,,ii #aaith ,,congress #ast ,session ,s4 #aidj ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #d1 #bjbe,mr4 ,scott of ,florida introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide for ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts4 #a4 ,short title ,this ,act may be cited as the ,,ready ,accounts ,act4 #b4 ,,ready accounts 7a7 ,in general ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by redesignating section #bbd as section #bbe and by inserting after section #bbc the following new section3 #bbd4 ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts 7a7 ,deduction allowed ,in the case of an individual1 there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such of individual to a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account of such individual4 7b7 ,limitation 7#a7 ,in general ,the amount allowable as a deduction under subsection 7a7 to an individual for the taxable year shall not exceed #d1ejj4 7#b7 ,inflation adjustment 7,a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjbf1 the #d1ejj dollar amount under paragraph 7#a7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting in subparagraph 7,a77ii7 thereof calendar year #bjbe for calendar year #bjaf4 7,b7 ,rounding ,if any amount as adjusted under paragraph 7#a7 is not a multiple of #ej1 such dollar amount shall be rounded to the next lowest multiple of #ej4 7c7 ,residential ,emergency ,asset-,accumulation ,deferred ,taxation ,yield 7,,ready7 account ,for purposes of this section-- 7#a7 ,in general ,the term ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account means a trust created or organized in the ,united ,states as a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account exclusively for the purpose of paying the qualified home disaster mitigation and recovery expenses of the account beneficiary1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,except in the case of a rollover contribution described in subsection 7e77#e71 no contribution will be accepted-- 7i7 unless it is in cash1 or 7ii7 to the extent such contribution1 when added to previous contributions to the trust for the calendar year1 exceeds the dollar amount in effect under subsection 7b77#a74 7,b7 ,the trustee is a bank 7as defined in section #djh7n77 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the interest of an individual in the balance in his account is nonforfeitable4 7#b7 ,qualified home disaster mitigation and recovery expenses 7,a7 ,in general ,the term qualified home disaster mitigation and recovery expenses means1 with respect to an account beneficiary1 amounts paid by such beneficiary for-- 7i7 qualified disaster mitigation measures1 or 7ii7 qualified disaster recovery costs1 with respect to a qualified home of the taxpayer4 7,b7 ,qualified disaster mitigation measures ,for purposes of subparagraph 7,a7-- 7i7 ,in general ,the term qualified disaster mitigation measures means any measure described in clause 7ii7 with respect to a qualified home of the taxpayer if-- 7,i7 such measure meets such criteria as the ,secretary1 in consultation with the ,administrator of the ,federal ,emergency ,management ,agency1 considers appropriate to mitigate damage from a natural or other disaster1 and 7,,ii7 is certified by a qualified industry professional as meeting such criteria4 7ii7 ,mitigation measures ,the following measures are measures described in this clause3 7,i7 ,installing a roofing underlayment to sheathing4 7,,ii7 ,replacing a roof covering4 7,,iii7 ,applying a foam adhesive to reinforce the roof structure4 7,,iv7 ,strengthening connection of roof deck to roof framing4 7,v7 ,strengthening roof-to-wall connections4 7,,vi7 ,strengthening soffits4 7,,vii7 ,strengthening attic ventilation openings4 7,,viii7 ,installing impact-resistant windows4 7,,ix7 ,installing impact-resistant entry doors4 7,x7 ,elevating the residential home4 7,,xi7 ,installing ground anchors4 7,,xii7 ,if the qualified home was built according to a building code from a prior year1 achieving the current building code standard in the applicable ,state or locality4 7,,xiii7 ,such other measures determined by the ,secretary1 in consultation with the ,administrator of the ,federal ,emergency ,management ,agency1 to be consistent with the purposes of this section4 7iii7 ,qualified industry professional ,the term qualified industry professional means an individual who meets such rules and standards as determined appropriate by the ,secretary1 in consultation with the ,administrator of the ,federal ,emergency ,management ,agency4 7,c7 ,qualified disaster recovery costs ,for purposes of subparagraph 7,a71 the term qualified disaster recovery costs means costs for repairing damage to the qualified home of the taxpayer if such damage arises from fire1 storm1 or other casualty and such costs are not compensated for by insurance or otherwise4 7,d7 ,qualified home ,for purposes of this section1 the term qualified home means1 with respect to any taxable year1 any structure which is-- 7i7 owned by the taxpayer1 and 7ii7 used by the taxpayer as the taxpayer's principal residence 7within the meaning of section #aba7 for the taxable year4 7#c7 ,account beneficiary ,the term account beneficiary means the individual on whose behalf the ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account