,,ii  #aac? ,,congress  #b;d ,session   
,s4 #bfcd  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,july #bb1 #bjad ,mr4  
,pryor 7= himself1 ,mr4 ,vitt]1 ,mr4    
,s*um]1 ,mr4 ,m55dez1 ,mr4 ,b5net1 ,ms4 
,l&rieu1 ,mr4 ,udall ( ,colorado1 ,mrs4 
,gillibr&1 ,mr4 ,rockefell]1 & ,mr4     
,book]7 introduc$ ! foll[+ bill2 :i* 0  
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to provide tax     
relief = major disa/] areas decl>$ 9    
#bjab1 #bjac1 & #bjad1 & = o!r purposes4
  #a4  ,%ort title2 table ( cont5ts  7a7
  ,%ort title  ,?is ,act may be cit$ z !
 ,national ,disa/] ,tax ,relief ,act (  
#bjad4  7b7  ,table ( cont5ts  ,! table 
( cont5ts = ?is ,act is z foll[s3  ,sec4
 #a4 ,%ort title2 table ( cont5ts4      
,,title ,i--,tax relief relat+ to       
disa/]s 9 #bjab1 #bjac1 & #bjad ,sec4   
#aja4 ,exp5s+ ( qualifi$ disa/] exp5ses4
 ,sec4 #ajb4 ,increas$ limitation on    
*>itable contributions = disa/] relief4 
,sec4 #ajc4 ,losses attributable to     
disa/]s 9 #bjab1 #bjac1 & #bjad4 ,sec4  

#ajd4 ,net op]at+ losses attributable to
 disa/]s 9 #bjab1 #bjac1 & #bjad4 ,sec4 
#aje4 ,waiv] ( c]ta9 mortgage rev5ue    
bond requirem5ts foll[+ #bjab1 #bjac1 & 
#bjad disa/]s4 ,sec4 #ajf4 ,increas$    
exp5s+ & bonus depreciation = qualifi$  
disa/] assi/ance prop]ty foll[+ #bjab1  
#bjac1 & #bjad disa/]s4 ,sec4 #ajg4     
,increase 9 new m>kets tax cr$it =      
inve/m5ts 9 community developm5t        
entities s]v+ #bjab1 #bjac1 & #bjad     
disa/] areas4 ,sec4 #ajh4 ,special rules
 = use ( retirem5t funds 9 connection ) 
f$]ally decl>$ disa/]s 9 #bjab1 #bjac1  
or #bjad4 ,sec4 #aji4 ,additional       
exemption = h\s+ qualifi$ disa/]        
displac$ individuals4 ,sec4 #aaj4       
,exclusions ( c]ta9 cancellations (     
indebt$ness by reason ( #bjab1 #bjac1 or
 #bjad disa/]s4 ,sec4 #aaa4 ,special    
rule = det]m9+ e>n$ income ( individuals
 affect$ by f$]ally decl>$ disa/]s4     
,sec4 #aab4 ,increase 9 rehabilitation  
cr$it = build+s 9 #bjab1 #bjac1 & #bjad 
disa/] areas4 ,sec4 #aac4 ,advanc$      

refund+s ( c]ta9 tax-exempt bonds4 ,sec4
 #aad4 ,qualifi$ disa/] area recov]y    
bonds4 ,sec4 #aae4 ,additional l[-income
 h\s+ cr$it allocations4 ,sec4 #aaf4    
,facilitation ( transf] ( wat] leas+ &  
wat] by mutual dit* or irrigation       
companies 9 disa/] areas4 ,,title       
,,ii--,o!r disa/] tax relief provisions 
,sec4 #bja4 ,exclusion = disa/]         
mitigation paym5ts receiv$ f ,/ate &    
local gov]nm5ts4 ,sec4 #bjb4 ,natural   
disa/] funds4  ,i  ,tax relief relat+ to
 disa/]s 9 #bjab1 #bjac1 & #bjad  #aja4 
,exp5s+ ( qualifi$ disa/] exp5ses  7a7  
,9 g5]al  ,section #aih;,a7b77#b7 ( !   
,int]nal ,rev5ue ,code ( #aihf is       
am5d$--  7#a7 by /rik+ be=e ,janu>y #a1 
#bjaj 9 subp>agraph 7,a7 & ins]t+ dur+ !
 p]iod beg9n+ aft] ,decemb] #ca1 #bjjg1 
& be=e ,janu>y #a1 #bjaj1 or dur+ !     
p]iod beg9n+ aft] ,decemb] #ca1 #bjaa1 &
 be=e ,janu>y #a1 #bjae1 &  7#b7 by     
/rik+ be=e su* date ea* place x appe>s 9
 subp>agraphs 7,b7 & 7,c7 & ins]t+ dur+ 
any su* p]iod4  7b7  ,effective date  ,!

 am5dm5t made by ?is section %all apply 
to am\nts paid or incurr$ aft] ,decemb] 
#ca1 #bjaa1 9 connection ) disa/]s      
decl>$ aft] su* date4  #ajb4  ,increas$ 
limitation on *>itable contributions =  
disa/] relief  7a7  ,individuals        
,p>agraph 7#a7 ( section #agj7;b7 ( !   
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by r$esignat+ subp>agraphs 7,f7 & 7,g7 z
 subp>agraphs 7,g7 & 7,h71 respectively1
 & by ins]t+ aft] subp>agraph 7,e7 !    
foll[+ new subp>agraph3  7,f7  ,qualifi$
 disa/] contributions  7i7  ,9 g5]al    
,any qualifi$ disa/] contribution %all  
be all[$ to ! ext5t t ! aggregate ( su* 
contributions does n exce$ ! excess (   
#hj p]c5t ( ! taxpay]'s contribution    
base ov] ! am\nt ( all o!r *>itable     
contributions all[able "u ?is p>agraph4 
7ii7  ,c>ryov]  ,if ! aggregate am\nt ( 
contributions describ$ 9 clause 7i7     
exce$s ! limitation "u clause 7i71 su*  
excess %all be treat$ 79 a mann]        
consi/5t ) ! rules ( subsection 7d77#a77
 z a *>itable contribution to :i* clause

 7i7 applies 9 ea* ( ! #e succe$+ ye>s 9
 ord] ( "t4  7iii7  ,coord9ation ) o!r  
subp>agraphs  ,= purposes ( apply+ ?is  
subsection & subsection 7d77#a71        
contributions describ$ 9 clause 7i7 %all
 n be treat$ z describ$ 9 subp>agraph   
7,a7 & su* subp>agraph %all be appli$   
)\t reg>d to su* contributions4  7iv7   
,qualifi$ disa/] contributions  ,=      
purposes ( ?is subp>agraph1 ! t]m       
qualifi$ disa/] contribution means any  
*>itable contribution if--  7,i7 su*    
contribution is = relief ef=ts relat$ to
 a f$]ally decl>$ disa/] 7z def9$ 9     
section #afe7;h77#c77;,c77i771  7,,ii7  
su* contribution is made dur+ ! p]iod   
beg9n+ on ! applicable disa/] date )    
respect to ! disa/] describ$ 9 subclause
 7,i7 & end+ on ,decemb] #ca1 #bjad1 &  
7,,iii7 su* contribution is made 9 ca%  
to an organization describ$ 9           
subp>agraph 7,a7 7o!r ?an an            
organization describ$ 9 section         
#eji7;a77#c774  ,su* t]m %all n include 
a contribution if ! contribution is =   

e/abli%m5t ( a new1 or ma9t5ance 9 an   
exi/+1 donor advis$ fund 7z def9$ 9     
section #diff7;d77#b774  7v7            
,applicable disa/] date  ,= purposes (  
clause 7iv77,,ii71 ! t]m applicable     
disa/] date means1 ) respect to any     
f$]ally decl>$ disa/] describ$ 9 clause 
7iv77,i71 ! date on :i* ! disa/] giv+   
rise to ! ,presid5tial decl>ation       
describ$ 9 section #afe7;h77#c77;,c77i7 
occurr$4  7vi7  ,sub/antiation          
requirem5t  ,?is p>agraph %all n apply  
to any qualifi$ disa/] contribution     
unless ! taxpay] obta9s f su*           
organization to :i* ! contribution 0    
made a contemporane\s writt5 ackn[l$gm5t
 7)9 ! mean+ ( subsection 7f77#h77 t su*
 contribution 0 us$ 7or is to be us$7 = 
a purpose describ$ 9 clause 7iv77,,iii74
  4  7b7  ,corporations  7#a7  ,9 g5]al 
,p>agraph 7#b7 ( section #agj7;b7 ( !   
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by r$esignat+ subp>agraph 7,c7 z        
subp>agraph 7,d7 & by ins]t+ aft]       
subp>agraph 7,b7 ! foll[+ new           

subp>agraph3  7,c7  ,qualifi$ disa/]    
contributions  7i7  ,9 g5]al  ,any      
qualifi$ disa/] contribution %all be    
all[$ to ! ext5t t ! aggregate ( su*    
contributions does n exce$ ! excess (   
#bj p]c5t ( ! taxpay]'s taxable income  
ov] ! am\nt ( *>itable contributions    
all[$ "u subp>agraph 7,a74  7ii7        
,c>ryov]  ,if ! aggregate am\nt (       
contributions describ$ 9 clause 7i7     
exce$s ! limitation "u clause 7i71 su*  
excess %all be treat$ 79 a mann]        
consi/5t ) ! rules ( subsection 7d77#a77
 z a *>itable contribution to :i* clause
 7i7 applies 9 ea* ( ! #e succe$+ ye>s 9
 ord] ( "t4  7iii7  ,qualifi$ disa/]    
contribution  ,! t]m qualifi$ disa/]    
contribution has ! mean+ giv5 su* t]m "u
 p>agraph 7#b77;,f77iv74  7iv7          
,sub/antiation requirem5t  ,?is p>agraph
 %all n apply to any qualifi$ disa/]    
contribution unless ! taxpay] obta9s f  
su* organization to :i* ! contribution 0
 made a contemporane\s writt5           
ackn[l$gm5t 7)9 ! mean+ ( subsection    

