,,ii  #aae? ,,congress  #a/ ,session    
,s4 #aijg  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,octob] #c1 #bjag ,mr4 
,nelson introduc$ ! foll[+ bill2 :i* 0  
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide tax    
relief = disa/] areas1 & = o!r purposes4
  #a4 ,%ort title2 table ( cont5ts  7a7 
,%ort title  ,?is ,act may be cit$ z !  
,national ,disa/] ,tax ,relief ,act (   
#bjag4  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 ,sec4 #aja4 ,exp5s+ ( qualifi$  
disa/] exp5ses4 ,sec4 #ajb4 ,net op]at+ 
losses attributable to disa/]s4 ,sec4   
#ajc4 ,increase 9 new m>kets tax cr$it =
 inve/m5ts 9 community developm5t       
entities s]v+ disa/] areas4 ,sec4 #ajd4 
,exclusions ( c]ta9 cancellations (     
indebt$ness by reason ( disa/]s4 ,sec4  
#aje4 ,advanc$ refund+s ( c]ta9         
tax-exempt bonds4 ,sec4 #ajf4           

,additional l[-income h\s+ cr$it        
allocations4 ,,title ,,ii--,p]man5t     
disa/] tax relief provisions ,sec4 #bja4
 ,exclusion = disa/] mitigation paym5ts 
receiv$ f ,/ate & local gov]nm5ts4 ,sec4
 #bjb4 ,cata/rophe ,sav+s ,acc\nts4     
,,title ,,iii--,o!r p]man5t tax         
provisions ,sec4 #cja4 ,repeal (        
limitation on cov] ov] ( di/ill$ spirits
 taxes to ,virg9 ,isl&s & ,pu]to ,rico4 
,sec4 #cjb4 ,d$uction = income          
attributable to dome/ic production      
activities 9 ,pu]to ,rico made p]man5t4 
,sec4 #cjc4 ,refundable *ild tax cr$it  
p>ity = resid5ts ( ,pu]to ,rico1        
,am]ican ,samoa1 ,guam1 ! ,nor!rn       
,m>iana ,isl&s1 & ! ,virg9 ,isl&s4      
,,title ,,iv--,treatm5t ( c]ta9         
possessions ,sec4 #dja4 ,treatm5t (     
possessions4  ,i ,tax relief relat+ to  
disa/]s  #aja4 ,exp5s+ ( qualifi$ disa/]
 exp5ses  7a7 ,9 g5]al ,"p ,,vi (       
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ by ins]t+
 aft] section #aih ! foll[+3  #aih;,a4  

,exp5s+ ( qualifi$ disa/] exp5ses  7a7  
,9 g5]al ,a taxpay] may elect to treat  
any qualifi$ disa/] exp5ses :i* are paid
 or incurr$ by ! taxpay] z an exp5se :i*
 is n *>geable to capital acc\nt4 ,any  
exp5se :i* is s treat$ %all be all[$ z a
 d$uction = ! taxable ye> 9 :i* x is    
paid or incurr$4  7b7 ,qualifi$ disa/]  
exp5se ,= purposes ( ?is section-- 7#a7 
,9 g5]al ,! t]m qualifi$ disa/] exp5se  
means any exp5diture--  7,a7 :i* is paid
 or incurr$ 9 connection ) a trade or   
bus9ess or ) bus9ess-relat$ prop]ty1    
7,b7 :i* is--  7i7 = ! abatem5t or      
control ( haz>d\s sub/ances t 7 releas$ 
due to a f$]ally decl>$ disa/] occurr+  
dur+ ! p]iod beg9n+ on ,janu>y #a1      
#bjab1 & end+ on ,decemb] #ca1 #bjbb1   
7ii7 = ! removal ( debris f1 or !       
demolition ( /ructures on1 real prop]ty 
:i* is bus9ess-relat$ prop]ty & :i* is  
damag$ or de/roy$ z a result ( a f$]ally
 decl>$ disa/] occurr+ dur+ su* p]iod1  
or  7iii7 = ! repair ( bus9ess-relat$   
prop]ty damag$ z a result ( a f$]ally   

