,i #aac? ,,congress #a/ ,session ,h4 ,r4 #edi ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,febru>y #f1 #bjac ,mr4 ,grimm 7= himself1 ,mr4 ,pascrell1 ,mr4 ,rooney1 & ,mr4 ,deut*7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to provide = ! creation ( policyhold] disa/] protection funds1 ,cata/rophe ,sav+s ,acc\nts1 & tax cr$its = natural disa/] mitigation exp5ditures4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,home[n] ,cata/rophe ,protection ,act ( #bjac4 ,i ,policyhold] ,disa/] ,protection ,funds #aja4 ,f9d+s ,! ,congress makes ! foll[+ f9d+s3 7#a7 ,ris+ co/s result+ f natural disa/]s are plac+ an increas+ /ra9 on ! ability ( prop]ty & casualty insurance companies to assure paym5t ( home[n]s' claims & o!r insurance claims aris+ f major natural disa/]s n[ & 9 ! future4 7#b7 ,pres5t tax laws d n provide adequate inc5tives to assure t natural disa/] insurance is provid$ or1 :]e su* insurance is provid$1 t funds are available = paym5t ( insurance claims 9 ! ev5t ( future cata/rophic losses f major natural disa/]s1 z pres5t law requires an insur] wi%+ to accumulate surplus assets = ?is purpose to d s entirely f its aft]-tax reta9$ e>n+s4 7#c7 ,revis+ ! tax laws applicable to ! prop]ty & casualty insurance indu/ry to p]mit c>efully controll$ accumulation ( pretax doll>s 9 sep>ate res]ve funds devot$ solely to ! paym5t ( claims aris+ f future major natural disa/]s w provide inc5tives = prop]ty & casualty insur]s to make natural disa/] insurance available1 w give great] protection to ! ,nation's home[n]s1 small bus9esses1 & o!r insurance consum]s1 & w help assure ! future f9ancial heal? ( ! ,nation's insurance sy/em z a :ole4 7#d7 ,implem5t+ ^! *anges w r$uce ! possibility t a significant portion ( ! private insurance sy/em w\ld fail 9 ! wake ( a major natural disa/] & t gov]nm5tal entities w\ld be requir$ to /ep 9 to provide relief at taxpay] exp5se4 #c4 ,creation ( policyhold] disa/] protection funds2 contributions to & di/ributions f funds2 o!r rules 7a7 ,contributions to policyhold] disa/] protection funds ,subsection 7c7 ( section #hcb ( ! ,int]nal ,rev5ue ,code ( #aihf 7relat+ to ! taxable income ( insurance companies o!r ?an life insurance companies7 is am5d$ by /rik+ & at ! end ( p>agraph 7#ab71 by /rik+ ! p]iod at ! end ( p>agraph 7#ac7 & ins]t+ 2 &1 & by add+ at ! end ! foll[+ new p>agraph3 7#ad7 ! qualifi$ contributions to a policyhold] disa/] protection fund dur+ ! taxable ye>4 4 7b7 ,di/ributions f policyhold] disa/] protection funds ,p>agraph 7#a7 ( section #hcb7;b7 ( su* ,code is am5d$ by /rik+ & at ! end ( subp>agraph 7,d71 by /rik+ ! p]iod at ! end ( subp>agraph 7,e7 & ins]t+ 1 &1 & by add+ at ! end ! foll[+ new subp>agraph3 7,f7 ! am\nt ( any di/ributions f a policyhold] disa/] protection fund dur+ ! taxable ye>1 except t a di/ribution made to return to ! qualifi$ insurance company any contribution :i* is n a qualifi$ contribution 7z def9$ 9 subsection 7h77 = a taxable ye> %all n be includ$ 9 gross income