7f77#h77 t su* contribution 0 us$ 7or is
 to be us$7 = a purpose describ$ 9      
p>agraph 7#a77;,f77iv77,,iii74  4  7#b7 
,con=m+ am5dm5ts  7,a7 ,subp>agraph 7,a7
 ( section #agj7;b77#b7 ( su* ,code is  
am5d$ by /rik+ subp>agraph 7,b7 applies 
& ins]t+ subp>agraphs 7,b7 & 7,c7 apply4
  7,b7 ,subp>agraph 7,b7 ( section      
#agj7;b77#b7 ( su* ,code is am5d$ by    
/rik+ subp>agraph 7,a7 & ins]t+         
subp>agraphs 7,a7 & 7,c74  7c7          
,effective date  ,! am5dm5ts made by ?is
 section %all apply to disa/]s aris+ 9  
taxable ye>s end+ aft] ,decemb] #ca1    
#bjaa4  #ajc4  ,losses attributable to  
disa/]s 9 #bjab1 #bjac1 & #bjad  7a7    
,waiv] ( adju/$ gross income limitation2
 increase 9 /&>d d$uction by disa/]     
casualty loss  ,subclause 7,i7 ( section
 #afe7;h77#c77;,b77i7 ( ! ,int]nal      
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
be=e ,janu>y #a1 #bjaj & ins]t+ dur+ !  
p]iod beg9n+ aft] ,decemb] #ca1 #bjjg1 &
 be=e ,janu>y #a1 #bjaj1 or dur+ ! p]iod
 beg9n+ aft] ,decemb] #ca1 #bjaa1 & be=e

 ,janu>y #a1 #bjae4  7b7  ,loss all[$   
:e!r or n individual itemiz$ d$uctions  
,section #fb7;a7 ( ! ,int]nal ,rev5ue   
,code ( #aihf is am5d$ by ins]t+ aft]   
p>agraph 7#ba7 ! foll[+ new p>agraph3   
7#bb7  ,disa/] casualty losses  ,any net
 disa/] loss 7z def9$ 9 section         
#afe7;h77#c77;,b774  4  7c7  ,te*nical  
am5dm5t  ,clause 7i7 ( section          
#afe7;h77#c77;,c7 ( ! ,int]nal ,rev5ue  
,code ( #aihf is am5d$ by ins]t+ major  
aft] means any4  7d7  ,effective date   
,! am5dm5ts made by ?is section %all    
apply to disa/]s decl>$ 9 taxable ye>s  
beg9n+ aft] ,decemb] #ca1 #bjaa4  7e7   
,use ( am5d$ income tax returns ,to take
 into acc\nt receipt ( c]ta9 casualty   
loss grants by disall[+ previ\sly tak5  
casualty loss d$uctions  7#a7  ,9 g5]al 
,not)/&+ any o!r provision ( ! ,int]nal 
,rev5ue ,code ( #aihf1 if a taxpay]--   
7,a7 claims a d$uction = any taxable ye>
 ) respect to a casualty loss to a      
pr9cipal resid5ce 7)9 ! mean+ ( section 
#aba ( su* ,code7 result+ f any f$]ally 

decl>$ disa/] 7z def9$ 9 section        
#afe7;h77#c77;,c7 ( su* ,code7 occurr+  
dur+ ! p]iod beg9n+ aft] ,decemb] #ca1  
#bjaa1 & be=e ,janu>y #a1 #bjae1 &  7,b7
 9 a subsequ5t taxable ye> receives a   
grant "u any ,f$]al or ,/ate program z  
reimbursem5t = su* loss1  su* taxpay]   
may elect to file an am5d$ income tax   
return = ! taxable ye> 9 :i* su*        
d$uction 0 all[$ 7& = any taxable ye> to
 :i* su* d$uction is c>ri$7 & r$uce 7b n
 bel[ z]o7 ! am\nt ( su* d$uction by !  
am\nt ( su* reimbursem5t4  7#b7  ,"t (  
fil+ am5d$ return  ,p>agraph 7#a7 %all  
apply ) respect to any grant only if any
 am5d$ income tax returns ) respect to  
su* grant are fil$ n lat] ?an ! lat] (--
  7,a7 ! due date = fil+ ! tax return = 
! taxable ye> 9 :i* ! taxpay] receives  
su* grant1 or  7,b7 ! date :i* is #a ye>
 aft] ! date ( ! enactm5t ( ?is ,act4   
7#c7  ,waiv] ( p5alties & int]e/  ,any  
und]paym5t ( tax result+ f ! r$uction "u
 p>agraph 7#a7 ( ! am\nt o!rwise        
all[able z a d$uction %all n be subject 

to any p5alty or int]e/ "u su* ,code if 
su* tax is paid n lat] ?an #a ye> aft] !
 fil+ ( ! am5d$ return to :i* su*       
r$uction relates4  #ajd4  ,net op]at+   
losses attributable to disa/]s 9 #bjab1 
#bjac1 & #bjad  7a7  ,9 g5]al           
,subclause 7,i7 ( section               
#agb7;j77#a77;,a77i7 ( ! ,int]nal       
,rev5ue ,code ( #aihf is am5d$ by /rik+ 
be=e ,janu>y #a1 #bjaj & ins]t+ dur+ !  
p]iod beg9n+ aft] ,decemb] #ca1 #bjjg1 &
 be=e ,janu>y #a1 #bjaj1 or dur+ ! p]iod
 beg9n+ aft] ,decemb] #ca1 #bjaa1 & be=e
 ,janu>y #a1 #bjae4  7b7  ,effective    
date  ,! am5dm5ts made by ?is section   
%all apply to losses aris+ 9 taxable    
ye>s beg9n+ aft] ,decemb] #ca1 #bjaa1 9 
connection ) disa/]s decl>$ aft] su*    
date4  #aje4  ,waiv] ( c]ta9 mortgage   
rev5ue bond requirem5ts foll[+ #bjab1   
#bjac1 & #bjad disa/]s  7a7  ,9 g5]al   
,section #adc7k7 ( ! ,int]nal ,rev5ue   
,code ( #aihf is am5d$--  7#a7 by       
r$esignat+ p>agraph 7#ab71 z add$ by    
section #gji7;a7 ( ! ,tax ,ext5d]s &    

,alt]native ,m9imum ,tax ,relief ,act ( 
#bjjh1 z p>agraph 7#ac71 &  7#b7 by     
/rik+ be=e ,janu>y #a1 #bjaj 9          
subp>agraphs 7,a77i7 & 7,b77i7 ( su*    
p>agraph & ins]t+ dur+ ! p]iod beg9n+   
aft] ,decemb] #ca1 #bjjg1 & be=e ,janu>y
 #a1 #bjaj1 or dur+ ! p]iod beg9n+ aft] 
,decemb] #ca1 #bjaa1 & be=e ,janu>y #a1 
#bjae4  7b7  ,effective date  ,!        
am5dm5ts made by ?is section %all apply 
to disa/]s occurr+ aft] ,decemb] #ca1   
#bjaa4  #ajf4  ,increas$ exp5s+ & bonus 
depreciation = qualifi$ disa/] assi/ance
 prop]ty foll[+ #bjab1 #bjac1 & #bjad   
disa/]s  7a7  ,9 g5]al  ,subclause 7,i7 
( section #afh7n77#b77;,a77ii7 ( !      
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by /rik+ be=e ,janu>y #a1 #bjaj & ins]t+
 dur+ ! p]iod beg9n+ aft] ,decemb] #ca1 
#bjjg1 & be=e ,janu>y #a1 #bjaj1 or dur+
 ! p]iod beg9n+ aft] ,decemb] #ca1      
#bjaa1 & be=e ,janu>y #a1 #bjae4  7b7   
,removal ( exclusion  ,section          
#afh7n77#b77;,b77i7 ( su* ,code is am5d$
 by ins]t+ & at ! end ( subclause 7,i71 

by /rik+ 1 & at ! end ( subclause 7,,ii7
 & ins]t+ a p]iod1 & by /rik+ subclause 
7,,iii74  7c7  ,effective date  ,!      
am5dm5ts made by ?is section %all apply 
to prop]ty plac$ 9 s]vice aft] ,decemb] 
#ca1 #bjaa1 ) respect to disa/]s decl>$ 
aft] su* date4  #ajg4  ,increase 9 new  
m>kets tax cr$it = inve/m5ts 9 community
 developm5t entities s]v+ #bjab1 #bjac1 
& #bjad disa/] areas  7a7  ,9 g5]al     
,subsection 7f7 ( section #de;,d ( !    
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new p>agraph3 
7#d7  ,increas$ special allocation =    
community developm5t entities s]v+      
#bjab1 #bjac1 & #bjad disa/] areas  7,a7
  ,9 g5]al  ,9 ! case ( ea* cal5d> ye>  
:i* beg9s aft] #bjab & be=e #bjag1 ! new
 m>kets tax cr$it limitation %all be    
increas$ by an am\nt equal to           
#ejj1jjj1jjj1 to be allocat$ among      
qualifi$ community developm5t entities  
to make qualifi$ l[-income community    
inve/m5ts )9 any #bjab1 #bjac1 or #bjad 
f$]ally decl>$ disa/] area4  7,b7       

,allocation ( increase  ,! am\nt ( !    
increase 9 limitation "u subp>agraph    
7,a7 %all be allocat$ by ! ,secret>y "u 
p>agraph 7#b7 to qualifi$ community     
developm5t entities & %all give priority
 to su* entities ) a record ( hav+      
successfully provid$ capital or te*nical
 assi/ance to bus9esses or communities  
)9 any #bjab1 #bjac1 or #bjad f$]ally   
decl>$ disa/] area or areas = :i* !     
allocation is reque/$4  7,c7            
,application ( c>ry=w>d  ,p>agraph 7#c7 
%all be appli$ sep>ately ) respect to ! 
am\nt ( any increase "u subp>agraph     
7,a74  7,d7  #bjab1 #bjac1 or #bjad     
f$]ally decl>$ disa/] area  ,= purposes 
( ?is p>agraph1 ! t]m #bjab1 #bjac1 or  
#bjad f$]ally decl>$ disa/] area means  
any disa/] area result+ f any f$]ally   
decl>$ disa/] occurr+ aft] ,decemb] #ca1
 #bjaa1 & be=e ,janu>y #a1 #bjae4 ,=    
purposes ( ! prec$+ s5t5ce1 ! t]ms      
f$]ally decl>$ disa/] & disa/] area h ! 
mean+s giv5 su* t]ms 9 section          
#afe7;h77#c74  4  7b7  ,effective date  