decl>$ disa/] occurr+ dur+ any su*      
p]iod1 &  7,c7 :i* is o!rwise *>geable  
to capital acc\nt4  7#b7 ,special rule =
 replant+ ( citrus plants lo/ by reason 
( casualty ,am\nts paid or incurr$ by a 
taxpay] 9 any taxable ye> beg9n+ aft]   
,decemb] #ca1 #bjaf1 = ! replant+ z     
describ$ 9 section #bfc;,a7d77#b77;,a7 (
 citrus plants :i* 7 lo/ or damag$1 due 
to disease or to a f$]ally decl>$       
disa/]1 :ile su* plants 7 9 ! h&s ( a   
p]son o!r ?an ! taxpay] %all be treat$ z
 a qualifi$ disa/] exp5se ( ! taxpay]   
if--  7,a7 su* o!r p]son has an equity  
int]e/ ( n less ?an #ej p]c5t 9 !       
replant$ citrus plants at all times dur+
 ! taxable ye> 9 :i* su* am\nts are paid
 or incurr$1 & ! taxpay] holds any "p ( 
! rema9+ equity int]e/1 or  7,b7 !      
taxpay] acquir$ ! entirety ( su* o!r    
p]son's equity int]e/ 9 ! l& on :i* !   
lo/ or damag$ citrus plants 7 locat$ at 
! "t ( su* loss or damage1 & ! replant+ 
is on su* l&4  7c7 ,o!r def9itions ,=   
purposes ( ?is section-- 7#a7           

,bus9ess-relat$ prop]ty ,! t]m          
bus9ess-relat$ prop]ty means prop]ty :i*
 is--  7,a7 held by ! taxpay] = use 9 a 
trade or bus9ess or = ! production (    
income1 or  7,b7 describ$ 9 section     
#abba7;a77#a7 9 ! h&s ( ! taxpay]4  7#b7
 ,f$]ally decl>$ disa/] ,! t]m f$]ally  
decl>$ disa/] has ! mean+ giv5 su* t]m  
by section #afe7;i77#e77;,a74  7d7      
,d$uction recaptur$ z ord9>y income on  
sale1 etc ,solely = purposes ( section  
#abde1 9 ! case ( prop]ty ) respect to  
:i* a qualifi$ disa/] exp5se w\ld h be5 
capitaliz$ b = ?is section--  7#a7 !    
d$uction all[$ by ?is section = su*     
exp5se %all be treat$ z a d$uction =    
depreciation1 &  7#b7 su* prop]ty 7if n 
o!rwise section #abde prop]ty7 %all be  
treat$ z section #abde prop]ty solely = 
purposes ( apply+ section #abde to su*  
d$uction4  7e7 ,coord9ation ) o!r       
provisions ,sections #aih1 #bhj;,b1 &   
#dfh %all n apply to am\nts :i* are     
treat$ z exp5ses n *>geable to capital  
acc\nt "u ?is section4  7f7 ,regulations

 ,! ,secret>y %all prescribe su*        
regulations z may be necess>y or        
appropriate to c>ry out ! purposes ( ?is
 section4  7g7 ,t]m9ation ,?is section  
%all n apply to am\nts paid or incurr$  
aft] ,decemb] #ca1 #bjbc4  4  7b7       
,cl]ical am5dm5t ,! table ( sections =  
"p ,,vi ( sub*apt] ,b ( *apt] #a ( !    
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ aft] ! item relat+ to section 
#aih ! foll[+ item3  ,sec4 #aih;,a4     
,exp5s+ ( qualifi$ disa/] exp5ses4  4   
7c7 ,effective date ,! am5dm5ts made by 
?is section %all apply to am\nts paid or
 incurr$ aft] ! date ( ! enactm5t ( ?is 
,act4  #ajb4 ,net op]at+ losses         
attributable to disa/]s  7a7 ,9 g5]al   
,section #agb7;b77#a7 ( ! ,int]nal      
,rev5ue ,code ( #aihf is am5d$ by add+  
at ! end ! foll[+3  7,g7 ,c]ta9 losses  
attributable to f$]ally decl>$ disa/]s  
,9 ! case ( a taxpay] :o has a qualifi$ 
disa/] loss 7z def9$ 9 subsection 7i771 
su* loss %all be a net op]at+ loss      
c>ryback to ea* ( ! #e taxable ye>s     

