIT NOT ALLOWED FOR LARGE BUSINESSES.—The term
‘‘eligible employer’’ shall not include any trade or business for
any taxable year if such trade or business employed an average
of more than 200 employees on business days during the taxable
year.
(d) CERTAIN RULES TO APPLY.—For purposes of this section,
rules similar to the rules of sections 51(i)(1), 52, and 280C(a) of
such Code shall apply.
(e) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—
An employee shall not be treated as an eligible employee for pur-
poses of this section for any period with respect to any employer
if such employer is allowed a credit under section 51 of such
Code with respect to such employee for such period.
(f) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.—The
credit allowed under this section shall be added to the current
year business credit under section 38(b) of such Code and shall
be treated as a credit allowed under subpart D of part IV of
subchapter A of chapter 1 of such Code.
TITLE III—CHARITABLE GIVING
INCENTIVES
SEC. 301. TEMPORARY SUSPENSION OF LIMITATIONS ON CHARITABLE
CONTRIBUTIONS.
(a) IN GENERAL.—Except as otherwise provided in subsection
(b), section 170(b) of the Internal Revenue Code of 1986 shall
not apply to qualified contributions and such contributions shall
not be taken into account for purposes of applying subsections
(b) and (d) of section 170 of such Code to other contributions.
(b) TREATMENT OF EXCESS CONTRIBUTIONS.—For purposes of
section 170 of such Code—
(1) INDIVIDUALS.—In the case of an individual—
(A) LIMITATION.—Any qualified contribution shall be
allowed only to the extent that the aggregate of such con-
tributions does not exceed the excess of the taxpayer’s
contribution base (as defined in subparagraph (F) of section
170(b)(1) of such Code) over the amount of all other chari-
table contributions allowed under such section 170(b)(1).
(B) CARRYOVER.—If the aggregate amount of qualified
contributions made in the contribution year (within the
meaning of section 170(d)(1) of such Code) exceeds the
limitation of subparagraph (A), such excess shall be added
to the excess described in the portion of subparagraph
(A) of such section which precedes clause (i) thereof for
purposes of applying such section.
(2) CORPORATIONS.—In the case of a corporation—
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PUBLIC LAW 109–73—SEPT. 23, 2005
(A) LIMITATION.—Any qualified contribution shall be
allowed only to the extent that the aggregate of such con-
tributions does not exceed the excess of the taxpayer’s
taxable income (as determined under paragraph (2) of sec-
tion 170(b) of such Code) over the amount of all other
charitable contributions allowed under such paragraph.
(B) CARRYOVER.—Rules similar to the rules of para-
graph (1)(B) shall apply for purposes of this paragraph.
(c) EXCEPTION TO OVERALL LIMITATION ON ITEMIZED DEDUC-
TIONS.—So much of any deduction allowed under section 170 of
such Code as does not exceed the qualified contributions paid during
the taxable year shall not be treated as an itemized deduction
for purposes of section 68 of such Code.
(d) QUALIFIED CONTRIBUTIONS.—
(1) IN GENERAL.—For purposes of this section, the term
‘‘qualified contribution’’ means any charitable contribution (as
defined in section 170(c) of such Code)—
(A) paid during the period beginning on August 28,
2005, and ending on December 31, 2005, in cash to an
organization described in section 170(b)(1)(A) of such Code
(other than an organization described in section 509(a)(3)
of such Code),
(B) in the case of a contribution paid by a corporation,
such contribution is for relief efforts related to Hurricane
Katrina, and
(C) with respect to which the taxpayer has elected
the application of this section.
(2) EXCEPTION.—Such term shall not include a contribution
if the contribution is for establishment of a new, or maintenance
in an existing, segregated fund or account with respect to
which the donor (or any person appointed or designated by
such donor) has, or reasonably expects to have, advisory privi-
leges with respect to distributions or investments by reason
of the donor’s status as a donor.