,! am5dm5ts made by ?is section %all    
apply to cal5d> ye>s beg9n+ aft] #bjab4 
#ajh4  ,special rules = use ( retirem5t 
funds 9 connection ) f$]ally decl>$     
disa/]s 9 #bjab1 #bjac1 or #bjad  7a7   
,tax-,favor$ )drawals f retirem5t plans 
7#a7  ,9 g5]al  ,p>agraph 7#b7 ( section
 #gb7t7 ( ! ,int]nal ,rev5ue ,code (    
#aihf is am5d$ by add+ at ! end ! foll[+
 new subp>agraph3  7,h7  ,di/ributions f
 retirem5t plans 9 connection ) f$]ally 
decl>$ disa/]s dur+ #bjab1 #bjac1 &     
#bjad  ,any qualifi$ #bjab1 #bjac1 or   
#bjad disa/] recov]y di/ribution4  4    
7#b7  ,qualifi$ disa/] recov]y          
di/ribution  ,section #gb7t7 ( su* ,code
 is am5d$ by add+ at ! end ! foll[+ new 
p>agraph3  7#aa7  ,qualifi$ #bjab1      
#bjac1 or #bjad disa/] recov]y          
di/ribution  ,= purposes ( p>agraph     
7#b77;,h7--  7,a7  ,9 g5]al  ,except z  
provid$ 9 subp>agraph 7,b71 ! t]m       
qualifi$ #bjab1 #bjac1 or #bjad disa/]  
recov]y di/ribution means1 ) respect to 
any f$]ally decl>$ disa/] occurr+ dur+  

#bjab1 #bjac1 or #bjad1 any di/ribution 
f an eligible retirem5t plan made on or 
aft] ! applicable disa/] date & be=e    
,janu>y #a1 #bjaf1 to an individual ^:  
pr9cipal place ( abode on ! applicable  
disa/] date1 is locat$ 9 ! disa/] area &
 :o has su/a9$ an economic loss by      
reason ( su* f$]ally decl>$ disa/]4     
7,b7  ,doll> limitation  7i7  ,9 g5]al  
,= purposes ( ?is subsection1 !         
aggregate am\nt ( di/ributions receiv$  
by an individual ) respect to any       
f$]ally decl>$ disa/] occurr+ dur+      
#bjab1 #bjac1 or #bjad %all n exce$     
#ajj1jjj4  7ii7  ,treatm5t ( plan       
di/ributions  ,if a di/ribution to an   
individual w\ld 7)\t reg>d to clause    
7i77 be a qualifi$ #bjab1 #bjac1 or     
#bjad disa/] recov]y di/ribution1 a plan
 %all n be treat$ z violat+ any         
requirem5t ( ?is title m]ely because !  
plan treats su* di/ribution z a qualifi$
 #bjab1 #bjac1 or #bjad disa/] recov]y  
di/ribution1 unless ! aggregate am\nt ( 
su* di/ributions f all plans ma9ta9$ by 

! employ] 7& any memb] ( any controll$  
gr\p :i* includes ! employ]7 to su*     
individual ) respect to any f$]ally     
decl>$ disa/] occurr+ dur+ #bjab1 #bjac1
 or #bjad exce$s #ajj1jjj4  7iii7       
,controll$ gr\p  ,= purposes ( clause   
7ii71 ! t]m controll$ gr\p means any    
gr\p treat$ z a s+le employ] "u         
subsection 7b71 7c71 7m71 or 7o7 (      
section #dad4  7,c7  ,am\nt di/ribut$   
may be repaid  7i7  ,9 g5]al  ,any      
individual :o receives a qualifi$ #bjab1
 #bjac1 or #bjad disa/] recov]y         
di/ribution may1 at any "t dur+ ! #c-ye>
 p]iod beg9n+ on ! day aft] ! date on   
:i* su* di/ribution 0 receiv$1 make "o  
or m contributions 9 an aggregate am\nt 
n to exce$ ! am\nt ( su* di/ribution to 
an eligible retirem5t plan ( :i* su*    
individual is a b5efici>y & to :i* a    
rollov] contribution ( su* di/ribution  
c\ld be made "u section #djb7;c71       
#djc7;a77#d71 #djc7;b77#h71             
#djh7;d77#c71 or #deg7;e77#af71 z ! case
 may be4  7ii7  ,treatm5t ( repaym5ts ( 

di/ributions f eligible retirem5t plans 
o!r ?an iras  ,= purposes ( ?is title1  
if a contribution is made pursuant to   
clause 7i7 ) respect to a qualifi$      
#bjab1 #bjac1 or #bjad disa/] recov]y   
di/ribution f an eligible retirem5t plan
 o!r ?an an individual retirem5t plan1  
!n ! taxpay] %all1 to ! ext5t ( ! am\nt 
( ! contribution1 be treat$ z hav+      
receiv$ ! qualifi$ #bjab1 #bjac1 or     
#bjad disa/] recov]y di/ribution 9 an   
eligible rollov] di/ribution 7z def9$ 9 
section #djb7;c77#d77 & z hav+ transf]r$
 ! am\nt to ! eligible retirem5t plan 9 
a direct tru/ee to tru/ee transf] )9 #fj
 days ( ! di/ribution4  7iii7  ,treatm5t
 ( repaym5ts = di/ributions f iras  ,=  
purposes ( ?is title1 if a contribution 
is made pursuant to clause 7i7 ) respect
 to a qualifi$ #bjab1 #bjac1 or #bjad   
disa/] recov]y di/ribution f an         
individual retirem5t plan 7z def9$ by   
section #ggja7;a77#cg771 !n1 to ! ext5t 
( ! am\nt ( ! contribution1 ! qualifi$  
#bjab1 #bjac1 or #bjad disa/] recov]y   

di/ribution %all be treat$ z a          
di/ribution describ$ 9 section          
#djh7;d77#c7 & z hav+ be5 transf]r$ to !
 eligible retirem5t plan 9 a direct     
tru/ee to tru/ee transf] )9 #fj days ( !
 di/ribution4  7,d7  ,income inclusion  
spread ov] #c-ye> p]iod  7i7  ,9 g5]al  
,9 ! case ( any qualifi$ #bjab1 #bjac1  
or #bjad disa/] recov]y di/ribution1    
unless ! taxpay] elects n to h ?is      
p>agraph apply = any taxable ye>1 any   
am\nt requir$ to be includ$ 9 gross     
income = su* taxable ye> %all be s      
includ$ ratably ov] ! #c-taxable-ye>    
p]iod beg9n+ ) su* taxable ye>4  7ii7   
,special rule  ,= purposes ( clause 7i71
 rules simil> to ! rules ( subp>agraph  
7,e7 ( section #djh;,a7d77#c7 %all      
apply4  7,e7  ,o!r def9itions  7i7      
,f$]ally decl>$ disa/]2 disa/] area  ,! 
t]ms f$]ally decl>$ disa/] & disa/] area
 h ! mean+s giv5 su* t]ms "u section    
#afe7;h77#c77;,c74  7ii7  ,applicable   
disa/] date  ,! t]m applicable disa/]   
date means1 ) respect to any f$]ally    

decl>$ disa/]1 ! date on :i* su* f$]ally
 decl>$ disa/] occurs4  7iii7  ,eligible
 retirem5t plan  ,! t]m eligible        
retirem5t plan %all h ! mean+ giv5 su*  
t]m by section #djb7;c77#h77;,b74  7,f7 
,special rules  7i7  ,exemption (       
di/ributions f tru/ee to tru/ee transf] 
& )hold+ rules  ,= purposes ( sections  
#dja7;a77#ca71 #djb7;f71 & #cdje1       
qualifi$ #bjab or #bjac disa/] recov]y  
di/ributions %all n be treat$ z eligible
 rollov] di/ributions4  7ii7  ,qualifi$ 
#bjab1 #bjac1 or #bjad disa/] recov]y   
di/ributions treat$ z meet+ plan        
di/ribution requirem5ts  ,= purposes (  
?is title1 a qualifi$ #bjab1 #bjac1 or  
#bjad disa/] recov]y di/ribution %all be
 treat$ z meet+ ! requirem5ts ( sections
 #dja7k77#b77;,b77i71                   
#djc7;b77#g77;,a77ii71 #djc7;b77#aa71 & 
#deg7;d77#a77;,a74  4  7#c7  ,effective 
date  ,! am5dm5ts made by ?is subsection
 %all apply to di/ributions ) respect to
 disa/] decl>$ aft] ,decemb] #ca1 #bjaa4
  7b7  ,loans f qualifi$ plans  7#a7  ,9

 g5]al  ,subsection 7p7 ( section #gb ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by add+ at ! end ! foll[+ new     
p>agraph3  7#f7  ,increase 9 limit on   
loans n treat$ z di/ributions ) respect 
to #bjab1 #bjac1 & #bjad disa/]s  7,a7  
,9 g5]al  ,9 ! case ( any loan f a      
qualifi$ employ] plan to a qualifi$     
individual made dur+ ! applicable       
p]iod--  7i7 clause 7i7 ( p>agraph      
7#b77;,a7 %all be appli$ by sub/itut+   
#ajj1jjj = #ej1jjj1 &  7ii7 clause 7ii7 
( su* p>agraph %all be appli$ by        
sub/itut+ ! pres5t value ( !            
non=feitable accru$ b5efit ( ! employee 
"u ! plan = "o-half ( ! pres5t value ( !
 non=feitable accru$ b5efit ( ! employee
 "u ! plan4  7,b7  ,delay ( repaym5t  ,9
 ! case ( a qualifi$ individual ) an    
out/&+ loan on or aft] ! applicable     
disa/] date f a qualifi$ employ] plan-- 
7i7 if ! due date pursuant to           
subp>agraph 7,b7 or 7,c7 ( p>agraph 7#b7
 = any repaym5t ) respect to su* loan   
occurs dur+ ! p]iod beg9n+ on !         