if su* di/ribution is made prior to ! fil+ ( ! tax return = su* taxable ye>4 4 7c7 ,def9itions & o!r rules relat+ to policyhold] disa/] protection funds ,section #hcb ( su* ,code 7relat+ to insurance company taxable income7 is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,def9itions & o!r rules relat+ to policyhold] disa/] protection funds ,= purposes ( ?is section-- 7#a7 ,policyhold] disa/] protection fund ,! t]m policyhold] disa/] protection fund 7h]eaft] 9 ?is subsection ref]r$ to z ! fund7 means any cu/odial acc\nt1 tru/1 or any o!r arrangem5t or acc\nt-- 7,a7 :i* is e/abli%$ to hold assets t are set aside solely = ! paym5t ( qualifi$ losses1 & 7,b7 "u ! t]ms ( :i*-- 7i7 ! assets 9 ! fund are requir$ to be inve/$ 9 a mann] consi/5t ) ! inve/m5t requirem5ts applicable to ! qualifi$ insurance company "u ! laws ( its jurisdiction ( domicile1 7ii7 ! net income = ! taxable ye> d]iv$ f ! assets 9 ! fund is requir$ to be di/ribut$ no less frequ5tly ?an annually1 7iii7 an excess balance drawd[n am\nt is requir$ to be di/ribut$ to ! qualifi$ insurance company no lat] ?an ! close ( ! taxable ye> foll[+ ! taxable ye> = :i* su* am\nt is det]m9$1 7iv7 a cata/rophe drawd[n am\nt may be di/ribut$ to ! qualifi$ insurance company if di/ribut$ prior to ! close ( ! taxable ye> foll[+ ! ye> = :i* su* am\nt is det]m9$1 7v7 a ,/ate requir$ drawd[n am\nt may be di/ribut$1 & 7vi7 no di/ributions f ! fund are requir$ or p]mitt$ o!r ?an ! di/ributions describ$ 9 clauses 7ii7 ?r\gh 7v7 & ! return to ! qualifi$ insurance company ( contributions t are n qualifi$ contributions4 7#b7 ,qualifi$ insurance company ,! t]m qualifi$ insurance company means any insurance company subject to tax "u section #hca7;a74 7#c7 ,qualifi$ contribution ,! t]m qualifi$ contribution means a contribution to a fund = a taxable ye> to ! ext5t t ! am\nt ( su* contribution1 :5 add$ to ! previ\s contributions to ! fund = su* taxable ye>1 does n exce$ ! excess (-- 7,a7 ! fund cap = ! taxable ye>1 ov] 7,b7 ! fund balance det]m9$ z ( ! close ( ! prec$+ taxable ye>4 7#d7 ,excess balance drawd[n am\nts ,! t]m excess balance drawd[n am\nt means ! excess 7if any7 (-- 7,a7 ! fund balance z ( ! close ( ! taxable ye>1 ov] 7,b7 ! fund cap = ! foll[+ taxable ye>4 7#e7 ,cata/rophe drawd[n am\nt 7,a7 ,9 g5]al ,! t]m cata/rophe drawd[n am\nt means an am\nt t does n exce$ ! less] ( ! am\nt det]m9$ "u subp>agraph 7,b7 or 7,c74 7,b7 ,net losses f qualify+ ev5ts ,! am\nt det]m9$ "u ?is subp>agraph %all be equal to ! qualifi$ losses = ! taxable ye> det]m9$ )\t reg>d to clause 7ii7 ( p>agraph 7#h77;,a74 7,c7 ,gross losses 9 excess ( ?re%old ,! am\nt det]m9$ "u ?is subp>agraph %all be equal to ! excess 7if any7 (-- 7i7 ! qualifi$ losses = ! taxable ye>1 ov] 7ii7 ! less] (-- 7,i7 ! fund cap = ! taxable ye> 7det]m9$ )\t reg>d to p>agraph 7#i77;,e771 or 7,,ii7 #cj p]c5t ( ! qualifi$ insurance company's surplus z reg>ds policyhold]s z %[n on ! company's annual /atem5t = ! cal5d> ye> prec$+ ! taxable ye>4 7,d7 ,special drawd[n am\nt foll[+ a rec5t cata/rophe loss ye> ,if = any taxable ye> includ$ 9 ! ref]5ce p]iod ! qualifi$ losses exce$ ! am\nt det]m9$ "u subp>agraph 7,c77ii71 ! cata/rophe drawd[n am\nt %all be an am\nt t does n exce$ ! less] ( ! am\nt det]m9$ "u subp>agraph 7,b7 or ! am\nt det]m9$ "u ?is subp>agraph4 ,! am\nt det]m9$ "u ?is subp>agraph %all be an am\nt equal to ! excess 7if any7 (-- 7i7 ! qualifi$ losses = ! taxable ye>1 ov] 7ii7 ! less] (-- 7,i7 #a_/c ( ! fund cap = ! taxable ye> 7det]m9$ )\t reg>d to p>agraph 7#i77;,e771 or 7,,ii7 #aj p]c5t ( ! qualifi$ insurance company's surplus z reg>ds policyhold]s z %[n on ! company's annual /atem5t = ! cal5d> ye> prec$+ ! taxable ye>4 7,e7 ,ref]5ce p]iod ,= purposes ( subp>agraph 7,d71 ! ref]5ce p]iod %all be det]m9$ "u ! foll[+ table3 ,= a taxable year,the ref]5ce p]iod beg9n+ 9--%all be-- #bjae & lat] ,! #c prec$+ taxable ye>s4 #bjad ,! #b prec$+ taxable ye>s4 #bjac ,! prec$+ taxable ye>4 #bjab or be=e ,no ref]5ce p]iod applies4 7#f7 ,/ate requir$ drawd[n am\nt ,! t]m ,/ate requir$ drawd[n am\nt means any am\nt t ! dep>tm5t ( insurance = ! qualifi$ insurance company's jurisdiction ( domicile requires to be di/ribut$ f ! fund1 to ! ext5t su* am\nt is n o!rwise describ$ 9 p>agraph 7#d7 or 7#e74 7#g7 ,fund balance ,! t]m fund balance means-- 7,a7 ! sum ( all qualifi$ contributions to ! fund1 7,b7 less any net inve/m5t loss ( ! fund = any taxable ye> or ye>s1 & 7,c7 less ! sum ( all di/ributions "u clauses 7iii7 ?r\gh 7v7 ( p>agraph 7#a77;,b74 7#h7 ,qualifi$ losses 7,a7 ,9 g5]al ,! t]m qualifi$ losses means1 ) respect to a taxable ye>-- 7i7 ! am\nt ( losses & loss adju/m5t exp5ses incurr$ 9 ! qualifi$ l9es ( bus9ess specifi$ 9 p>agraph 7#i71 net ( re9surance1 z report$ 9 ! qualifi$ insurance company's annual /atem5t = ! taxable ye>1 t are attributable to "o or m qualify+ ev5ts 7reg>dless ( :5 su* qualify+ ev5ts occurr$71 7ii7 ! am\nt by :i* su* losses & loss adju/m5t exp5ses attributable to su* qualify+ ev5ts h be5 r$uc$ = re9surance receiv$ & recov]able1 plus 7iii7 any nonrecov]able assessm5ts1 sur*>ges1 or o!r liabilities t are borne by ! qualifi$ insurance company & are attributable to su* qualify+ ev5ts4 7,b7 ,qualify+ ev5t ,= purposes ( subp>agraph 7,a71 ! t]m qualify+ ev5t means any ev5t t satisfies clauses 7i7 & 7ii74 7i7 ,ev5t ,an ev5t satisfies ?is clause if ! ev5t is #a or m ( ! foll[+3 7,i7 ,w9d/orm 7hurricane1 cyclone1 or tornado74 7,,ii7 ,e>?quake 7includ+ any fire foll[+74 7,,iii7 ,w9t] cata/rophe 7sn[1 ice1 or freez+74 7,,iv7 ,fire4 7,v7 ,tsunami4 7,,vi7 ,flood4 7,,vii7 ,volcanic eruption4 7,,viii7 ,hail4 7ii7 ,cata/rophe designation ,an ev5t satisfies ?is clause if ! ev5t-- 7,i7 is designat$ a cata/rophe by ,prop]ty ,claim ,s]vices or its successor organization1 7,,ii7 is decl>$ by ! ,presid5t to be an em]g5cy or disa/]1 or 7,,iii7 is decl>$ to be an em]g5cy or disa/] 9 a simil> decl>ation by ! *ief executive (ficial ( a ,/ate1 possession1 or t]ritory ( ! ,unit$ ,/ates1 or ! ,di/rict ( ,columbia4 7#i7 ,fund cap 7,a7 ,9 g5]al ,! t]m fund cap = a taxable ye> is ! sum ( ! sep>ate l9es ( bus9ess caps = ea* ( ! qualifi$ l9es ( bus9ess specifi$ 9 ! table conta9$ 9 subp>agraph 7,c7 7z modifi$ "u subp>agraphs 7,d7 & 7,e774 7,b7 ,sep>ate l9es ( bus9ess cap ,= purposes ( subp>agraph 7,a71 ! sep>ate l9es ( bus9ess cap1 ) respect to a qualifi$ l9e ( bus9ess specifi$ 9 ! table conta9$ 9 subp>agraph 7,c71 is ! product (-- 7i7 net writt5 premiums report$ 9 ! annual /atem5t = ! cal5d> ye> prec$+ ! taxable ye> 9 su* l9e ( bus9ess1 multipli$ by 7ii7 ! fund cap multipli] applicable to su* qualifi$ l9e ( bus9ess4 7,c7 ,qualifi$ l9es ( bus9ess & _! respective fund cap multipli]s ,= purposes ( ?is p>agraph1 ! qualifi$ l9es ( bus9ess & fund cap multipli]s specifi$ 9 ?is subp>agraph are ^? specifi$ 9 ! foll[+ table3 ,l9e ( ,bus9ess on ,annual,fund ,cap ,/atem5t ,blank3,multipli]3 ,fire#j4be ,alli$#a4be ,f>m[n]s ,multiple ,p]il#j4be ,home[n]s ,multiple ,p]il#j4ge ,comm]cial ,multi ,p]il 7non-liability portion7#j4ej ,e>?quake#ac4jj ,inl& ,m>9e#j4be4 7,d7 ,subsequ5t modifications ( ! annual /atem5t blank ,if1 ) respect to any taxable ye> beg9n+ aft] ! effective date ( ?is subsection1 ! annual /atem5t blank requir$ to be fil$ is am5d$ to replace1 comb9e1 or o!rwise modify any ( ! qualifi$ l9es ( bus9ess specifi$ 9 subp>agraph 7,c71 !n = su* taxable ye> subp>agraph 7,c7 %all be appli$ 9 a mann] su* t ! fund cap %all be ! same am\nt z if su* report+ modification _h n be5 made4 7,e7 #bj-ye> phase-9 ,not)/&+ subp>agraph 7,c71 ! fund cap = a taxable ye> %all be ! am\nt det]m9$ "u subp>agraph 7,c71 z adju/$ pursuant to subp>agraph 7,d7 7if applicable71 multipli$ by ! phase-9 p]c5tage indicat$ 9 ! foll[+ table3 ,taxable ye> beg9n+ 93,phase-9 p]c5tage to be appli$ to fund cap comput$ "u subp>agraphs 7,a7 & 7,b73 #bjabe p]c5t #bjacaj p]c5t #bjadae p]c5t #bjaebj p]c5t #bjafbe p]c5t #bjagcj p]c5t #bjahce p]c5t #bjaidj p]c5t #bjbjde p]c5t #bjbaej p]c5t #bjbbee p]c5t #bjbcfj p]c5t #bjbdfe p]c5t #bjbegj p]c5t #bjbfge p]c5t #bjbghj p]c5t #bjbhhe p]c5t #bjbiij p]c5t #bjcjie p]c5t #bjca & lat]#ajj p]c5t4 7#aj7 ,treatm5t ( inve/m5t income & ga9 or loss 7,a7 ,contributions 9 k9d ,a transf] ( prop]ty o!r ?an money to a fund %all be treat$ z a sale or ex*ange ( su* prop]ty = an am\nt equal to its fair m>ket value z ( ! date ( transf]1 & appropriate adju/m5t %all be made to ! basis ( su* prop]ty4 ,section #bfg %all apply to any loss realiz$ ^u su* a transf]4 7,b7 ,di/ributions 9 k9d ,a transf] ( prop]ty o!r ?an money by a fund to ! qualifi$ insurance company %all n be treat$ z a sale or ex*ange or o!r disposition ( su* prop]ty4 ,! basis ( su* prop]ty imm$iately aft] su* transf] %all be ! great] ( ! basis ( su* prop]ty imm$iately be=e su* transf] or ! fair m>ket value ( su* prop]ty on ! date ( su* transf]4 7,c7 ,income ) respect to fund assets ,items ( income ( ! type describ$ 9 p>agraphs 7#a77;,b71 7#a77;,c71 & 7#b7 ( subsection 7b7 t are d]iv$ f ! assets