prec$+ ! taxable ye> ( su* loss4  4  7b7
 ,rules relat+ to qualifi$ disa/] losses
 ,section #agb ( ! ,int]nal ,rev5ue     
,code ( #aihf is am5d$ by r$esignat+    
subsection 7i7 z subsection 7j7 & by    
ins]t+ aft] subsection 7h7 ! foll[+3    
7i7 ,rules relat+ to qualifi$ disa/]    
losses ,= purposes ( ?is section-- 7#a7 
,9 g5]al ,! t]m qualifi$ disa/] loss    
means ! less] (--  7,a7 ! sum (-- 7i7 ! 
losses all[able "u section #afe = !     
taxable ye>--  7,i7 attributable to a   
f$]ally decl>$ disa/] 7z def9$ 9 section
 #afe7;i77#e77;,a77 occurr+ aft]        
,decemb] #ca1 #bjaa1 & be=e ,janu>y #a1 
#bjbc1 &  7,,ii7 occurr+ 9 a disa/] area
 7z def9$ 9 section #afe7;i77#e77;,b771 
&  7ii7 ! d$uction = ! taxable ye> =    
qualifi$ disa/] exp5ses :i* is all[able 
"u section #aih;,a7a71 or :i* w\ld be s 
all[able if n o!rwise treat$ z an       
exp5se1 or  7,b7 ! net op]at+ loss = !  
taxable ye> 9 :i* ! taxpay] _h ! losses 
describ$ 9 subp>agraph 7,a74  7#b7      
,exclusion ,! t]m qualifi$ disa/] loss  

%all n include any loss ) respect to any
 prop]ty describ$ 9 section             
#adjj,n7p77#c74  7#c7 ,coord9ation )    
subsection 7b77#b7 ,= purposes ( apply+ 
subsection 7b77#b71 a qualifi$ disa/]   
loss = any taxable ye> %all be treat$ 9 
a mann] simil> to ! mann] 9 :i* a       
specifi$ liability loss is treat$4  7#d7
 ,election ,any taxpay] entitl$ to a    
#e-ye> c>ryback "u subsection           
7b77#a77;,g7 f any loss ye> may elect to
 h ! c>ryback p]iod ) respect to su*    
loss ye> det]m9$ )\t reg>d to subsection
 7b77#a77;,g74 ,su* election %all be    
made 9 su* mann] z may be prescrib$ by !
 ,secret>y & %all be made by ! due date 
7includ+ ext5sions ( "t7 = fil+ !       
taxpay]'s return = ! taxable ye> ( ! net
 op]at+ loss4 ,su* election1 once made =
 any taxable ye>1 %all be irrevocable = 
su* taxable ye>4  4  7c7 ,effective date
 ,! am5dm5ts made by ?is section %all   
apply to losses aris+ 9 taxable ye>s    
beg9n+ aft] ,decemb] #ca1 #bjaa4  #ajc4 
,increase 9 new m>kets tax cr$it =      