was established4 7#d7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,section #bai7;f77#e7 7relating to employer payments74 7,d7 ,section #djh7;g7 7relating to community property laws74 7,e7 ,section #djh7;h7 7relating to custodial accounts74 7d7 ,tax treatment of accounts 7#a7 ,in general ,a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account is exempt from taxation under this subtitle unless such account has ceased to be a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account4 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts1 and any amount treated as distributed under such rules shall be treated as not used to pay qualified home disaster mitigation and recovery expenses4 7e7 ,tax treatment of distributions 7#a7 ,amounts used for qualified home disaster mitigation and recovery expenses ,any amount paid or distributed out of a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account which is used exclusively to pay qualified home disaster mitigation and recovery expenses of the account beneficiary shall not be includible in gross income4 7#b7 ,inclusion of amounts not used for qualified home disaster mitigation and recovery expenses ,any amount paid or distributed out of a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account which is not used exclusively to pay the qualified home disaster mitigation and recovery expenses of the account beneficiary shall be included in the gross income of such beneficiary4 7#c7 ,excess contributions returned before due date of return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to any ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account of an individual1 paragraph 7#b7 shall not apply to distributions from the ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts of such individual 7to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year7 if-- 7i7 such distribution is received by the individual on or before the last day prescribed by law 7including extensions of time7 for filing such individual's return for such taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in the gross income of the individual for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution 7other than a rollover contribution described in paragraph 7#e77 which is not deductible under this section4 7#d7 ,additional tax on distributions not used for qualified home disaster mitigation and recovery expenses ,the tax imposed by this chapter on the account beneficiary for any taxable year in which there is a payment or distribution from a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account of such beneficiary which is includible in gross income under paragraph 7#b7 shall be increased by #bj percent of the amount which is so includible4 7#e7 ,rollover contribution ,an amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs 7,a7 and 7,b74 7,a7 ,in general ,paragraph 7#b7 shall not apply to any amount paid or distributed from a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account to the account beneficiary to the extent the amount received is paid into a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account for the benefit of such beneficiary not later than the #fjth day after the day on which the beneficiary receives the payment or distribution4 7,b7 ,limitation ,this paragraph shall not apply to any amount described in subparagraph 7,a7 received by an individual from a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account if1 at any time during the #a-year period ending on the day of such receipt1 such individual received any other amount described in subparagraph 7,a7 from a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account which was not includible in the individual's gross income because of the application of this paragraph4 7#f7 ,transfer of account incident to divorce ,the transfer of an individual's interest in a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account to an individual's spouse or former spouse under a divorce or separation instrument described in clause 7i7 of section #aba7;d77#c77;,c7 shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle1 and such interest shall1 after such transfer1 be treated as a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account with respect to which such spouse is the account beneficiary4 7#g7 ,treatment after death of account beneficiary 7,a7 ,treatment if designated beneficiary is spouse ,if the account beneficiary's surviving spouse acquires such beneficiary's interest in a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account by reason of being the designated beneficiary of such account at the death of the account beneficiary1 such ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account shall be treated as if the spouse were the account beneficiary4 7,b7 ,other cases ,if1 by reason of the death of the account beneficiary1 any person acquires the account beneficiary's interest in a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account in a case to which subparagraph 7,a7 does not apply-- 7i7 such account shall cease to be a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account as of the date of death1 and 7ii7 an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such beneficiary1 in such person's gross income for the taxable year which includes such date1 or if such person