held 9 a fund1 z well z losses f ! sale or o!r disposition ( su* assets1 %all be consid]$ items ( income1 ga91 or loss ( ! qualifi$ insurance company4 ,not)/&+ p>agraph 7#a77;,f7 ( subsection 7b71 di/ributions ( net income to ! qualifi$ insurance company pursuant to p>agraph 7#a77;,b77ii7 ( ?is subsection %all n cause su* income to be tak5 into acc\nt a second "t4 7#aa7 ,net income2 net inve/m5t loss ,= purposes ( p>agraph 7#a77;,b77ii71 ! net income d]iv$ f ! assets 9 ! fund = ! taxable ye> %all be ! items ( income & ga9 = ! taxable ye>1 less ! items ( loss = ! taxable ye>1 d]iv$ f su* assets1 z describ$ 9 p>agraph 7#aj77;,c74 ,= purposes ( p>agraph 7#g71 !re is a net inve/m5t loss = ! taxable ye> to ! ext5t t ! items ( loss describ$ 9 ! prec$+ s5t5ce exce$ ! items ( income & ga9 describ$ 9 ! prec$+ s5t5ce4 7#ab7 ,annual /atem5t ,= purposes ( ?is subsection1 ! t]m annual /atem5t %all h ! mean+ set =? 9 section #hdf7;f77#c74 7#ac7 ,exclusion ( premiums & losses on c]ta9 pu]to rican risks ,not)/&+ any o!r provision ( ?is subsection1 premiums & losses ) respect to risks cov]$ by a cata/rophe res]ve e/abli%$ "u ! laws or regulations ( ! ,commonweal? ( ,pu]to ,rico %all n be tak5 into acc\nt "u ?is subsection 9 det]m9+ ! am\nt ( ! fund cap or ! am\nt ( qualifi$ losses4 7#ad7 ,regulations ,! ,secret>y %all prescribe su* regulations z may be necess>y or appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations-- 7,a7 :i* gov]n ! application ( ?is subsection to a qualifi$ insurance company hav+ a taxable ye> o!r ?an ! cal5d> ye> or a taxable ye> less ?an #ab mon?s1 7,b7 :i* gov]n a fund ma9ta9$ by a qualifi$ insurance company t ceases to be subject to ?is "p1 & 7,c7 :i* gov]n ! application ( p>agraph 7#i77;,d74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 ,,ii ,cata/rophe ,sav+s ,acc\nts #bja4 ,cata/rophe ,sav+s ,acc\nts 7a7 ,9 g5]al ,sub*apt] ,f ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf 7relat+ to exempt organizations7 is am5d$ by add+ at ! end ! foll[+ new "p3 ,,ix ,cata/rophe ,sav+s ,acc\nts #ecj;,a4 ,cata/rophe ,sav+s ,acc\nts 7a7 ,g5]al rule ,a ,cata/rophe ,sav+s ,acc\nt %all be exempt f taxation "u ?is subtitle4 ,not)/&+ ! prec$+ s5t5ce1 su* acc\nt %all be subject to ! taxes impos$ by section #eaa 7relat+ to imposition ( tax on unrelat$ bus9ess income ( *>itable organizations74 7b7 ,cata/rophe ,sav+s ,acc\nt ,= purposes ( ?is section1 ! t]m ,cata/rophe ,sav+s ,acc\nt means a tru/ creat$ or organiz$ 9 ! ,unit$ ,/ates = ! exclusive b5efit ( an individual or 8 b5efici>ies & :i* is designat$ 79 su* mann] z ! ,secret>y %all prescribe7 at ! "t ( ! e/abli%m5t ( ! tru/ z a ,cata/rophe ,sav+s ,acc\nt1 b only if ! writt5 gov]n+ in/rum5t creat+ ! tru/ meets ! foll[+ requirem5ts3 7#a7 ,except 9 ! case ( a qualifi$ rollov] contribution-- 7,a7 no contribution w be accept$ unless x is 9 ca%1 & 7,b7 contributions w n be accept$ 9 excess ( ! acc\nt balance limit specifi$ 9 subsection 7c74 7#b7 ,! tru/ee is a bank 7z def9$ 9 section #djh7n77 or ano!r p]son :o demon/rates to ! satisfaction ( ! ,secret>y t ! mann] 9 :i* t p]son w adm9i/] ! tru/ w be consi/5t ) ! requirem5ts ( ?is section4 7#c7 ,! int]e/ ( an individual 9 ! balance ( 8 acc\nt is non=feitable4 7#d7 ,! assets ( ! tru/ %all n be comm+l$ ) o!r prop]ty except 9 a common tru/ fund or common inve/m5t fund4 7c7 ,acc\nt balance limit ,! aggregate acc\nt balance = all ,cata/rophe ,sav+s ,acc\nts ma9ta9$ = ! b5efit ( an individual 7includ+ qualifi$ rollov] contributions7 %all n exce$-- 7#a7 9 ! case ( an individual ^: qualifi$ d$uctible is n m ?an #a1jjj1 #b1jjj1 & 7#b7 9 ! case ( an individual ^: qualifi$ d$uctible is m ?an #a1jjj1 ! am\nt equal to ! less] (-- 7,a7 #ae1jjj1 or 7,b7 twice ! am\nt ( ! individual's qualifi$ d$uctible4 7d7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,qualifi$ cata/rophe exp5ses ,! t]m qualifi$ cata/rophe exp5ses means exp5ses paid or incurr$ by reason ( a major disa/] t has be5 decl>$ by ! ,presid5t "u section #dja ( ! ,rob]t ,t4 ,/af=d ,disa/] ,relief & ,em]g5cy ,assi/ance ,act4 7#b7 ,qualifi$ d$uctible ,) respect to an individual1 ! t]m qualifi$ d$uctible means ! annual d$uctible = ! individual's home[n]s' insurance policy4 7#c7 ,qualifi$ rollov] contribution ,! t]m qualifi$ rollov] contribution means a contribution to a ,cata/rophe ,sav+s ,acc\nt-- 7,a7 f ano!r su* acc\nt ( ! same b5efici>y1 b only if su* am\nt is contribut$ n lat] ?an ! #fj? day aft] ! di/ribution f su* o!r acc\nt1 & 7,b7 f a ,cata/rophe ,sav+s ,acc\nt ( a sp\se ( ! b5efici>y ( ! acc\nt to :i* ! contribution is made1 b only if su* am\nt is contribut$ n lat] ?an ! #fj? day aft] ! di/ribution f su* o!r acc\nt4 7e7 ,tax treatm5t ( di/ributions 7#a7 ,9 g5]al ,any di/ribution f a ,cata/rophe ,sav+s ,acc\nt %all be includible 9 ! gross income ( ! di/ributee 9 ! mann] z provid$ 9 section #gb4 7#b7 ,di/ributions = qualifi$ cata/rophe exp5ses 7,a7 ,9 g5]al ,no am\nt %all be includible 9 gross income "u p>agraph 7#a7 if ! qualifi$ cata/rophe exp5ses ( ! di/ributee dur+ ! taxable ye> are n less ?an ! aggregate di/ributions dur+ ! taxable ye>4 7,b7 ,di/ributions 9 excess ( exp5ses ,if su* aggregate di/ributions exce$ su* exp5ses dur+ ! taxable ye>1 ! am\nt o!rwise includible 9 gross income "u p>agraph 7#a7 %all be r$uc$ by ! am\nt :i* be>s ! same ratio to ! am\nt :i* w\ld be includible 9 gross income "u p>agraph 7#a7 7)\t reg>d to ?is subp>agraph7 z ! qualifi$ cata/rophe exp5ses be> to su* aggregate di/ributions4 7#c7 ,additional tax = di/ributions n us$ = qualifi$ cata/rophe exp5ses ,! tax impos$ by ?is *apt] = any taxable ye> on any taxpay] :o receives a paym5t or di/ribution f a ,cata/rophe ,sav+s ,acc\nt :i* is includible 9 gross income %all be increas$ by #aj p]c5t ( ! am\nt :i* is s includible4 7#d7 ,retirem5t di/ributions ,no am\nt %all be includible 9 gross income "u p>agraph 7#a7 7or subject to an additional tax "u p>agraph 7#c77 if ! paym5t or di/ribution is made on or aft] ! date on :i* ! di/ributee atta9s age #fb4 7f7 ,tax treatm5t ( acc\nts ,rules simil> to ! rules ( p>agraphs 7#b7 & 7#d7 ( section #djh7;e7 %all apply to any ,cata/rophe ,sav+s ,acc\nt4 4 7b7 ,tax on excess contributions 7#a7 ,9 g5]al ,subsection 7a7 ( section #digc ( ! ,int]nal ,rev5ue ,code ( #aihf 7relat+ to tax on excess contributions to c]ta9 tax-favor$ acc\nts & annuities7 is am5d$ by /rik+ or at ! end ( p>agraph 7#d71 by ins]t+ or at ! end ( p>agraph 7#e71 & by ins]t+ aft] p>agraph 7#e7 ! foll[+ new p>agraph3 7#f7 a ,cata/rophe ,sav+s ,acc\nt 7z def9$ 9 section #ecj;,a71 4 7#b7 ,excess contribution ,section #digc ( su* ,code is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,excess contributions to ,cata/rophe ,sav+s ,acc\nts ,= purposes ( ?is section1 9 ! case ( ,cata/rophe ,sav+s ,acc\nts 7)9 ! mean+ ( section #ecj;,a71 ! t]m excess contributions means ! am\nt by :i* ! aggregate acc\nt balance = all ,cata/rophe ,sav+s ,acc\nts ma9ta9$ = ! b5efit ( an individual exce$s ! acc\nt balance limit def9$ 9 section #ecj;,a7c77#a74 4 7c7 ,con=m+ am5dm5t ,! table ( p>ts = sub*apt] ,f ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by add+ at ! end ! foll[+ new item3 ,"p ,,ix4 ,cata/rophe ,sav+s ,acc\nts 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 ,,iii ,tax cr$it = natural disa/] mitigation prop]ty #cja4 ,nonrefundable p]sonal cr$it = natural disa/] mitigation prop]ty 7a7 ,9 g5]al ,subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] section #be;,d ! foll[+ new section3 #be;,e4 ,natural disa/] mitigation prop]ty 7a7 ,all[ance ( cr$it ,9 ! case ( an individual1 !re %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is *apt] = ! taxable ye> an am\nt equal to #be p]c5t ( ! qualifi$ natural disa/] mitigation prop]ty exp5ditures made by ! taxpay] dur+ su* taxable ye> 9 connection ) a qualifi$ pr9cipal resid5ce ( ! taxpay]4 7b7 ,maximum cr$it ,! cr$it all[$ "u subsection 7a7 ) respect to any pr9cipal resid5ce ( ! taxpay] = any taxable ye> %all n exce$ ! excess (-- 7#a7 #e1jjj 7half su* am\nt 9 ! case ( a m>ri$ individual fil+ a sep>ate return71 ov] 7#b7 ! aggregate am\nts all[$ z a cr$it "u ?is section to ! taxpay] 7or ! taxpay]'s sp\se7 ) respect to su* resid5ce = all prior taxable ye>s4 7c7 ,limitation bas$ on am\nt ( tax ,9 ! case ( a taxable ye> to :i* section #bf7;a77#b7 does n apply1 ! cr$it all[$ "u subsection 7a7 = any taxable ye> %all n exce$ ! excess (-- 7#a7 ! sum ( ! regul> tax liability 7z def9$ 9 section #bf7;b77 plus ! tax impos$ by section #ee1 ov] 7#b7 ! sum ( ! cr$its all[able "u ?is subp>t 7o!r ?an ?is section & sections #bc1 #bd1 & #be;,b7 & section #bg = ! taxable ye>4 7d7 ,qualifi$ natural disa/] mitigation prop]ty exp5diture ,= purposes ( ?is section1 ! t]m qualifi$ natural disa/] mitigation prop]ty exp5diture means an exp5diture =-- 7#a7 prop]ty to improve ! /r5g? ( a ro( deck atta*m5t1 7#b7 prop]ty to create a second>y wat] b>ri] to prev5t wat] intrusion1 7#c7 prop]ty to improve ! durability ( a ro( cov]+1 7#d7 prop]ty to brace gable-end walls1 7#e7 prop]ty to re9=ce ! connection betwe5 a ro( & support+ wall1 7#f7 prop]ty to protect op5+s f p5etration by w9dborne debris1 7#g7 prop]ty to protect ext]ior doors & g>ages1 7#h7 prop]ty to improve ! natural resili5cy ( ! prop]ty1 includ+ ! re/oration1 e/abli%m5t1 or enhancem5t ( aquatic res\rces 7hav+ ! mean+s giv5 su* t]ms by "p #ccb ( title #cc ( ! ,code ( ,f$]al ,regulations71 z prescrib$ by ! ,secret>y aft] consultation ) ! ,adm9i/rator ( ! ,environm5tal ,protection ,ag5cy & ! ,assi/ant ,secret>y ( ! ,army = ,civil ,works1 7#i7 seismic retr(itt+1 includ+ prop]ty to increase resi/ance to seismic activity1 gr\nd motion1 or soil failure due to e>?quakes1 or 7#aj7 su* o!r measures to mitigate natural disa/] damage to homes1 z prescrib$ by ! ,secret>y aft] consultation ) ! ,adm9i/rator ( ! ,f$]al ,em]g5cy ,managem5t ,ag5cy &1 to ! ext5t applicable1 9 accordance ) section #ab7;d7 ( ! ,national ,te*nology ,transf] & ,advancem5t ,act ( #aiie 7#ae ,u4,s4,c4 #bgb note2 ,public ,law #ajd-aac74 7e7 ,qualifi$ pr9cipal resid5ce ,= purposes ( ?is section1 ! t]m qualifi$ pr9cipal resid5ce means ! pr9cipal resid5ce ( ! taxpay] 7)9 ! mean+ ( section #aba7 if su* resid5ce-- 7#a7 is assess$ by ! locality 9 :i* x is locat$ at a value :i* does n exce$ #cjj p]c5t ( ! national m$ian home price 7det]m9$ z ( ! close ( ! taxable ye> = :i* ! cr$it det]m9$ "u ?is section is all[$71 & 7#b7 is n sev]e repetitive loss prop]ty 7z def9$ 9 section #acfa;,a ( ! ,national ,flood ,insurance ,act 7#db ,u4,s4,c4 #dajb;a7b7774 7f7 ,rules relat$ to inspections & labor co/s ,= purposes ( ?is section-- 7#a7 ,inspection requirem5t ,an exp5diture %all be tak5 into acc\nt 9 det]m9+ ! qualifi$ natural disa/] mitigation prop]ty exp5ditures made by ! taxpay] dur+ ! taxable ye> only if ! in/allation ( ! prop]ty ) respect to :i* su* exp5diture is made has be5 complet$ 9 a mann] t is deem$ to be adequate by an inspector t is lic5s$ or c]tifi$ by ! ,/ate or o!r gov]nm5tal au?ority1 or its designee1 hav+ jurisdiction ov] inspectors 9 ! area :]e ! in/all$ prop]ty is locat$4 7#b7 ,labor & inspection co/s ,= purposes ( ?is section1 exp5ditures = labor co/s prop]ly allocable to ! onsite prep>ation1 assembly1 or orig9al in/allation ( ! prop]ty describ$ 9 subsection 7d7 7includ+ ! co/ ( inspections ref]r$ to 9 p>agraph 7#a77 %all be tak5 into acc\nt 9 det]m9+ ! qualifi$ natural disa/] mitigation prop]ty exp5ditures made by ! taxpay] dur+ ! taxable ye>4 7g7 ,basis adju/m5t ,= purposes ( ?is section1 if a cr$it is all[$ "u ?is section = any exp5diture ) respect to any prop]ty1 ! increase 9 ! basis ( su* prop]ty :i* w\ld 7b = ?is subsection7 result f su* exp5diture %all be r$uc$ by ! am\nt ( ! cr$it s all[$4 4 7b7 ,con=m+ am5dm5t ,! table ( sections = subp>t ,a ( "p ,,iv ( sub*apt] ,a ( *apt] #a ( su* ,code is am5d$ by ins]t+ aft] ! item relat+ to section #be;,d ! foll[+ new item3 ,sec4 #be;,e4 ,natural disa/] mitigation prop]ty4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4