(3) APPLICATION OF ELECTION TO PARTNERSHIPS AND S COR-
PORATIONS.—In the case of a partnership or S corporation,
the election under paragraph (1)(C) shall be made separately
by each partner or shareholder.
SEC. 
302. 
ADDITIONAL 
EXEMPTION 
FOR 
HOUSING 
HURRICANE
KATRINA DISPLACED INDIVIDUALS.
(a) IN GENERAL.—In the case of taxable years of a natural
person beginning in 2005 or 2006, for purposes of the Internal
Revenue Code of 1986, taxable income shall be reduced by $500
for each Hurricane Katrina displaced individual of the taxpayer
for the taxable year.
(b) LIMITATIONS.—
(1) DOLLAR LIMITATION.—The reduction under subsection
(a) shall not exceed $2,000, reduced by the amount of the
reduction under this section for all prior taxable years.
(2) INDIVIDUALS TAKEN INTO ACCOUNT ONLY ONCE.—An indi-
vidual shall not be taken into account under subsection (a)
if such individual was taken into account under such subsection
by the taxpayer for any prior taxable year.
(3) IDENTIFYING
INFORMATION
REQUIRED.—An individual
shall not be taken into account under subsection (a) for a
taxable year unless the taxpayer identification number of such
Applicability.
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individual is included on the return of the taxpayer for such
taxable year.
(c) HURRICANE KATRINA DISPLACED INDIVIDUAL.—For purposes
of this section, the term ‘‘Hurricane Katrina displaced individual’’
means, with respect to any taxpayer for any taxable year, any
natural person if—
(1) such person’s principal place of abode on August 28,
2005, was in the Hurricane Katrina disaster area,
(2)(A) in the case of such an abode located in the core
disaster area, such person is displaced from such abode, or
(B) in the case of such an abode located outside of the
core disaster area, such person is displaced from such abode,
and
(i) such abode was damaged by Hurricane Katrina,
or
(ii) such person was evacuated from such abode by
reason of Hurricane Katrina, and
(3) such person is provided housing free of charge by the
taxpayer in the principal residence of the taxpayer for a period
of 60 consecutive days which ends in such taxable year.
Such term shall not include the spouse or any dependent of the
taxpayer.
(d) COMPENSATION
FOR
HOUSING.—No deduction shall be
allowed under this section if the taxpayer receives any rent or
other amount (from any source) in connection with the providing
of such housing.
SEC. 303. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE
USE OF VEHICLES.
Notwithstanding section 170(i) of the Internal Revenue Code
of 1986, for purposes of computing the deduction under section
170 of such Code for use of a vehicle described in subsection
(f)(12)(E)(i) of such section for provision of relief related to Hurricane
Katrina during the period beginning on August 25, 2005, and ending
on December 31, 2006, the standard mileage rate shall be 70
percent of the standard mileage rate in effect under section 162(a)
of such Code at the time of such use. Any increase under this
section shall be rounded to the next highest cent.
SEC. 304. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS
EXCLUDED FROM GROSS INCOME.
(a) IN GENERAL.—For purposes of the Internal Revenue Code
of 1986, gross income of an individual for taxable years ending
on or after August 25, 2005, does not include amounts received,
from an organization described in section 170(c) of such Code,
as reimbursement of operating expenses with respect to use of
a passenger automobile for the benefit of such organization in
connection with providing relief relating to Hurricane Katrina
during the period beginning on August 25, 2005, and ending on
December 31, 2006. The preceding sentence shall apply only to
the extent that the expenses which are reimbursed would be deduct-
ible under chapter 1 of such Code if section 274(d) of such Code
were applied—
(1) by using the standard business mileage rate in effect
under section 162(a) at the time of such use, and
(2) as if the individual were an employee of an organization
not described in section 170(c) of such Code.
Applicability.
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(b) APPLICATION TO VOLUNTEER SERVICES ONLY.—Subsection
(a) shall not apply with respect to any expenses relating to the
performance of services for compensation.