is the estate of such beneficiary1 in such beneficiary's gross income for the last taxable year of such beneficiary4 7f7 ,reports 7#a7 ,in general ,the ,secretary may require the trustee of a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account to make such reports regarding such account to the ,secretary and to the account beneficiary with respect to contributions1 distributions1 the return of excess contributions1 and such other matters as the ,secretary determines appropriate4 7#b7 ,time and manner of reports ,the reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the ,secretary4 7g7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section and to prevent the abuse of such purposes4 4 7b7 ,excess contributions 7#a7 ,in general ,section #digc7;a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of paragraph 7#e71 by inserting or at the end of paragraph 7#f71 and by inserting after paragraph 7#f7 the following new paragraph3 7#g7 a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account 7within the meaning of section #bbd71 4 7#b7 ,excess contributions ,section #digc of such ,code is amended by adding at the end the following new subsection3 7i7 ,excess contributions to ,,ready accounts 7#a7 ,in general ,for purposes of this section1 in the case of a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account 7within the meaning of section #bbd71 the term excess contributions means the sum of-- 7,a7 the aggregate amount contributed for the taxable year to such accounts 7other than rollover contributions described in section #bbd7;e77#e77 which is not allowed as a deduction under section #bbd for such year1 and1 and 7,b7 the amount determined under this subsection for the preceding taxable year1 reduced by the sum of-- 7i7 the distributions out of the accounts which were included in gross income under section #bbd7;e77#b71 and 7ii7 the excess 7if any7 of the maximum amount allowed as a deduction under section #bbd7;b7 for the taxable year over the amount contributed to the accounts for the taxable year4 7#b7 ,special rules ,for purposes of this subsection1 any contribution which is distributed out of the ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account in a distribution to which section #bbc7;e77#c7 applies shall be treated as an amount not contributed4 4 7c7 ,application of prohibited transaction rules 7#a7 ,in general ,section #dige7;e77#a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of subparagraph 7,f71 by redesignating subparagraph 7,g7 as subparagraph 7,h71 and by inserting after subparagraph 7,f7 the following new subparagraph3 7,g7 a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account described in section #bbd1 or 4 7#b7 ,special rule ,section #dige7;c7 of such ,code is amended by adding at the end the following new paragraph3 7#h7 ,special rule for ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts ,an individual for whose benefit a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account 7within the meaning of section #bbd7 is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account 7which would otherwise be taxable under this section7 if1 with respect to such transaction1 the account ceases to be a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account by reason of the application of section #bbd7;d77#b7 to such account4 4 7d7 ,conforming amendments 7#a7 ,section #bf7;b77#b7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of subparagraph 7,y71 by striking the period at the end of subparagraph 7,z7 and inserting 1 and1 and by inserting after subparagraph 7,y7 the following3 7,,aa7 section #bbd7;e77#d74 4 7#b7 ,section #fb7;a7 of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account ,the deduction allowed by section #bbd4 4 7#c7 ,section #afe7;h7 of such ,code is amended by adding at the end the following new paragraph3 7#f7 ,coordination with expenditures from ,,ready accounts ,no deduction shall be allowed with respect to any loss described in subsection 7a77#c7 to the extent the taxpayer has made an expenditure from a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account 7as defined in section #bbd7 which is taken into account under section #bbd7;c77#b77;,c7 as a cost with respect to such loss4 4 7#d7 ,section #hgg;,a of such ,code is amended-- 7,a7 in subsection 7e77#b7 by inserting a ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 account 7as defined in section #bbd71 after a health savings account 7as defined in section #bbc711 and 7,b7 in subsection 7g77#f7 by inserting #bbd7;e77#d71 after #bbc7;f77#d714 7#e7 ,section #ffic7;a77#b7 of such ,code is amended by striking and at the end of subparagraph 7,e71 by striking the period at the end of subparagraph 7,f7 and inserting 1 and1 and by inserting after subparagraph 7,f7 the following new subparagraph3 7,g7 section #bbd7;f7 7relating to ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts74 4 7#f7 ,the table of sections for part ,,vii of subchapter ,b of chapter #a of such ,code is amended redesignating the item relating to section #bbd as relating to section #bbe and by inserting after the item relating to section #bbc the following new item3 ,sec4 #bbd4 ,residential ,emergency ,asset-accumulation ,deferred ,taxation ,yield 7,,ready7 accounts4 4 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4