applicable disa/] date & end+ on        
,decemb] #ca1 #bjad1 su* due date %all  
be delay$ = #a ye>1  7ii7 any subsequ5t 
repaym5ts ) respect to any su* loan %all
 be appropriately adju/$ to reflect !   
delay 9 ! due date "u clause 7i7 & any  
int]e/ accru+ dur+ su* delay1 &  7iii7 9
 det]m9+ ! #e-ye> p]iod & ! t]m ( a loan
 "u subp>agraph 7,b7 or 7,c7 ( p>agraph 
7#b71 ! p]iod describ$ 9 clause 7i7 %all
 be disreg>d$4  7,c7  ,def9itions  ,=   
purposes ( ?is p>agraph--  7i7          
,qualifi$ individual  ,! t]m qualifi$   
individual means1 ) respect to any      
f$]ally decl>$ disa/] occurr+ dur+      
#bjab1 #bjac1 or #bjad1 an individual ^:
 pr9cipal place ( abode on ! applicable 
disa/] date is locat$ 9 ! disa/] area & 
:o has su/a9$ an economic loss by reason
 ( su* f$]ally decl>$ disa/]4  7ii7     
,applicable p]iod  ,! applicable p]iod  
is ! p]iod beg9n+ on ! applicable disa/]
 date & end+ on ,decemb] #ca1 #bjad4    
7iii7  ,f$]ally decl>$ disa/]2 disa/]   
area  ,! t]ms f$]ally decl>$ disa/] &   

disa/] area h ! mean+s giv5 su* t]ms "u 
section #afe7;h77#c77;,c74  7iv7        
,applicable disa/] date  ,! t]m         
applicable disa/] date means1 ) respect 
to any f$]ally decl>$ disa/]1 ! date on 
:i* su* f$]ally decl>$ disa/] occurs4  4
  7#b7  ,effective date  ,! am5dm5t made
 by ?is subsection %all apply to loans  
made ) respect to disa/] decl>$ aft]    
,decemb] #ca1 #bjaa4  7c7  ,provisions  
relat+ to plan am5dm5ts  7#a7  ,9 g5]al 
,if ?is subsection applies to any       
am5dm5t to any plan or annuity contract1
 su* plan or contract %all be treat$ z  
be+ op]at$ 9 accordance ) ! t]ms ( !    
plan dur+ ! p]iod describ$ 9 p>agraph   
7#b77;,b77i74  7#b7  ,am5dm5ts to :i*   
subsection applies  7,a7  ,9 g5]al  ,?is
 subsection %all apply to any am5dm5t to
 any plan or annuity contract :i* is    
made--  7i7 pursuant to any provision (1
 or am5dm5t made by1 ?is section1 or    
pursuant to any regulation issu$ by !   
,secret>y or ! ,secret>y ( ,labor "u any
 provision (1 or am5dm5t made by1 ?is   

section1 &  7ii7 on or be=e ! la/ day ( 
! fir/ plan ye> beg9n+ on or aft]       
,janu>y #a1 #bjae1 or su* lat] date z ! 
,secret>y may prescribe4  ,9 ! case ( a 
gov]nm5tal plan 7z def9$ 9 section      
#dad7;d771 clause 7ii7 %all be appli$ by
 sub/itut+ ! date :i* is #b ye>s aft] ! 
date o!rwise appli$ "u clause 7ii74     
7,b7  ,conditions  ,?is subsection %all 
n apply to any am5dm5t unless--  7i7    
dur+ ! p]iod--  7,i7 beg9n+ on ! date t 
! provisions (1 & am5dm5ts made by1 ?is 
section or ! regulation describ$ 9      
subp>agraph 7,a77i7 takes effect 7or 9 !
 case ( a plan or contract am5dm5t n    
requir$ by ! provisions (1 or am5dm5ts  
made by1 ?is section or su* regulation1 
! effective date specifi$ by ! plan71 & 
7,,ii7 end+ on ! date describ$ 9        
subp>agraph 7,a77ii7 7or1 if e>li]1 !   
date ! plan or contract am5dm5t is      
adopt$71  ! plan or contract is op]at$ z
 if su* plan or contract am5dm5t 7 9    
effect2 &  7ii7 su* plan or contract    
am5dm5t applies retroactively = su*     

p]iod4  #aji4  ,additional exemption =  
h\s+ qualifi$ disa/] displac$           
individuals  7a7  ,9 g5]al  ,section    
#aea ( ! ,int]nal ,rev5ue ,code ( #aihf 
is am5d$ by add+ at ! end ! foll[+ new  
subsection3  7g7  ,additional exemption 
= c]ta9 disa/]-,displac$ individuals    
7#a7  ,9 g5]al  ,9 ! case ( any taxable 
ye> beg9n+ 9 #bjab1 #bjac1 or #bjad1 !re
 %all be all[$ an exemption ( #ejj = ea*
 qualifi$ disa/]-displac$ individual )  
respect to ! taxpay] = ! taxable ye>4   
7#b7  ,limitations  7,a7  ,doll>        
limitation  ,! exemption "u p>agraph    
7#a7 %all n exce$ #b1jjj1 r$uc$ by !    
am\nt ( ! exemption "u ?is subsection = 
all prior taxable ye>s4  7,b7           
,individuals tak5 into acc\nt only once 
,an individual %all n be tak5 into      
acc\nt "u p>agraph 7#a7 if su*          
individual 0 tak5 into acc\nt "u ?is    
subsection by ! taxpay] = any prior     
taxable ye>4  7,c7  ,id5tify+ in=mation 
requir$  ,an individual %all n be tak5  
into acc\nt "u p>agraph 7#a7 = a taxable

 ye> unless ! taxpay] id5tification     
numb] ( su* individual is includ$ on !  
return ( ! taxpay] = su* taxable ye>4   
7#c7  ,qualifi$ disa/]-displac$         
individual  7,a7  ,9 g5]al  ,= purposes 
( ?is subsection1 ! t]m qualifi$        
disa/]-displac$ individual means1 )     
respect to any taxpay] = any taxable    
ye>1 any qualifi$ individual if su*     
individual is provid$ h\s+ free ( *>ge  
by ! taxpay] 9 ! pr9cipal resid5ce ( !  
taxpay] = a p]iod ( #fj consecutive days
 :i* ends 9 su* taxable ye>4 ,su* t]m   
%all n include ! sp\se or any dep5d5t ( 
! taxpay]4  7,b7  ,qualifi$ individual  
,! t]m qualifi$ individual means any    
individual :o--  7i7 on ! date ( a      
f$]ally decl>$ disa/] occurr+ dur+      
#bjab1 #bjac1 or #bjad ma9ta9$ su*      
individual's pr9cipal place ( abode 9 ! 
disa/] area decl>$ ) respect to su*     
disa/]1 &  7ii7 0 displac$ f su*        
pr9cipal place ( abode by reason ( !    
f$]ally decl>$ disa/]4  ,= purposes ( ! 
prec$+ s5t5ce1 ! t]ms f$]ally decl>$    

disa/] & disa/] area h ! mean+s giv5 su*
 t]ms 9 section #afe7;h77#c74  7#d7     
,comp5sation = h\s+  ,no d$uction %all  
be all[$ "u ?is subsection if ! taxpay] 
receives any r5t or o!r am\nt 7f any    
s\rce7 9 connection ) ! provid+ ( su*   
h\s+4  4  7b7  ,effective date  ,!      
am5dm5t made by ?is section %all apply  
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjaa4  #aaj4  ,exclusions ( c]ta9 
cancellations ( indebt$ness by reason ( 
#bjab1 #bjac1 or #bjad disa/]s  7a7  ,9 
g5]al  ,section #ajh ( ! ,int]nal       
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new subsection3  7j7  
,dis*>ge ( indebt$ness = individuals    
affect$ by #bjab1 #bjac1 & #bjad disa/]s
  7#a7  ,9 g5]al  ,except z provid$ 9   
p>agraph 7#b71 gross income %all n      
include any am\nt :i* 7b = ?is          
subsection7 w\ld be includible 9 gross  
income by reason ( any dis*>ge 79 :ole  
or 9 "p7 ( indebt$ness ( a natural p]son
 describ$ 9 p>agraph 7#c7 by an         
applicable entity 7z def9$ 9 section    

#fjej,p7c77#a77 dur+ ! applicable p]iod4
  7#b7  ,exceptions = bus9ess           
indebt$ness  ,p>agraph 7#a7 %all n apply
 to any indebt$ness incurr$ 9 connection
 ) a trade or bus9ess4  7#c7  ,p]sons   
describ$  ,a natural p]son is describ$ 9
 ?is p>agraph if ! pr9cipal place (     
abode ( su* p]son on ! applicable disa/]
 date 0 locat$ 9 ! disa/] area ) respect
 to any f$]ally decl>$ disa/] occurr+   
dur+ #bjab1 #bjac1 or #bjad4  7#d7      
,applicable p]iod  ,= purposes ( ?is    
subsection1 ! t]m applicable p]iod means
 ! p]iod beg9n+ on ! applicable disa/]  
date & end+ on ! date :i* is #ad mon?s  
aft] su* date4  7#e7  ,o!r def9itions   
,= purposes ( ?is subsection--  7,a7    
,f$]ally decl>$ disa/]2 disa/] area  ,! 
t]ms f$]ally decl>$ disa/] & disa/] area
 h ! mean+s giv5 su* t]ms "u section    
#afe7;h77#c77;,c74  7,b7  ,applicable   
disa/] date  ,! t]m applicable disa/]   
date means1 ) respect to any f$]ally    
decl>$ disa/]1 ! date on :i* su* f$]ally
 decl>$ disa/] occurs4  4  7b7          