inve/m5ts 9 community developm5t        
entities s]v+ 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+      
disa/] areas  7,a7 ,9 g5]al ,9 ! case ( 
ea* cal5d> ye> beg9n+ aft] ! date ( !   
enactm5t ( ! ,national ,disa/] ,tax     
,relief ,act ( #bjag & be=e ,janu>y #a1 
#bjbc1 = :i* !re is a limitation "u     
p>agraph 7#a71 su* limitation %all be   
increas$ by #ejj1jjj1jjj1 to be allocat$
 among qualifi$ community developm5t    
entities to make qualifi$ l[-income     
community inve/m5ts )9 any cov]$ 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 cov]$  
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 ,cov]$ f$]ally decl>$ disa/]
 area ,= purposes ( ?is p>agraph1 ! t]m 
cov]$ f$]ally decl>$ disa/] area means  
any disa/] area ) respect to :i* a      
f$]ally decl>$ disa/] is decl>$ :i*     
occurs aft] ,decemb] #ca1 #bjaa1 & be=e 
,janu>y #a1 #bjbc4 ,= purposes ( !      
prec$+ s5t5ce1 ! t]ms f$]ally decl>$    
disa/] & disa/] area h ! mean+s giv5 su*
 t]ms 9 section #afe7;i77#e74  4  7b7   
,effective date ,! am5dm5ts made by ?is 
section %all apply to cal5d> ye>s beg9n+
 aft] ,decemb] #ca1 #bjaf4  #ajd4       
,exclusions ( c]ta9 cancellations (     
indebt$ness by reason ( disa/]s  7a7 ,9 
g5]al ,section #ajh ( ! ,int]nal ,rev5ue
 ,code ( #aihf is am5d$ by add+ at ! end
 ! foll[+ new subsection3  7j7 ,dis*>ge 
( indebt$ness = individuals affect$ by  

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 if1 ) respect to any f$]ally   
decl>$ disa/] occurr+ aft] ,decemb] #ca1
 #bjaa1 & be=e ,janu>y #a1 #bjbc1 !     
pr9cipal place ( abode ( su* p]son on ! 
applicable disa/] date 0 locat$ 9 !     
disa/] area4  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 #bd 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;i77#e74  
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 ,! am5dm5t made by
 ?is section %all apply to dis*>ges made
 on or aft] ,decemb] #ca1 #bjae4  #aje4 
,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 #a    
additional advance refund+ aft] ! date (
 ! enactm5t ( ! ,national ,disa/] ,tax  
,relief ,act ( #bjag & be=e ,janu>y #a1 
#bjbc1 %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      
,subp>agraph 7,a7 %all apply ) 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;a7 not)/&+ p>agraph 7#b7 ( ?is    
subsection4  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
 out/&+ on any applicable disa/] date   
:i* may be designat$ "u ?is subsection  
by ! ,gov]nor ( a ,/ate %all n exce$    
#b1jjj1jjj1jjj4  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;i77#e74  
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$4  4 
7b7 ,effective date ,! am5dm5t made by  
?is section %all apply to bonds issu$   
aft] ! date ( ! enactm5t ( ?is ,act4    
#ajf4 ,additional l[-income h\s+ cr$it  
allocations  7a7 ,9 g5]al ,p>agraph 7#c7

 ( section #db7;h7 ( ! ,int]nal ,rev5ue 
,code ( #aihf 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 ( any cal5d> ye> beg9n+ aft] !
 date ( ! enactm5t ( ! ,national ,disa/]
 ,tax ,relief ,act ( #bjag & be=e       
,janu>y #a1 #bjbc1 ! ,/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 = #bjag4  7iii7 ,applicable
 p]c5tage ,= purposes ( ?is section1 !  

applicable p]c5tage ) respect to any    
build+ to :i* am\nts are allocat$ "u    
clause 7i7 %all be det]m9$ "u subsection
 7b77#b74  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;i77#e77 occurr+ aft]      
,decemb] #ca1 #bjaa1 & be=e ,janu>y #a1 
#bjbc1 or  7,,ii7 a natural disa/]      
decl>$ by ! ,secret>y ( ,agriculture4  4
  7b7 ,eligibility = difficult          
developm5t area ,= purposes ( section   
#db ( ! ,int]nal ,rev5ue ,code ( #aihf1 
any area locat$ 9 a disa/] area 7z def9$
 9 section #afe7;i77#e77;,b7 ( !        
,int]nal ,rev5ue ,code ( #aihf7 %all be 
designat$ a difficult developm5t area = 
purposes ( section #db7;d77#e77;,b77iii7
 ( su* ,code = any #bd-mon? p]iod foll[+
 ! date ( a f$]ally decl>$ disa/]1 if ! 
area qualifies to be su* a difficult    
developm5t area at any "t )9 su*        
#bd-mon? p]iod4  7c7 ,effective date ,! 
am5dm5t made by ?is section %all take   
effect on ! date ( ! enactm5t ( ?is     
,act4  ,,ii ,p]man5t 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 an 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 ,cata/rophe 
,sav+s ,acc\nts  7a7 ,9 g5]al ,sub*apt] 
,f ( *apt] #a ( ! ,int]nal ,rev5ue ,code
 ( #aihf 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 ! 
individual's 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 ( ! individual's 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  7#a7  