(c) NO DOUBLE BENEFIT.—No deduction or credit shall be
allowed under any other provision of such Code with respect to
the expenses excludable from gross income under subsection (a).
SEC. 305. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD
INVENTORY.
(a) IN GENERAL.—Paragraph (3) of section 170(e) of the Internal
Revenue Code of 1986 (relating to special rule for certain contribu-
tions of inventory and other property) is amended by redesignating
subparagraph (C) as subparagraph (D) and by inserting after
subparagraph (B) the following new subparagraph:
‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS OF FOOD INVEN-
TORY.—
‘‘(i) GENERAL RULE.—In the case of a charitable
contribution of food from any trade or business of the
taxpayer, this paragraph shall be applied—
‘‘(I) without regard to whether the contribution
is made by a C corporation, and
‘‘(II) only to food that is apparently wholesome
food.
‘‘(ii) LIMITATION.—In the case of a taxpayer other
than a C corporation, the aggregate amount of such
contributions for any taxable year which may be taken
into account under this section shall not exceed 10
percent of the taxpayer’s aggregate net income for such
taxable year from all trades or businesses from which
such contributions were made for such year, computed
without regard to this section.
‘‘(iii) APPARENTLY
WHOLESOME
FOOD.—For pur-
poses of this subparagraph, the term ‘apparently
wholesome food’ has the meaning given to such term
by section 22(b)(2) of the Bill Emerson Good Samaritan
Food Donation Act (42 U.S.C. 1791(b)(2)), as in effect
on the date of the enactment of this subparagraph.
‘‘(iv) TERMINATION.—This subparagraph shall not
apply to contributions made after December 31, 2005.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to contributions made on or after August 28, 2005,
in taxable years ending after such date.
SEC. 306. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK
INVENTORIES TO PUBLIC SCHOOLS.
(a) IN GENERAL.—Paragraph (3) of section 170(e) of the Internal
Revenue Code of 1986 (relating to certain contributions of ordinary
income and capital gain property), as amended by section 305,
is amended by redesignating subparagraph (D) as subparagraph
(E) and by inserting after subparagraph (C) the following new
subparagraph:
‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS OF BOOK INVEN-
TORY TO PUBLIC SCHOOLS.—
‘‘(i) CONTRIBUTIONS OF BOOK INVENTORY.—In deter-
mining whether a qualified book contribution is a quali-
fied contribution, subparagraph (A) shall be applied
without regard to whether the donee is an organization
Applicability.
26 USC 170 note.
Applicability.
26 USC 170.
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described in the matter preceding clause (i) of subpara-
graph (A).
‘‘(ii) QUALIFIED
BOOK
CONTRIBUTION.—For pur-
poses of this paragraph, the term ‘qualified book con-
tribution’ means a charitable contribution of books to
a public school which is an educational organization
described in subsection (b)(1)(A)(ii) and which provides
elementary education or secondary education (kinder-
garten through grade 12).
‘‘(iii) CERTIFICATION BY DONEE.—Subparagraph (A)
shall not apply to any contribution unless (in addition
to the certifications required by subparagraph (A) (as
modified by this subparagraph)), the donee certifies
in writing that—
‘‘(I) the books are suitable, in terms of cur-
rency, content, and quantity, for use in the donee’s
educational programs, and
‘‘(II) the donee will use the books in its edu-
cational programs.
‘‘(iv) TERMINATION.—This subparagraph shall not
apply to contributions made after December 31, 2005.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to contributions made on or after August 28, 2005,
in taxable years ending after such date.
TITLE IV—ADDITIONAL TAX RELIEF
PROVISIONS
SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTED-
NESS BY REASON OF HURRICANE KATRINA.
(a) IN GENERAL.—For purposes of the Internal Revenue Code
of 1986, gross income shall not include any amount which (but
for this section) would be includible in gross income by reason
of the discharge (in whole or in part) of indebtedness of a natural
person described in subsection (b) by an applicable entity (as defined
in section 6050P(c)(1) of such Code).