,effective date  ,?is section %all apply
 to dis*>ges made on or aft] ,decemb]   
#ca1 #bjaa4  #aaa4  ,special rule =     
det]m9+ e>n$ income ( individuals       
affect$ by f$]ally decl>$ disa/]s  7a7  
,9 g5]al  ,section #cb ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new subsection3  7n7  
,special rule = det]m9+ e>n$ income (   
taxpay]s affect$ by f$]ally decl>$      
disa/]s  7#a7  ,9 g5]al  ,9 ! case ( a  
qualifi$ individual ) respect to any    
f$]ally decl>$ disa/] occurr+ dur+      
#bjab1 #bjac1 or #bjad1 if ! e>n$ income
 ( ! taxpay] = ! taxable ye> :i*        
includes ! applicable disa/] date is    
less ?an ! e>n$ income ( ! taxpay] = !  
prec$+ taxable ye>1 ! cr$it all[$ "u ?is
 section & section #bd7;d7 may1 at !    
election ( ! taxpay]1 be det]m9$ by     
sub/itut+--  7,a7 su* e>n$ income = !   
prec$+ taxable ye>1 =  7,b7 su* e>n$    
income = ! taxable ye> :i* includes !   
applicable date4  7#b7  ,qualifi$       
individual  ,= purposes ( ?is           

subsection1 ! t]m qualifi$ individual   
means1 ) respect to any f$]ally decl>$  
disa/] occurr+ dur+ #bjab1 #bjac1 or    
#bjad1 any individual ^: pr9cipal place 
( abode on ! applicable disa/] date1 0  
locat$--  7,a7 9 any portion ( a disa/] 
area det]m9$ by ! ,presid5t to w>rant   
individual or individual & public       
assi/ance "u ! ,rob]t ,t4 ,/af=d ,disa/]
 ,relief & ,em]g5cy ,assi/ance ,act by  
reason ( ! f$]ally decl>$ disa/]1 or    
7,b7 9 any portion ( ! disa/] area n    
describ$ 9 subp>agraph 7,a7 & su*       
individual 0 displac$ f su* pr9cipal    
place ( abode by reason ( ! f$]ally     
decl>$ disa/]4  7#c7  ,o!r def9itions   
,= purposes ( ?is p>agraph--  7,a7      
,f$]ally decl>$ disa/]2 disa/] area  ,! 
t]ms f$]ally decl>$ disa/] & disa/] area
 h ! mean+s giv5 su* t]ms "u section    
#afe7;h77#c77;,c74  7,b7  ,applicable   
disa/] date  ,! t]m applicable disa/]   
date means1 ) respect to any f$]ally    
decl>$ disa/]1 ! date on :i* su* f$]ally
 decl>$ disa/] occurs4  7#d7  ,special  

rules  7,a7  ,application to jo9t       
returns  ,= purposes ( p>agraph 7#a71 9 
! case ( a jo9t return = a taxable ye>  
:i* includes ! disa/] date--  7i7 su*   
p>agraph %all apply if ei!r sp\se is a  
qualifi$ individual1 &  7ii7 ! e>n$     
income ( ! taxpay] = ! prec$+ taxable   
ye> %all be ! sum ( ! e>n$ income ( ea* 
sp\se = su* prec$+ taxable ye>4  7,b7   
,uni=m application ( election  ,any     
election made "u p>agraph 7#a7 %all     
apply ) respect to bo? sections #bd7;d7 
& ?is section4  7,c7  ,errors treat$ z  
ma!matical error  ,= purposes ( section 
#fbac1 an incorrect use on a return (   
e>n$ income pursuant to p>agraph 7#a7   
%all be treat$ z a ma!matical or cl]ical
 error4  7,d7  ,no effect on det]m9ation
 ( gross income1 etc  ,except z o!rwise 
provid$ 9 ?is subsection1 ?is title %all
 be appli$ )\t reg>d to any sub/itution 
"u p>agraph 7#a74  4  7b7  ,*ild tax    
cr$it  ,section #bd7;d7 ( ! ,int]nal    
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+ new p>agraph3  7#e7   

,special rule = det]m9+ e>n$ income (   
taxpay]s affect$ by f$]ally decl>$      
disa/]s  ,= election by qualifi$        
individuals ) respect to c]ta9 f$]ally  
decl>$ disa/]s to sub/itute e>n$ income 
f ! prec$+ taxable ye>1 see section     
#cb7n74  4  7c7  ,effective date  ,!    
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjaa4  #aab4  ,increase 9         
rehabilitation cr$it = build+s 9 #bjab1 
#bjac1 & #bjad disa/] areas  7a7  ,9    
g5]al  ,section #dg ( ! ,int]nal ,rev5ue
 ,code ( #aihf is am5d$ by add+ at ! end
 ! foll[+ new subsection3  7e7  ,special
 rule = exp5ditures made 9 connection ) 
c]ta9 disa/]s  7#a7  ,9 g5]al  ,9 ! case
 ( qualifi$ rehabilitation exp5ditures  
paid or incurr$ dur+ ! applicable p]iod 
) respect to any qualifi$ rehabilitat$  
build+ or c]tifi$ hi/oric /ructure      
locat$ 9 a disa/] area ) respect to any 
f$]ally decl>$ disa/] occurr+ 9 #bjab1  
#bjac1 or #bjad1 subsection 7a7 %all be 
appli$--  7,a7 by sub/itut+ #ac p]c5t = 

#aj p]c5t 9 p>agraph 7#a7 !re(1 &  7,b7 
by sub/itut+ #bf p]c5t = #bj p]c5t 9    
p>agraph 7#b7 !re(4  7#b7  ,def9itions  
,= purposes ( ?is subsection--  7,a7    
,f$]ally decl>$ disa/]2 disa/] area  ,! 
t]ms f$]ally decl>$ disa/] & disa/] area
 h ! mean+s giv5 su* t]ms "u section    
#afe7;h77#c77;,c74  7,b7  ,applicable   
p]iod  ,! t]m applicable p]iod means !  
p]iod beg9n+ on ! applicable disa/] date
 & end+ on ,decemb] #ca1 #bjae4  7,c7   
,applicable disa/] date  ,! t]m         
applicable disa/] date means1 ) respect 
to any f$]ally decl>$ disa/]1 ! date on 
:i* su* f$]ally decl>$ disa/] occurs4  4
  7b7  ,effective date  ,! am5dm5ts made
 by ?is section %all apply to am\nts    
paid or incurr$ aft] ,decemb] #ca1      
#bjaa4  #aac4  ,advanc$ refund+s ( c]ta9
 tax-exempt bonds  7a7  ,9 g5]al        
,section #adi7;d7 ( ! ,int]nal ,rev5ue  
,code ( #aihf is am5d$ by r$esignat+    
p>agraph 7#g7 z p>agraph 7#h7 & by      
ins]t+ aft] p>agraph 7#f7 ! foll[+ new  
p>agraph3  7#g7  ,special rule ) respect

 to c]ta9 natural disa/]s  7,a7  ,9     
g5]al  ,) respect to a bond describ$ 9  
subp>agraph 7,c71 "o additional advance 
refund+ aft] ! date ( ! enactm5t ( ?is  
p>agraph & be=e ,janu>y #a1 #bjah1 %all 
be all[$ "u ! rules ( ?is subsection    
if--  7i7 ! ,gov]nor ( ! ,/ate          
designates ! advance refund+ bond =     
purposes ( ?is subsection1 &  7ii7 !    
requirem5ts ( subp>agraph 7,e7 are met4 
7,b7  ,c]ta9 private activity bonds  ,) 
respect to a bond describ$ 9 subp>agraph
 7,c7 :i* is an exempt facility bond    
describ$ 9 p>agraph 7#a7 or 7#b7 (      
section #adb7;a71 "o advance refund+    
aft] ! date ( ! enactm5t ( ?is p>agraph 
& be=e ,janu>y #a1 #bjah1 %all be all[$ 
"u ! applicable rules ( ?is subsection  
7not)/&+ p>agraph 7#b7 !re(7 if !       
requirem5ts ( clauses 7i7 & 7ii7 (      
subp>agraph 7,a7 are met4  7,c7  ,bonds 
describ$  ,a bond is describ$ 9 ?is     
p>agraph if1 ) respect to any f$]ally   
decl>$ disa/]1 su* bond--  7i7 0 out/&+ 
on ! applicable disa/] date1 &  7ii7 is 

issu$ by an applicable ,/ate or a       
political subdivision !re(4  7,d7       
,aggregate limit  ,! maximum aggregate  
face am\nt ( bonds :i* may be designat$ 
"u ?is subsection by ! ,gov]nor ( a     
,/ate %all n exce$ #d1ejj1jjj1jjj4  7,e7
  ,additional requirem5ts  ,!           
requirem5ts ( ?is subp>agraph are met ) 
respect to any advance refund+ ( a bond 
describ$ 9 subp>agraph 7,c7 if--  7i7 no
 advance refund+s ( su* bond w\ld be    
all[$ "u ?is title on or aft] !         
applicable disa/] date1  7ii7 ! advance 
refund+ bond is ! only o!r out/&+ bond )
 respect to ! refund$ bond1 &  7iii7 !  
requirem5ts ( section #adh are met )    
respect to all bonds issu$ "u ?is       
p>agraph4  7,f7  ,def9itions  ,=        
purposes ( ?is subsection--  7i7        
,f$]ally decl>$ disa/]2 disa/] area  ,! 
t]ms f$]ally decl>$ disa/] & disa/] area
 h ! mean+s giv5 su* t]ms "u section    
#afe7;h77#c77;,c74  7ii7  ,applicable   
disa/] date  ,! t]m applicable disa/]   
date means1 ) respect to any f$]ally    

decl>$ disa/]1 ! date on :i* su* f$]ally
 decl>$ disa/] occurs4  7iii7           
,applicable ,/ate  ,! t]m applicable    
,/ate means1 ) respect to any f$]ally   
decl>$ disa/]1 any ,/ate 9 :i* a portion
 ( ! disa/] area is locat$4  4  #aad4   
,qualifi$ disa/] area recov]y bonds  7a7
  ,9 g5]al  ,subp>t ,a ( "p ,,iv (      
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] section #adf ! foll[+ new section3
  #adf;,a4  ,qualifi$ disa/] area       
recov]y bonds  7a7  ,9 g5]al  ,=        
purposes ( ?is title1 any qualifi$      
disa/] area recov]y bond %all--  7#a7 be
 treat$ z an exempt facility bond1 &    
7#b7 n be subject to section #adf4  7b7 
,qualifi$ disa/] area recov]y bond  ,=  
purposes ( ?is section1 ! t]m qualifi$  
disa/] area recov]y bond means any bond 
issu$ z "p ( an issue if--  7#a7 #ie    
p]c5t or m ( ! net proce$s ( su* issue  
are to be us$ = qualifi$ project co/s1  
7#b7 su* bond is issu$ by a ,/ate or any
 political subdivision !re( any "p ( :i*

 is 9 a qualifi$ disa/] area1  7#c7 !   
,gov]nor ( ! issu+ ,/ate designates su* 
bond = purposes ( ?is section1 &  7#d7  
su* bond is issu$ aft] ! date ( !       
enactm5t ( ?is section & be=e ,janu>y   
#a1 #bjag4  7c7  ,limitation on am\nt ( 
bonds  7#a7  ,9 g5]al  ,! maximum       
aggregate face am\nt ( bonds :i* may be 
designat$ "u ?is section by any ,/ate   
%all n exce$ #aj1jjj1jjj1jjj4  7#b7     
,movable prop]ty  ,no bonds %all be     
issu$ :i* are to be us$ = movable       
fixtures & equipm5t4  7#c7  ,treatm5t ( 
curr5t refund+ bonds  ,p>agraph 7#a7    
%all n apply to any bond 7or s]ies (    
bonds7 issu$ to refund a qualifi$ disa/]
 area recov]y bond1 if--  7,a7 ! av]age 
maturity date ( ! issue ( :i* ! refund+ 
bond is a "p is n lat] ?an ! av]age     
maturity date ( ! bonds to be refund$ by
 su* issue1  7,b7 ! am\nt ( ! refund+   
bond does n exce$ ! out/&+ am\nt ( !    
refund$ bond1 &  7,c7 ! net proce$s ( ! 
refund+ bond are us$ to r$eem ! refund$ 
bond n lat] ?an #ij days aft] ! date ( !