,9 g5]al ,! 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$uctible is n m ?an #a1jjj1
 #ge1jjj1 &  7,b7 9 ! case ( an         
individual ^: qualifi$ d$uctible is m   
?an #a1jjj1 #aej1jjj4  7#b7 ,qualifi$   
d$uctible ,= purposes ( ?is subsection1 
) respect to an individual1 ! t]m       
qualifi$ d$uctible means ! annual       
d$uctible = ! individual's home[n]s'    
insurance policy4  7d7 ,qualifi$ rollov]
 contribution ,= purposes ( ?is section1
 ! 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] 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 !      
aggregate di/ributions dur+ ! taxable   
ye> d n exce$ ! qualifi$ cata/rophe     
exp5ses ( ! di/ributee dur+ su* 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 ,qualifi$ cata/rophe 
exp5ses ,= purposes ( ?is subsection1 ! 
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#e7 ,exception =     
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 is am5d$ 
by /rik+ or at ! end ( p>agraph 7#e71 by
 ins]t+ or at ! end ( p>agraph 7#f71 &  
by ins]t+ aft] p>agraph 7#f7 ! foll[+   
new p>agraph3  7#g7 a ,cata/rophe ,sav+s
 ,acc\nt 7z def9$ 9 section #ecj;,a7b771
  4  7#b7 ,excess contribution ,section 
#digc ( su* ,code is am5d$ by add+ at ! 
end ! foll[+ new subsection3  7i7       
,excess contributions to ,cata/rophe    
,sav+s ,acc\nts ,= purposes ( ?is       
section1 9 ! case ( a ,cata/rophe ,sav+s
 ,acc\nt 7z def9$ 9 section #ecj;,a7b771
 ! 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$s ! acc\nt balance limit "u section
 #ecj;,a7c77#a74  4  7c7 ,con=m+ am5dm5t
 ,! table ( p>ts = sub*apt] ,f ( *apt]  
#a ( ! ,int]nal ,rev5ue ,code ( #aihf is
 am5d$ by add+ at ! end ! foll[+ new    
item3  ,"p ,,ix--,cata/rophe ,sav+s     
,acc\nts  4  7d7 ,contributions f       

insurance companies ,subsection 7c7 (   
section #hcb ( ! ,int]nal ,rev5ue ,code 
( #aihf 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 contributions to a ,cata/rophe    
,sav+s ,acc\nt 7z def9$ 9 section       
#ecj;,a7b77 dur+ ! taxable ye> to !     
ext5t su* contributions are n excess    
contributions 7z def9$ 9 section        
#digc7;i774  4  7e7 ,cu/odial acc\nts   
treat$ z tru/ ,= purposes ( ?is section1
 a cu/odial acc\nt %all be treat$ z a   
tru/ if-- 7#a7 ! assets ( su* acc\nt are
 held by a bank 7z def9$ 9 section      
#djh7n7 ( ! ,int]nal ,rev5ue ,code (    
#aihf7 or ano!r p]son :o demon/rates1 to
 ! satisfaction ( ! ,secret>y ( !       
,treasury1 t ! mann] 9 :i* su* p]son w  
adm9i/] ! acc\nt w be consi/5t ) !      
requirem5ts ( ?is section1 &  7#b7 !    
cu/odial acc\nt w\ld1 except = ! fact t 
x is n a tru/1 con/itute a ,cata/rophe  
,sav+s ,acc\nt 7z def9$ 9 section       