(b) PERSONS DESCRIBED.—A natural person is described in this
subsection if the principal place of abode of such person on August
25, 2005, was located—
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside
the core disaster area) and such person suffered economic loss
by reason of Hurricane Katrina.
(c) EXCEPTIONS.—
(1) BUSINESS
INDEBTEDNESS.—Subsection (a) shall not
apply to any indebtedness incurred in connection with a trade
or business.
(2) REAL PROPERTY OUTSIDE CORE DISASTER AREA.—Sub-
section (a) shall not apply to any discharge of indebtedness
to the extent that real property constituting security for such
indebtedness is located outside of the Hurricane Katrina dis-
aster area.
(d) DENIAL OF DOUBLE BENEFIT.—For purposes of the Internal
Revenue Code of 1986, the amount excluded from gross income
under subsection (a) shall be treated in the same manner as an
amount excluded under section 108(a) of such Code.
26 USC 170 note.
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(e) EFFECTIVE DATE.—This section shall apply to discharges
made on or after August 25, 2005, and before January 1, 2007.
SEC. 402. SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CAS-
UALTY LOSSES.
Paragraphs (1) and (2)(A) of section 165(h) of the Internal
Revenue Code of 1986 shall not apply to losses described in section
165(c)(3) of such Code which arise in the Hurricane Katrina disaster
area on or after August 25, 2005, and which are attributable to
Hurricane Katrina. In the case of any other losses, section
165(h)(2)(A) of such Code shall be applied without regard to the
losses referred to in the preceding sentence.
SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SECTION 7508A
FOR TAX RELIEF RELATING TO HURRICANE KATRINA.
(a) AUTHORITY INCLUDES SUSPENSION OF PAYMENT OF EMPLOY-
MENT AND EXCISE TAXES.—Subparagraphs (A) and (B) of section
7508(a)(1) of the Internal Revenue Code of 1986 are amended
to read as follows:
‘‘(A) Filing any return of income, estate, gift, employ-
ment, or excise tax;
‘‘(B) Payment of any income, estate, gift, employment,
or excise tax or any installment thereof or of any other
liability to the United States in respect thereof;’’.
(b) APPLICATION WITH RESPECT TO HURRICANE KATRINA.—In
the case of any taxpayer determined by the Secretary of the
Treasury to be affected by the Presidentially declared disaster
relating to Hurricane Katrina, any relief provided by the Secretary
of the Treasury under section 7508A of the Internal Revenue Code
of 1986 shall be for a period ending not earlier than February
28, 2006, and shall be treated as applying to the filing of returns
relating to, and the payment of, employment and excise taxes.
(c) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply for any period for performing an act which has not
expired before August 25, 2005.
SEC. 404. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
(a) IN GENERAL.—In the case of financing provided with respect
to a qualified Hurricane Katrina recovery residence, subsection
(d) of section 143 of the Internal Revenue Code of 1986 shall
be applied as if such residence were a targeted area residence.
(b) QUALIFIED HURRICANE KATRINA RECOVERY RESIDENCE.—
For purposes of this section, the term ‘‘qualified Hurricane Katrina
recovery residence’’ means—
(1) any residence in the core disaster area, and
(2) any other residence if—
(A) such other residence is located in the same State
as the principal residence referred to in subparagraph (B),
and
(B) the mortgagor with respect to such other residence
owned a principal residence on August 28, 2005, which—
(i) was located in the Hurricane Katrina disaster
area, and
(ii) was rendered uninhabitable by reason of Hurri-
cane Katrina.
(c) SPECIAL RULE
FOR HOME IMPROVEMENT LOANS.—In the
case of any loan with respect to a residence in the Hurricane
Katrina disaster area, section 143(k)(4) of such Code shall be applied
Applicability.
Applicability.
26 USC 7508
note.
26 USC 7508.
Applicability.
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by substituting $150,000 for the dollar amount contained therein
to the extent such loan is for the repair of damage by reason
of Hurricane Katrina.