 issuance ( ! refund+ bond4  ,= purposes
 ( subp>agraph 7,a71 av]age maturity    
%all be det]m9$ 9 accordance ) section  
#adg7;b77#b77;,a74  7d7  ,qualifi$      
project co/s  ,= purposes ( ?is section1
 ! t]m qualifi$ project co/s means ! co/
 ( acquisition1 con/ruction1            
recon/ruction1 & r5ovation (--  7#a7    
resid5tial r5tal prop]ty 7z def9$ 9     
section #adb7;d771  7#b7 nonresid5tial  
real prop]ty 7includ+ fix$ improvem5ts  
associat$ ) su* prop]ty71  7#c7 a       
facility describ$ 9 p>agraph 7#b7 or    
7#c7 ( section #adb7;a71 or  7#d7 public
 utility prop]ty 7z def9$ 9 section     
#afh7;i77#aj771  :i* is locat$ 9 a      
qualifi$ disa/] area & 0 damag$ or      
de/roy$ by reason ( a f$]ally decl>$    
disa/]4  7e7  ,special rules  ,9 apply+ 
?is title to any qualifi$ disa/] area   
recov]y bond1 ! foll[+ modifications    
%all apply3  7#a7 ,section #adg7;d7     
7relat+ to acquisition ( exi/+ prop]ty n
 p]mitt$7 %all be appli$ by sub/itut+   
#ej p]c5t = #ae p]c5t ea* place x       

appe>s4  7#b7 ,section #adh7;f77#d77;,c7
 7relat+ to exception f rebate = c]ta9  
proce$s to be us$ to f9ance con/ruction 
exp5ditures7 %all apply to ! available  
con/ruction proce$s ( bonds issu$ "u ?is
 section4 ,= purposes ( ! prec$+ s5t5ce1
 ! foll[+ sp5d+ requirem5ts %all apply 9
 lieu ( ! requirem5ts 9 clause 7ii7 (   
su* section3  7,a7 #dj p]c5t ( su*      
available con/ruction proce$s are sp5t =
 ! gov]nm5tal purposes ( ! issue )9 !   
#b-ye> p]iod beg9n+ on ! date ! bonds   
are issu$1  7,b7 #fj p]c5t ( su* proce$s
 are sp5t = su* purposes )9 ! #c-ye>    
p]iod beg9n+ on su* date1  7,c7 #hj     
p]c5t ( su* proce$s are sp5t = su*      
purposes )9 ! #d-ye> p]iod beg9n+ on su*
 date1 &  7,d7 #ajj p]c5t ( su* proce$s 
are sp5t = su* purposes )9 ! #e-ye>     
p]iod beg9n+ on su* date4  7#c7         
,repaym5ts ( pr9cipal on f9anc+ provid$ 
by ! issue--  7,a7 may n be us$ to      
provide f9anc+1 &  7,b7 mu/ be us$ n    
lat] ?an ! close ( ! #a/ semiannual     
p]iod beg9n+ aft] ! date ( ! repaym5t to

 r$eem bonds :i* are "p ( su* issue4  ,!
 requirem5t ( subp>agraph 7,b7 %all be  
treat$ z met ) respect to am\nts receiv$
 )9 #e ye>s aft] ! date ( issuance ( !  
issue 7or1 9 ! case ( a refund+ bond1 ! 
date ( issuance ( ! orig9al bond7 if su*
 am\nts are us$ by ! close ( su* #e ye>s
 to r$eem bonds :i* are "p ( su* issue4 
7#d7 ,section #eg7;a77#e7 %all n apply4 
7f7  ,sep>ate issue treatm5t ( portions 
( an issue  ,?is section %all n apply to
 ! portion ( an issue :i* 7if issu$ z a 
sep>ate issue7 w\ld be treat$ z a       
qualifi$ bond or z a bond t is n a      
private activity bond 7det]m9$ )\t reg>d
 to p>agraph 7#a771 if ! issu] elects to
 s treat su* portion4  7g7  ,qualifi$   
disa/] area2 f$]ally decl>$ disa/]  7#a7
  ,qualifi$ disa/] area  ,! t]m qualifi$
 disa/] area means any area det]m9$ to  
w>rant individual or individual & public
 assi/ance f ! ,f$]al ,gov]nm5t "u !    
,rob]t ,t4 ,/af=d ,disa/] ,relief &     
,em]g5cy ,assi/ance ,act by reason ( a  
f$]ally decl>$ disa/] occurr+ dur+ !    

p]iod beg9n+ aft] ,decemb] #ca1 #bjaa1 &
 be=e ,janu>y #a1 #bjae4  7#b7  ,f$]ally
 decl>$ disa/]  ,! t]m f$]ally decl>$   
disa/] has ! mean+ giv5 to su* t]m "u   
section #afe7;h77#c77;,c74  4  7b7      
,cl]ical am5dm5t  ,! table ( sections = 
subp>t ,a ( "p ,,iv ( sub*apt] ,b (     
*apt] #a ( su* ,code is am5d$ by ins]t+ 
aft] ! item relat+ to section #adf !    
foll[+ new item3  ,sec4 #adf;,a4        
,qualifi$ disa/] area recov]y bonds4  4 
7c7  ,effective date  ,! am5dm5ts made  
by ?is section %all apply to obligations
 issu$ aft] ! date ( ! enactm5t ( ?is   
,act4  #aae4  ,additional l[-income h\s+
 cr$it allocations  7a7  ,9 g5]al       
,p>agraph 7#c7 ( section #db7;h7 ( !    
,int]nal ,rev5ue ,code ( #aihf 7relat+  
to limitation on aggregate cr$it        
all[able ) respect to projects locat$ 9 
a ,/ate7 is am5d$ by add+ at ! end !    
foll[+ new subp>agraph3  7,j7  ,increase
 9 ,/ate h\s+ cr$it = ,/ates damag$ by  
natural disa/]s  7i7  ,9 g5]al  ,9 !    
case ( cal5d> ye> #bjae1 ! ,/ate h\s+   

cr$it ceil+ ( ea* ,/ate any portion (   
:i* includes any portion ( a qualify+   
disa/] area %all be increas$ by s mu* ( 
! aggregate h\s+ cr$it doll> am\nt z    
does n exce$ ! applicable limitation    
allocat$ by ! ,/ate h\s+ cr$it ag5cy (  
su* ,/ate = su* cal5d> ye> to build+s   
locat$ 9 qualify+ disa/] areas4  7ii7   
,applicable limitation  ,= purposes (   
clause 7i71 ! applicable limitation is !
 great] (--  7,i7 #h multipli$ by !     
population ( ! qualify+ disa/] areas 9  
su* ,/ate1 or  7,,ii7 #ej p]c5t ( !     
,/ate h\s+ cr$it ceil+ 7det]m9$ )\t     
reg>d to ?is subp>agraph7 = #bjad4      
7iii7  ,applicable p]c5tage  ,= purposes
 ( ?is section1 ! applicable p]c5tage ) 
respect to any build+ to :i* am\nts     
allocat$ "u clause 7i7 %all be det]m9$  
"u subsection 7b77#b71 except t         
subp>agraph 7,a7 !re( %all be appli$ by 
sub/itut+ ,janu>y #a1 #bjae = ,janu>y   
#a1 #bjad4  7iv7  ,allocations treat$ z 
made fir/ f additional allocation am\nt 
= purposes ( det]m9+ c>ryov]  ,=        

purposes ( det]m9+ ! unus$ ,/ate h\s+   
cr$it ceil+ "u subp>agraph 7,c7 = any   
cal5d> ye>1 any increase 9 ! ,/ate h\s+ 
cr$it ceil+ "u clause 7i7 %all be treat$
 z an am\nt describ$ 9 clause 7ii7 ( su*
 subp>agraph4  7v7  ,qualify+ disa/]    
area  ,= purposes ( ?is subp>agraph1 !  
t]m qualify+ f$]ally decl>$ disa/] area 
means--  7,i7 ea* c\nty :i* is det]m9$  
to w>rant individual or individual &    
public assi/ance f ! ,f$]al ,gov]nm5t "u
 a qualify+ natural disa/] decl>ation   
describ$ 9 clause 7vi77,i71 &  7,,ii7   
ea* c\nty n describ$ 9 subclause 7,i7   
:i* is includ$ 9 ! geographical area    
cov]$ by a qualify+ natural disa/]      
decl>ation describ$ 9 subclause 7,,ii7  
or 7,,iii7 ( clause 7vi74  7vi7         
,qualify+ natural disa/] decl>ation  ,= 
purposes ( clause 7v71 ! t]m qualify+   
natural disa/] decl>ation means--  7,i7 
a f$]ally decl>$ disa/] 7z def9$ 9      
section #afe7;h77#c77;,c77 occurr+ dur+ 
! p]iod beg9n+ aft] ,decemb] #ca1 #bjaa1
 & be=e ,janu>y #a1 #bjae1  7,,ii7 a    