#ecj;,a7b7 ( ! ,int]nal ,rev5ue ,code ( 
#aihf74  ,9 ! case ( a cu/odial acc\nt  
treat$ z a tru/ by reason ( ! prec$+    
s5t5ce1 ! cu/odian ( su* acc\nt %all be 
treat$ z ! tru/ee !re( = purposes ( !   
,int]nal ,rev5ue ,code ( #aihf4  7f7    
,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjag4  ,,iii 
,o!r p]man5t tax provisions  #cja4      
,repeal ( limitation on cov] ov] (      
di/ill$ spirits taxes to ,virg9 ,isl&s &
 ,pu]to ,rico  7a7 ,9 g5]al ,section    
#gfeb ( ! ,int]nal ,rev5ue ,code ( #aihf
 is am5d$ by /rik+ subsection 7f7 & by  
r$esignat+ subsections 7g7 & 7h7 z      
subsections 7f7 & 7g71 respectively4    
7b7 ,effective date ,! am5dm5ts made by 
?is section %all apply to di/ill$       
spirits br\ght into ! ,unit$ ,/ates aft]
 ,decemb] #ca1 #bjaf4  #cjb4 ,d$uction =
 income attributable to dome/ic         
production activities 9 ,pu]to ,rico    
made p]man5t  7a7 ,9 g5]al ,section     
#aii7;d77#h7 ( ! ,int]nal ,rev5ue ,code 

( #aihf is am5d$ by /rik+ subp>agraph   
7,c74  7b7 ,effective date ,! am5dm5t   
made by ?is section %all apply to       
taxable ye>s beg9n+ aft] ,decemb] #ca1  
#bjaf4  #cjc4 ,refundable *ild tax cr$it
 p>ity = resid5ts ( ,pu]to ,rico1       
,am]ican ,samoa1 ,guam1 ! ,nor!rn       
,m>iana ,isl&s1 & ! ,virg9 ,isl&s  7a7  
,treatm5t ( non-,mirror code possessions
 ,section #bd7;d7 ( ! ,int]nal ,rev5ue  
,code ( #aihf is am5d$ by ins]t+ aft]   
p>agraph 7#b7 ! foll[+ new p>agraph3    
7#c7 ,special rule = ,pu]to ,rico &     
,am]ican ,samoa ,9 ! case ( an          
individual :o is a bona fide resid5t (  
,pu]to ,rico or ,am]ican ,samoa dur+ !  
entire taxable ye>--  7,a7 p>agraph     
7#a77;,b77i7 %all n apply1 &  7,b7      
p>agraph 7#a77;,b77ii7 %all be appli$   
)\t reg>d to ! numb] ( qualify+ *ildr5 (
 ! taxpay]4  4  7b7 ,treatm5t ( mirror  
code possessions  7#a7 ,9 g5]al ,!      
,secret>y ( ! ,treasury %all pay to ea* 
mirror code possession ( ! ,unit$ ,/ates
 am\nts equal to ! loss to t possession 

by reason ( ! application ( section     
#bd7;d7 ( ! ,int]nal ,rev5ue ,code (    
#aihf 7det]m9$ z if p>agraph 7#c7 !re(1 
z add$ by ?is section1 appli$ to bona   
fide resid5ts ( t possession7 ) respect 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjag4 ,su* am\nts %all be det]m9$ 
by ! ,secret>y ( ! ,treasury bas$ on    
in=mation provid$ by ! gov]nm5t ( !     
respective possession4  7#b7 ,possession
 ( ! unit$ /ates ,= purposes ( ?is      
subsection1 ! t]m mirror code possession
 ( ! ,unit$ ,/ates means ,guam1 !       
,nor!rn ,m>iana ,isl&s1 & ! ,virg9      
,isl&s4  7#c7 ,treatm5t ( paym5ts ,=    
purposes ( section #acbd7;b77#b7 ( title
 #ca1 ,unit$ ,/ates ,code1 ! paym5ts "u 
?is subsection %all be treat$ 9 ! same  
mann] z a refund due f ! cr$it all[$ "u 
section #bd ( ! ,int]nal ,rev5ue ,code (
 #aihf by reason ( subsection 7d7 ( su* 
section4  7c7 ,effective date ,! am5dm5t
 made by ?is section %all apply to      
taxable ye>s beg9n+ aft] ,decemb] #ca1  
#bjag4  ,,iv ,treatm5t ( c]ta9          