(d) APPLICATION.—Subsection (a) shall not apply to financing
provided after December 31, 2007.
SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNI-
TION OF GAIN FOR PROPERTY LOCATED IN HURRICANE
KATRINA DISASTER AREA.
Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code
of 1986 shall be applied by substituting ‘‘5 years’’ for ‘‘2 years’’
with respect to property in the Hurricane Katrina disaster area
which is compulsorily or involuntarily converted on or after August
25, 2005, by reason of Hurricane Katrina, but only if substantially
all of the use of the replacement property is in such area.
SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME.
(a) IN GENERAL.—In the case of a qualified individual, if the
earned income of the taxpayer for the taxable year which includes
August 25, 2005, is less than the earned income of the taxpayer
for the preceding taxable year, the credits allowed under sections
24(d) and 32 of the Internal Revenue Code of 1986 may, at the
election of the taxpayer, be determined by substituting—
(1) such earned income for the preceding taxable year,
for
(2) such earned income for the taxable year which includes
August 25, 2005.
(b) QUALIFIED INDIVIDUAL.—For purposes of this section, the
term ‘‘qualified individual’’ means any individual whose principal
place of abode on August 25, 2005, was located—
(1) in the core disaster area, or
(2) in the Hurricane Katrina disaster area (but outside
the core disaster area) and such individual was displaced from
such principal place of abode by reason of Hurricane Katrina.
(c) EARNED INCOME.—For purposes of this section, the term
‘‘earned income’’ has the meaning given such term under section
32(c) of such Code.
(d) SPECIAL RULES.—
(1) APPLICATION TO JOINT RETURNS.—For purposes of sub-
section (a), in the case of a joint return for a taxable year
which includes August 25, 2005—
(A) such subsection shall apply if either spouse is a
qualified individual, and
(B) the earned income of the taxpayer for the preceding
taxable year shall be the sum of the earned income of
each spouse for such preceding taxable year.
(2) UNIFORM APPLICATION OF ELECTION.—Any election made
under subsection (a) shall apply with respect to both section
24(d) and section 32 of such Code.
(3) ERRORS TREATED AS MATHEMATICAL ERROR.—For pur-
poses of section 6213 of such Code, an incorrect use on a
return of earned income pursuant to subsection (a) shall be
treated as a mathematical or clerical error.
(4) NO EFFECT ON DETERMINATION OF GROSS INCOME, ETC.—
Except as otherwise provided in this section, the Internal Rev-
enue Code of 1986 shall be applied without regard to any
substitution under subsection (a).
Applicability.
Applicability.
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LEGISLATIVE HISTORY—H.R. 3768 (S. 1696):
CONGRESSIONAL RECORD, Vol. 151 (2005):
Sept. 15, considered and passed House. Considered and passed Senate,
amended.
Sept. 21, House agreed to Senate amendment with an amendment, pursuant
to H. Res. 454. Senate concurred in House amendment.
SEC. 
407. 
SECRETARIAL 
AUTHORITY 
TO 
MAKE 
ADJUSTMENTS
REGARDING TAXPAYER AND DEPENDENCY STATUS.
With respect to taxable years beginning in 2005 or 2006, the
Secretary of the Treasury or the Secretary’s delegate may make
such adjustments in the application of the internal revenue laws
as may be necessary to ensure that taxpayers do not lose any
deduction or credit or experience a change of filing status by reason
of temporary relocations by reason of Hurricane Katrina. Any
adjustments made under the preceding sentence shall ensure that
an individual is not taken into account by more than one taxpayer
with respect to the same tax benefit.
TITLE V—EMERGENCY REQUIREMENT
SEC. 501. EMERGENCY REQUIREMENT.
Any provision of this Act causing an effect on receipts, budget
authority, or outlays is designated as an emergency requirement
pursuant to section 402 of H. Con. Res. 95 (109th Congress).
Approved September 23, 2005.
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