natural disa/] decl>$ by ! ,secret>y (  
,agriculture 9 #bjaa due to damag+ wea!r
 & o!r conditions relat+ to ,hurricane  
,ir5e or ,tropical ,/orm ,lee "u section
 #cba7;a7 ( ! ,consolidat$ ,f>m & ,rural
 ,developm5t ,act 7#g ,u4,s4,c4         
#aifa7;a771 or  7,,iii7 a major disa/]  
or em]g5cy designat$ by ! ,presid5t 9   
#bjaa due to damag+ wea!r & o!r         
conditions relat+ to ,hurricane ,ir5e or
 ,tropical ,/orm ,lee "u ! ,rob]t ,t4   
,/af=d ,disa/] ,relief & ,em]g5cy       
,assi/ance ,act 7#db ,u4,s4,c4 #eaba et 
seq474  4  7b7  ,effective date  ,!     
am5dm5t made by ?is section %all take   
effect on ! date ( ! enactm5t ( ?is     
,act4  #aaf4  ,facilitation ( transf] ( 
wat] leas+ & wat] by mutual dit* or     
irrigation companies 9 disa/] areas  7a7
  ,9 g5]al  ,p>agraph 7#ab7 ( section   
#eja7;c7 ( ! ,int]nal ,rev5ue ,code (   
#aihf is am5d$ by add+ at ! end ! foll[+
 new subp>agraph3  7,i7  ,treatm5t (    
mutual dit* or irrigation companies 9   
c]ta9 disa/] areas  7i7  ,9 g5]al  ,9 ! 

case ( a qualifi$ mutual dit* or        
irrigation company or l organization1   
subp>agraph 7,a7 %all be appli$ )\t tak+
 into acc\nt any income receiv$ or      
accru$ dur+ ! applicable p]iod--  7,i7 f
 ! sale1 lease1 or ex*ange ( fee or o!r 
int]e/s 9 real prop]ty1 includ+ int]e/s 
9 wat]1  7,,ii7 f ! sale or ex*ange (   
/ock 9 a mutual dit* or irrigation      
company or l organization or contract   
rights = ! deliv]y or use ( wat]1       
7,,iii7 f ! inve/m5t ( proce$s f sales1 
leases1 or ex*anges "u subclauses 7,i7 &
 7,,ii71 or  7,,iv7 f ! ,unit$ ,/ates1  
or a ,/ate or local gov]nm5t1 result+ f 
! f$]ally decl>$ disa/]1  except t any  
income receiv$ "u subclause 7,i71       
7,,ii71 7,,iii71 or 7,,iv7 :i* is       
di/ribut$ or exp5d$ = exp5ses 7o!r ?an =
 op]ations1 ma9t5ance1 & capital        
improvem5ts7 ( ! qualifi$ mutual dit* or
 irrigation company or l organization   
%all be treat$ z nonmemb] income 9 ! ye>
 9 :i* x is di/ribut$ or exp5d$4  7ii7  
,qualifi$ mutual dit* or irrigation     

company or l organization  ,= purposes (
 ?is p>agraph--  7,i7  ,9 g5]al  ,! t]m 
qualifi$ mutual dit* or irrigation      
company or l organization means any     
mutual dit* or irrigation company or l  
organization to a mutual dit* or        
irrigation company t div]t$1 deliv]$1   
transport$1 /or$1 or us$ its wat] =     
agricultural irrigation purposes on its 
own or ?r\gh its %>ehold]s 9 a qualifi$ 
disa/] area dur+ #bjab1 #bjac1 or #bjad4
  7,,ii7  ,qualifi$ asset  ,! t]m       
qualifi$ asset means any real prop]ty or
 tangible p]sonal prop]ty us$ 9 ! mutual
 dit* or irrigation company's 7or l     
organization's7 sy/em4  7,,iii7         
,multiple areas  ,"u regulations1 if !  
qualifi$ assets ( any mutual dit* or    
irrigation company or l organization are
 locat$ 9 m ?an #a qualifi$ disa/] area1
 all su* areas %all be treat$ z #a area 
& if m ?an #a f$]ally decl>$ disa/] is  
involv$1 ! date on :i* ! la/ ( su*      
disa/]s occurr$ %all be ! date us$ =    
purposes ( ?is p>agraph4  7iii7         

,applicable p]iod  ,= purposes ( ?is    
p>agraph1 ! t]m applicable p]iod means !
 taxable ye> 9 :i* ! f$]ally decl>$     
disa/] occurr$ & ! #e foll[+ taxable    
ye>s4  7iv7  ,o!r def9itions  7,i7      
,qualifi$ disa/] area  ,! t]m qualifi$  
disa/] area means any area det]m9$ to   
w>rant individual or individual & public
 assi/ance f ! ,f$]al ,gov]nm5t "u !    
,rob]t ,t4 ,/af=d ,disa/] ,relief &     
,em]g5cy ,assi/ance ,act by reason ( a  
f$]ally decl>$ disa/] occurr+ dur+ !    
p]iod beg9n+ on ,janu>y #a1 #bjab1 &    
end+ on ,decemb] #ca1 #bjad4  7,,ii7    
,f$]ally decl>$ disa/]  ,! t]m f$]ally  
decl>$ disa/] has ! mean+ giv5 to su*   
t]m "u section #afe7;h77#c77;,c74  4    
7b7  ,effective date  ,! am5dm5t made by
 subsection 7a7 %all apply to taxable   
ye>s end+ aft] ,decemb] #ca1 #bjaa4     
,,ii  ,o!r disa/] tax relief provisions 
#bja4  ,exclusion = disa/] mitigation   
paym5ts receiv$ f ,/ate & local         
gov]nm5ts  7a7  ,9 g5]al  ,p>agraph 7#b7
 ( section #aci7;g7 ( ! ,int]nal ,rev5ue

 ,code ( #aihf is am5d$ by ins]t+ 1 or  
any o!r am\nt :i* is paid by a ,/ate or 
local gov]nm5t or ag5cy or in/rum5tality
 !re(1 aft] 7z 9 effect on su* date74   
7b7  ,effective date  ,! am5dm5t made by
 ?is section %all apply to paym5ts      
receiv$ aft] ! date ( ! enactm5t ( ?is  
,act4  #bjb4  ,natural disa/] funds  7a7
  ,natural disa/] fund  ,subp>t ,c ( "p 
,,ii ( sub*apt] ,e ( *apt] #a ( !       
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ aft] section #dfh;,b ! foll[+ 
new section3  #dfh;,c4  ,special rules =
 natural disa/] funds  7a7  ,9 g5]al    
,if a qualifi$ taxpay] elects !         
application ( ?is section1 !re %all be  
all[$ z a d$uction = any taxable ye> !  
am\nt ( paym5ts made by ! taxpay] to a  
natural disa/] fund dur+ su* taxable    
ye>4  7b7  ,natural disa/] fund  ,! t]m 
natural disa/] fund means a fund meet+ !
 foll[+ requirem5ts3  7#a7  ,designation
  ,! taxpay] designates--  7,a7 ! fund z
 a natural disa/] fund 9 ! mann]        
prescrib$ by ! ,secret>y1 &  7,b7 ! l9e 

or l9es ( bus9ess to :i* ! fund applies4
  7#b7  ,segregation  ,! assets ( ! fund
 are segregat$ f o!r assets ( ! taxpay]4
  7#c7  ,inve/m5ts  7,a7 ,! assets ( !  
fund are ma9ta9$ 9 "o or m qualifi$     
acc\nts & are inve/$ only 9--  7i7      
deposits ) banks ^: deposits are insur$ 
subject to applicable limits by ! ,f$]al
 ,deposit ,insurance ,corporation1 or   
7ii7 9 /ock or o!r securities 9 :i* !   
fund w\ld be p]mitt$ to inve/ if x 7 a  
capital con/ruction fund subject to !   
inve/m5t limitations ( p>agraphs 7#b7 & 
7#c7 ( section #geah7;b77#b74  7,b7 ,all
 inve/m5t e>n+s 7includ+ ga9s & losses7 
f inve/m5ts ( ! fund become "p ( ! fund4
  7#d7  ,contributions to ! fund  ,!    
fund does n accept any deposits 7or o!r 
am\nts7 o!r ?an ca% paym5ts ) respect to
 :i* a d$uction is all[able "u          
subsection 7a7 & e>n+s 7includ+ ga9s &  
losses7 f fund inve/m5ts4  7#e7         
,purpose  ,! fund is e/abli%$ & ma9ta9$ 
= ! purposes ( cov]+ co/s1 exp5ses1 &   
losses 7includ+ bus9ess int]ruption     

losses7 result+ f a ,f$]ally decl>$     
natural disa/] to ! ext5t su* co/s are n
 cov]$ by insurance4  7#f7  ,maximum    
balance  ,! balance ( ! fund does n     
exce$ ! less] (--  7,a7 ! sum (--  7i7  
#aej p]c5t ( ! maximum d$uctible1 &     
7ii7 #ajj p]c5t ( ! maximum co-insurance
 7to ! ext5t n tak5 into acc\nt 9 clause
 7i771  t1 9 ! case ( a ,f$]ally decl>$ 
natural disa/] result+ 9 losses1 !      
taxpay] c\ld be expect$ to pay ) respect
 to prop]ty & bus9ess int]ruption       
insurance ma9ta9$ by ! taxpay] = ! l9e (
 bus9ess to :i* ! fund applies & t w\ld 
cov] losses result+ f a ,f$]ally decl>$ 
natural disa/]1 &  7,b7 ! maximum loss  
"u any insurance cov]age t ! taxpay]    
c\ld reasonably expect to occur = ! l9e 
( bus9ess 9 ! case ( a sev]e natural    
disa/]4  7#g7  ,f9ancial /atem5ts  ,!   
fund or ! balance ( ! fund is record$ 9 
! taxpay]'s f9ancial /atem5ts 9         
accordance ) g5]ally accept$ acc\nt+    
pr9ciples & n z a curr5t asset & !      
footnotes to ! taxpay]'s f9ancial       