possessions  #dja4 ,treatm5t (          
possessions  7a7 ,paym5ts to possessions
  7#a7 ,mirror code possessions ,!      
,secret>y ( ! ,treasury %all pay to ea* 
possession ( ! ,unit$ ,/ates ) a mirror 
code tax sy/em am\nts equal to ! loss to
 t possession by reason ( ! application 
( sections #aja1 #ajd1 & #bja4 ,su*     
am\nts %all be det]m9$ by ! ,secret>y ( 
! ,treasury bas$ on in=mation provid$ by
 ! gov]nm5t ( ! respective possession4  
7#b7 ,o!r possessions ,! ,secret>y ( !  
,treasury %all pay to ea* possession ( !
 ,unit$ ,/ates :i* does n h a mirror    
code tax sy/em am\nts e/imat$ by !      
,secret>y ( ! ,treasury z be+ equal to !
 aggregate b5efits t w\ld h be5 provid$ 
to resid5ts ( su* possession by reason (
 ! application ( sections #aja1 #ajd1 & 
#bja if a mirror code tax sy/em _h be5 9
 effect 9 su* possession4 ,! prec$+     
s5t5ce %all n apply ) respect to any    
possession ( ! ,unit$ ,/ates unless su* 
possession has a plan1 :i* has be5      
approv$ by ! ,secret>y ( ! ,treasury1 "u

 :i* su* possession w promptly di/ribute
 su* paym5ts to ! resid5ts ( su*        
possession4  7b7 ,coord9ation ) cr$it   
all[$ aga9/ unit$ /ates income taxes ,no
 increase 9 any cr$it1 d$uction1 or     
exclusion det]m9$ "u section #aih;,a1   
#ajh7;j71 or #aci7;g7 ( ! ,int]nal      
,rev5ue ,code ( #aihf aga9/ ,unit$      
,/ates income taxes = any taxable ye>   
%all be tak5 into acc\nt ) respect to   
any p]son--  7#a7 to :om ! correspond+  
cr$it1 d$uction1 or exclusion is all[$  
aga9/ taxes impos$ by ! possession by   
reason ( section #aja1 #ajd1 or #bja1   
:i*ev] is applicable1 = su* taxable ye>1
 or  7#b7 :o is eligible = a paym5t "u a
 plan describ$ 9 subsection 7a77#b7 )   
respect to su* cr$it1 d$uction1 or      
exclusion = ! taxable ye>4  7c7         
,def9itions & special rules  7#a7       
,possession ( ! unit$ /ates ,= purposes 
( ?is subsection1 ! t]m possession ( !  
,unit$ ,/ates includes ! ,commonweal? ( 
,pu]to ,rico & ! ,commonweal? ( !       
,nor!rn ,m>iana ,isl&s4  7#b7 ,mirror   

code tax sy/em ,= purposes ( ?is        
subsection1 ! t]m mirror code tax sy/em 
means1 ) respect to any possession ( !  
,unit$ ,/ates1 ! income tax sy/em ( su* 
possession if ! income tax liability ( !
 resid5ts ( su* possession "u su* sy/em 
is det]m9$ by ref]5ce to ! income tax   
laws ( ! ,unit$ ,/ates z if su*         
possession 7 ! ,unit$ ,/ates4  7#c7     
,treatm5t ( paym5ts ,= purposes (       
section #acbd7;b77#b7 ( title #ca1      
,unit$ ,/ates ,code1 rules simil> to !  
rules ( section #ajja7;b77#c77;,c7 ( !  
,am]ican ,recov]y & ,re9ve/m5t ,tax ,act
 ( #bjji %all apply4