/atem5ts include a %ort description ( ! 
fund & its purposes4  7#h7  ,insurance  
,! taxpay] prop]ty insurance ma9ta9$ by 
! qualifi$ taxpay] applies to #ge p]c5t 
or m ( ! prop]ty us$--  7,a7 9 !        
qualifi$ taxpay]'s l9e ( bus9ess to :i* 
! fund relates1 &  7,b7 9 ! ,unit$      
,/ates4  7c7  ,qualifi$ taxpay]  ,=     
purposes ( ?is section1 ! t]m qualifi$  
taxpay] means any taxpay] t--  7#a7     
actively conducts a trade or bus9ess1 & 
7#b7 ma9ta9s prop]ty insurance ) respect
 to su* trade or bus9ess t insures aga9/
 losses 9 natural disa/]s4  7d7         
,failure ,to meet requirem5ts  ,if a    
fund t 0 a natural disa/] fund ceases to
 meet any ( ! requirem5ts ( subsection  
7b7 or a taxpay] :o has a natural disa/]
 fund ceases to meet ! requirem5t (     
subsection 7c71 ! entire balance ( !    
fund %all be deem$ di/ribut$ 9 a        
nonqualifi$ di/ribution at ! "t ! fund  
ceases to meet su* requirem5ts4  7e7    
,taxation ( fund  7#a7  ,9 g5]al  ,!    
e>n+s 7includ+ ga9s & losses7 f !       

inve/m5t & re9ve/m5t ( am\nts held 9 !  
fund %all n be tak5 into acc\nt 9       
det]m9+ ! gross income ( ! taxpay] t    
owns ! fund4  7#b7  ,n a sep>ate taxpay]
  ,a natural disa/] fund %all n be      
consid]$ a sep>ate taxpay] = purposes ( 
?is subtitle4  7f7  ,taxation (         
di/ributions f ! fund  7#a7  ,qualifi$  
di/ributions  ,= purposes ( ?is *apt]1  
qualifi$ di/ributions %all be treat$ 9 !
 same mann] z proce$s f prop]ty or      
bus9ess int]ruption insurance4  7#b7    
,nonqualifi$ di/ributions  7,a7  ,9     
g5]al  ,9 ! case ( any taxable ye> = :i*
 !re is a nonqualifi$ di/ribution--  7i7
 su* nonqualifi$ di/ributions %all be   
exclud$ f ! gross income ( ! taxpay]1 & 
7ii7 ! tax impos$ by ?is *apt] 7det]m9$ 
)\t reg>d to ?is subsection7 %all be    
increas$ by ! product ( ! am\nt ( su*   
nonqualifi$ di/ribution & ! highe/ rate 
( tax specifi$ 9 section #a 7section #aa
 9 ! case ( a corporation74  7,b7  ,tax 
b5efit rule2 coord9ation ) d$uction =   
net op]at+ losses  ,rules simil> to !   

rules ( subp>agraphs 7,b7 & 7,c7 (      
section #geah7;g77#f7 %all apply =      
purposes ( ?is p>agraph4  7#c7          
,additional tax  ,! tax impos$ by ?is   
*apt] = any taxable ye> on any taxpay] t
 a owns natural disa/] fund %all be     
increas$ by ! great] (--  7,a7 #bj p]c5t
 ( ! am\nt ( any non-qualifi$           
di/ributions f ! fund 9 ! taxable ye>1 &
  7,b7 an am\nt equal to int]e/1 at !   
und]paym5t rate e/abli%$ "u section     
#ffba1 on ! nonqualifi$ di/ribution f ! 
"t ! am\nt is add$ to ! fund to ! "t !  
am\nt is di/ribut$4  7#d7  ,int]e/      
calculation  ,= purposes ( calculat+    
int]e/ "u p>agraph 7#c77;,b7--  7,a7 all
 inve/m5t e>n+s 7includ+ ga9s or losses7
 9 taxable ye> %all be treat$ z add$ to 
! fund on ! la/ day ( ! taxable ye>1 &  
7,b7 am\nts di/ribut$ f ! fund %all be  
treat$ z di/ribut$ on a fir/-91 fir/-out
 basis4  7g7  ,def9itions  ,= purposes (
 ?is section--  7#a7  ,f$]ally decl>$   
natural disa/]  ,! t]m ,f$]ally decl>$  
natural disa/] means a natural disa/] t 

is det]m9$ by ,presid5tial decl>ation "u
 ! ,rob]t ,t4 ,/af=d ,disa/] ,relief &  
,em]g5cy ,assi/ance ,act to w>rant      
individual or individual & public       
assi/ance "u su* ,act4  7#b7            
,nonqualifi$ di/ribution  ,! t]m        
nonqualifi$ di/ribution means a         
di/ribution f a natural disa/] fund o!r 
?an a qualifi$ di/ribution4  7#c7       
,qualifi$ acc\nt  ,! t]m qualifi$ acc\nt
 means an acc\nt ) a bank 7z def9$ 9    
section #eha7 or a brok]age acc\nt b    
only if ! inve/m5ts ( su* acc\nts are   
limit$ to ^? p]mitt$ by subsection      
7b77#c7 & no inve/m5ts are made 9 a     
relat$ p]son 7z def9$ 9 section         
#dfe7;b77#c77;,c77 to ! taxpay]4  7#d7  
,qualifi$ di/ribution  7,a7  ,9 g5]al   
,! t]m qualifi$ di/ribution means )     
respect to natural disa/] fund an am\nt 
equal to ! excess (--  7i7 co/s1        
exp5ses1 & losses 7includ+ losses ( a   
type reimbursable by proce$s ( bus9ess  
int]ruption insurance7 incurr$ by !     
taxpay] z a result ( ! ,f$]ally decl>$  

natural disa/] ) respect to ! l9e or    
l9es ( bus9ess = :i* ! fund 0 designat$1
 ov]  7ii7 ! proce$s ( prop]ty & bus9ess
 int]ruption insurance paid = ! b5efit (
 ! taxpay] ) respect to co/s1 exp5ses1 &
 losses describ$ 9 clause 7i74  7,b7    
,limitation  ,a di/ribution f a natural 
disa/] fund %all n be treat$ z a        
qualifi$ di/ribution if su* di/ribution 
is allocat$ to a ,f$]ally decl>$ natural
 disa/] occurr+ m ?an #c ye>s be=e !    
date ( su* di/ribution4  7h7  ,special  
rules  ,= purposes ( ?is section--  7#a7
  ,no d\ble c\nt+  ,any portion ( any   
d$uctible or co9surance tak5 into acc\nt
 "u subsection 7b77#f7 9 det]m9+ !      
maximum balance = a natural disa/] fund 
%all n be tak5 into acc\nt 9 det]m9+ !  
maximum balance = ano!r natural disa/]  
fund4  7#b7  ,excess balance  7,a7  ,9  
g5]al  ,if ! balance ( a natural disa/] 
fund exce$s ! maximum balance p]mitt$ by
 subsection 7b77#f7 by reason ( inve/m5t
 e>n+s or a r$uction 9 ! maximum        
balance1 ! acc\nt %all n cease to be a  

natural disa/] fund z ! result ( exce$+ 
su* limit if ! excess is di/ribut$ )9   
#abj days ( ! date t su* excess fir/    
occurr$4  7,b7  ,treatm5t ( di/ributions
 ( excess balance  ,9 ! case ( any      
di/ribution ( ! excess balance ( a      
natural disa/] fund )9 #abj days ( !    
date t su* excess fir/ occurr$--  7i7   
p>agraphs 7#b7 & 7#c7 ( subsection 7f7  
%all n apply to ! di/ribution ( su*     
excess if di/ribut$ )9 su* p]iod1 &     
7ii7 ! am\nt ( su* di/ribution %all be  
includ$ 9 ! gross income ( ! taxpay] 9 !
 ye> su* di/ribution 0 made4  7,c7      
,anti-abuse rule  ,subp>agraph 7,b7 %all
 n apply 9 ! case ( any r$uction 9 !    
maximum balance result+ f any action ( !
 taxpay] ! prim>y purpose ( :i* 0 to    
r$uce ! maximum balance to enable a     
di/ribution t w\ld n be subject to !    
maximum tax rate calculation or !       
additional tax4  7#c7  ,c]ta9 asset     
acquisitions  ,! transf] ( a natural    
disa/] fund 7or ! portion ( a natural   
disa/] fund7 f "o p]son to ano!r p]son  

%all n con/itute a nonqualifi$          
di/ribution if--  7,a7 su* transf] is "p
 ( a transaction--  7i7 to :i* section  
#cha applies1  7ii7 ! transf]ee acquires
 sub/antially all ( ! assets ( !        
transf]or us$ 9 ! l9e or l9es ( bus9ess 
= :i* ! fund 0 designat$1  7iii7 !      
transf]ee acquires sub/antially all ( ! 
assets ( ! transf]or us$ 9 "o1 b n all1 
( ! l9es ( bus9ess = :i* ! fund 0       
designat$1 or  7iv7 ! transf]ee acquires
 sub/antially all ( ! transf]or's assets
 locat$ 9 a geographical area & us$ 9 a 
l9e ( bus9ess = :i* ! fund 0 designat$1 
&  7,b7 ! transf]ee elects to treat !   
acquir$ natural disa/] fund 7or portion 
!re(7 z a natural disa/] fund = ! l9e ( 
bus9ess = :i* ! transf]or _h previ\sly  
designat$ ! fund & z a cont9uation ( !  
fund 7or pro rata portion !re(7 =       
purposes ( det]m9+ ! additional tax     
impos$ by subsection 7f77#d74  7i7      
,regulations  ,! ,secret>y %all         
prescribe su* regulations z may be      
necess>y or appropriate to c>ry out !   

provisions ( ?is section4  4  7b7       
,cl]ical am5dm5t  ,! table ( sections = 
subp>t ,c ( "p ,,ii ( sub*apt] ,e (     
*apt] #a ( ! ,int]nal ,rev5ue ,code (   
#aihf is am5d$ by ins]t+ aft] ! item    
relat+ to section #dfh;,b ! foll[+ new  
item3  ,sec4 #dfh;,c4 ,special rules =  
natural disa/] funds4  4  7c7           
,effective date  ,! am5dm5t made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjac4