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H.R. 6137 (114th): Louisiana Flood and Storm Devastation Tax Relief Act of 2016

The text of the bill below is as of Sep 22, 2016 (Introduced).

Source: GPO

I

114th CONGRESS

2d Session

H. R. 6137

IN THE HOUSE OF REPRESENTATIVES

September 22, 2016

introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To provide emergency tax relief for persons affected by severe storms and flooding occurring in Louisiana.

1.

Short title, etc

(a)

Short title

This Act may be cited as the Louisiana Flood and Storm Devastation Tax Relief Act of 2016.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title, etc.

Sec. 2. Louisiana storm and flood disaster area.

Title I—SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING TO 2016 LOUISIANA STORMS AND FLOODING

Sec. 101. Tax-favored withdrawals from retirement plans for relief relating to 2016 Louisiana storms and flooding.

Sec. 102. Recontributions of withdrawals for home purchases canceled due to the 2016 Louisiana storms and flooding.

Sec. 103. Loans from qualified plans for relief relating to 2016 Louisiana storms and flooding.

Sec. 104. Provisions relating to plan amendments.

Title II—EMPLOYMENT RELIEF

Sec. 201. Work opportunity tax credit for Louisiana storm and flood employees.

Sec. 202. Employee retention credit for employers affected by 2016 Louisiana storms and flooding.

Title III—CHARITABLE GIVING INCENTIVES

Sec. 301. Temporary suspension of limitations on charitable contributions.

Sec. 302. Additional exemption for housing Louisiana storm and flood displaced individuals.

Sec. 303. Increase in standard mileage rate for charitable use of vehicles.

Sec. 304. Mileage reimbursements to charitable volunteers excluded from gross income.

Sec. 305. Charitable deduction for contributions of book inventories to public schools.

Title IV—ADDITIONAL TAX RELIEF PROVISIONS

Sec. 401. Exclusions of certain cancellations of indebtedness by reason of 2016 Louisiana storms and flooding.

Sec. 402. Suspension of certain limitations on personal casualty losses.

Sec. 403. Required exercise of authority under section 7508A for tax relief relating to 2016 Louisiana storms and flooding.

Sec. 404. Special rules for mortgage revenue bonds relating to 2016 Louisiana storms and flooding.

Sec. 405. Extension of replacement period for nonrecognition of gain for property located in Louisiana storm and flood disaster area.

Sec. 406. Special rule for determining earned income.

Sec. 407. Secretarial authority to make adjustments regarding taxpayer and dependency status.

Sec. 408. Low-income housing credit.

Sec. 409. Application of new markets tax credit to investments in community development entities serving Louisiana storm and flood disaster area.

Sec. 410. Tax-exempt bond financing.

Sec. 411. Expensing for certain demolition and clean-up costs.

Sec. 412. Extension of expensing for environmental remediation costs.

Sec. 413. Treatment of net operating losses attributable to Louisiana storm and flood disaster area losses.

Sec. 414. Increased expensing for qualified timber property.

Sec. 415. Disaster loss carryback.

Sec. 416. Housing relief for individuals affected by Hurricane Katrina.

2.

Louisiana storm and flood disaster area

For purposes of this Act—

(1)

Louisiana Storm and Flood Disaster Area

The term Louisiana storm and flood disaster area means an area with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act—

(A)

before September 3, 2016, by reason of severe storms and flooding occurring in Louisiana during August of 2016, and

(B)

before April 21, 2016, by reason of severe storms and flooding occurring in Louisiana during March and April of 2016.

(2)

Core disaster area

The term core disaster area means that portion of the Louisiana storm and flood disaster area determined by the President to warrant individual or individual and public assistance from the Federal Government under such Act.

(3)

Applicable disaster date

The term applicable disaster date means, with respect to any Louisiana storm and flood disaster area, the date of the first day of the period during which the severe storms and flooding giving rise to the Presidential declaration described in paragraph (1) occurred.

I

SPECIAL RULES FOR USE OF RETIREMENT FUNDS FOR RELIEF RELATING TO 2016 LOUISIANA STORMS AND FLOODING

101.

Tax-favored withdrawals from retirement plans for relief relating to 2016 Louisiana storms and flooding

(a)

In general

Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified Louisiana storm and flood distribution.

(b)

Aggregate dollar limitation

(1)

In general

For purposes of this section, the aggregate amount of distributions received by an individual which may be treated as qualified Louisiana storm and flood distributions for any taxable year shall not exceed the excess (if any) of—

(A)

$100,000, over

(B)

the aggregate amounts treated as qualified Louisiana storm and flood distributions received by such individual for all prior taxable years.

(2)

Treatment of plan distributions

If a distribution to an individual would (without regard to paragraph (1)) be a qualified Louisiana storm and flood distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified Louisiana storm and flood distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.

(3)

Controlled group

For purposes of paragraph (2), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of such Code.

(c)

Amount distributed may be repaid

(1)

In general

Any individual who receives a qualified Louisiana storm and flood distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as the case may be.

(2)

Treatment of repayments of distributions from eligible retirement plans other than IRAs

For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified Louisiana storm and flood distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified Louisiana storm and flood distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(3)

Treatment of repayments for distributions from iras

For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified Louisiana storm and flood distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified Louisiana storm and flood distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(d)

Definitions

For purposes of this section—

(1)

Qualified Louisiana storm and flooding distribution

Except as provided in subsection (b), the term qualified Louisiana storm and flooding distribution means any distribution from an eligible retirement plan made on or after the applicable disaster date, to an individual whose principal residence on or after such date, is located in the Louisiana storm and flood disaster area and who has sustained an economic loss by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(2)

Eligible retirement plan

The term eligible retirement plan shall have the meaning given such term by section 402(c)(8)(B) of such Code.

(e)

Income inclusion spread over 3-Year period for qualified Louisiana storm and flooding distributions

(1)

In general

In the case of any qualified Louisiana storm and flood distribution, unless the taxpayer elects not to have this subsection apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.

(2)

Special rule

For purposes of paragraph (1), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of such Code shall apply.

(f)

Special rules

(1)

Exemption of distributions from trustee to trustee transfer and withholding rules

For purposes of sections 401(a)(31), 402(f), and 3405 of such Code, qualified Louisiana storm and flood distributions shall not be treated as eligible rollover distributions.

(2)

Qualified Louisiana storm and flooding distributions treated as meeting plan distribution requirements

For purposes of such Code, a qualified Louisiana storm and flood distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.

102.

Recontributions of withdrawals for home purchases canceled due to the 2016 Louisiana storms and flooding

(a)

Recontributions

(1)

In general

Any individual who received a qualified distribution may, during the period beginning on the applicable disaster date, and ending on February 28, 2017, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such Code, as the case may be.

(2)

Treatment of repayments

Rules similar to the rules of paragraphs (2) and (3) of section 101(c) of this Act shall apply for purposes of this section.

(b)

Qualified distribution defined

For purposes of this section, the term qualified distribution means any distribution—

(1)

described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F) of such Code,

(2)

received after February 10, 2016, and before August 11, 2016, and

(3)

which was to be used to purchase or construct a principal residence in the Louisiana storm and flood disaster area, but which was not so purchased or constructed on account of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

103.

Loans from qualified plans for relief relating to 2016 Louisiana storms and flooding

(a)

Increase in limit on loans not treated as distributions

In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual made after the date of enactment of this Act and before January 1, 2018—

(1)

clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting $100,000 for $50,000, and

(2)

clause (ii) of such section shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan for one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan.

(b)

Delay of repayment

In the case of a qualified individual with an outstanding loan on or after the date that is 5 days before the applicable disaster date, from a qualified employer plan (as defined in section 72(p)(4) of such Code)—

(1)

if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on the date that is 5 days before the applicable disaster date, and ending on December 31, 2017, such due date shall be delayed for 1 year,

(2)

any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and

(3)

in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in paragraph (1) shall be disregarded.

(c)

Qualified individual

For purposes of this section, the term qualified individual means an individual whose principal place of abode on the date that is 5 days before the applicable disaster date, is located in the Louisiana storm and flood disaster area and who has sustained an economic loss by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

104.

Provisions relating to plan amendments

(a)

In general

If this section applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A).

(b)

Amendments to which section applies

(1)

In general

This section shall apply to any amendment to any plan or annuity contract which is made—

(A)

pursuant to any amendment made by this title, or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under this title, and

(B)

on or before the last day of the first plan year beginning on or after January 1, 2018, or such later date as the Secretary of the Treasury may prescribe.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subparagraph (B) shall be applied by substituting the date which is 2 years after the date otherwise applied under subparagraph (B).
(2)

Conditions

This section shall not apply to any amendment unless—

(A)

during the period—

(i)

beginning on the date the legislative or regulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan or contract amendment not required by such legislative or regulatory amendment, the effective date specified by the plan), and

(ii)

ending on the date described in paragraph (1)(B) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect, and
(B)

such plan or contract amendment applies retroactively for such period.

II

EMPLOYMENT RELIEF

201.

Work opportunity tax credit for Louisiana storm and flood employees

(a)

In general

For purposes of section 51 of the Internal Revenue Code of 1986, a Louisiana storm and flood employee shall be treated as a member of a targeted group.

(b)

Louisiana storm and flood employee

For purposes of this section, the term Louisiana storm and flood employee means—

(1)

any individual who on the applicable disaster date, had a principal place of abode in the core disaster area and who is hired during the 2-year period beginning on such date for a position the principal place of employment of which is located in the core disaster area, and

(2)

any individual who on such date had a principal place of abode in the core disaster area, who is displaced from such abode by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), and who is hired during the period beginning on such date and ending on December 31, 2016.

(c)

Reasonable identification acceptable

In lieu of the certification requirement under section 51(d)(12)(A) of such Code, an individual may provide to the employer reasonable evidence that the individual is a Louisiana storm and flood employee, and subparagraph (B) of such section shall be applied as if such evidence were a certification described in such subparagraph.

(d)

Special rules for determining credit

For purposes of applying subpart F of part IV of subchapter A of chapter 1 of such Code to wages paid or incurred to any Louisiana storm and flood employee—

(1)

section 51(c)(4) of such Code shall not apply, and

(2)

section 51(i)(2) of such Code shall not apply with respect to the first hire of such employee as a Louisiana storm and flood employee, unless such employee was an employee of the employer on the applicable disaster date.

202.

Employee retention credit for employers affected by 2016 Louisiana storms and flooding

(a)

In general

In the case of an eligible employer, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the taxable year an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.

(b)

Definitions

For purposes of this section—

(1)

Eligible employer

The term eligible employer means any employer—

(A)

which conducted an active trade or business on the applicable disaster date, in a core disaster area, and

(B)

with respect to whom the trade or business described in subparagraph (A) is inoperable on or after the applicable disaster date, and before January 1, 2017, as a result of damage sustained by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(2)

Eligible employee

The term eligible employee means with respect to an eligible employer an employee whose principal place of employment on the applicable disaster date, with such eligible employer was in a core disaster area.

(3)

Qualified wages

The term qualified wages means wages (as defined in section 51(c)(1) of such Code, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on or after the applicable disaster date, and before January 1, 2017, which occurs during the period—

(A)

beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), and

(B)

ending on the date on which such trade or business has resumed significant operations at such principal place of employment.

Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.
(c)

Credit not allowed for large businesses

The term eligible employer shall not include any trade or business for any taxable year if such trade or business employed an average of more than 200 employees on business days during the taxable year.

(d)

Certain rules To apply

For purposes of this section, rules similar to the rules of sections 51(i)(1), 52, and 280C(a) of such Code shall apply.

(e)

Employee not taken into account more than once

An employee shall not be treated as an eligible employee for purposes of this section for any period with respect to any employer if such employer is allowed a credit under section 51 of such Code with respect to such employee for such period.

(f)

Credit To be part of general business credit

The credit allowed under this section shall be added to the current year business credit under section 38(b) of such Code and shall be treated as a credit allowed under subpart D of part IV of subchapter A of chapter 1 of such Code.

III

CHARITABLE GIVING INCENTIVES

301.

Temporary suspension of limitations on charitable contributions

(a)

In general

Except as otherwise provided in subsection (b), section 170(b) of the Internal Revenue Code of 1986 shall not apply to qualified contributions and such contributions shall not be taken into account for purposes of applying subsections (b) and (d) of section 170 of such Code to other contributions.

(b)

Treatment of excess contributions

For purposes of section 170 of such Code—

(1)

Individuals

In the case of an individual—

(A)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in subparagraph (F) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under such section 170(b)(1).

(B)

Carryover

If the aggregate amount of qualified contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of subparagraph (A), such excess shall be added to the excess described in the portion of subparagraph (A) of such section which precedes clause (i) thereof for purposes of applying such section.

(2)

Corporations

In the case of a corporation—

(A)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s taxable income (as determined under paragraph (2) of section 170(b) of such Code) over the amount of all other charitable contributions allowed under such paragraph.

(B)

Carryover

Rules similar to the rules of paragraph (1)(B) shall apply for purposes of this paragraph.

(c)

Exception to overall limitation on itemized deductions

So much of any deduction allowed under section 170 of such Code as does not exceed the qualified contributions paid during the taxable year shall not be treated as an itemized deduction for purposes of section 68 of such Code.

(d)

Qualified contributions

(1)

In general

For purposes of this section, the term qualified contribution means any charitable contribution (as defined in section 170(c) of such Code)—

(A)

paid during the period beginning on the applicable disaster date, and ending on December 31, 2016, in cash to an organization described in section 170(b)(1)(A) of such Code (other than an organization described in section 509(a)(3) of such Code),

(B)

in the case of a contribution paid by a corporation, such contribution is for relief efforts related to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), and

(C)

with respect to which the taxpayer has elected the application of this section.

(2)

Exception

Such term shall not include a contribution if the contribution is for establishment of a new, or maintenance in an existing, segregated fund or account with respect to which the donor (or any person appointed or designated by such donor) has, or reasonably expects to have, advisory privileges with respect to distributions or investments by reason of the donor’s status as a donor.

(3)

Application of election to partnerships and s corporations

In the case of a partnership or S corporation, the election under paragraph (1)(C) shall be made separately by each partner or shareholder.

302.

Additional exemption for housing Louisiana storm and flood displaced individuals

(a)

In general

In the case of taxable years of a natural person beginning in 2016 or 2017, for purposes of the Internal Revenue Code of 1986, taxable income shall be reduced by $600 for each Louisiana storm and flood displaced individual of the taxpayer for the taxable year.

(b)

Limitations

(1)

Dollar limitation

The reduction under subsection (a) shall not exceed $2,500, reduced by the amount of the reduction under this section for all prior taxable years.

(2)

Individuals taken into account only once

An individual shall not be taken into account under subsection (a) if such individual was taken into account under such subsection by the taxpayer for any prior taxable year.

(3)

Identifying information required

An individual shall not be taken into account under subsection (a) for a taxable year unless the taxpayer identification number of such individual is included on the return of the taxpayer for such taxable year.

(c)

Louisiana storm and flood displaced individual

For purposes of this section, the term Louisiana storm and flood displaced individual means, with respect to any taxpayer for any taxable year, any natural person if—

(1)

such person’s principal place of abode on the applicable disaster date, was in the Louisiana storm and flood disaster area,

(2)
(A)

in the case of such an abode located in the core disaster area, such person is displaced from such abode, or

(B)

in the case of such an abode located outside of the core disaster area, such person is displaced from such abode, and—

(i)

such abode was damaged by the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), or

(ii)

such person was evacuated from such abode by reason of such storms and flooding, and

(3)

such person is provided housing free of charge by the taxpayer in the principal residence of the taxpayer for a period of 60 consecutive days which ends in such taxable year.

Such term shall not include the spouse or any dependent of the taxpayer.
(d)

Compensation for housing

No deduction shall be allowed under this section if the taxpayer receives any rent or other amount (from any source) in connection with the providing of such housing.

303.

Increase in standard mileage rate for charitable use of vehicles

Notwithstanding section 170(i) of the Internal Revenue Code of 1986, for purposes of computing the deduction under section 170 of such Code for use of a vehicle described in subsection (f)(12)(E)(i) of such section for provision of relief during the period beginning on the applicable disaster date, and ending on December 31, 2017, and related to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), the standard mileage rate shall be 70 percent of the standard mileage rate in effect under section 162(a) of such Code at the time of such use. Any increase under this section shall be rounded to the next highest cent.

304.

Mileage reimbursements to charitable volunteers excluded from gross income

(a)

In general

For purposes of the Internal Revenue Code of 1986, gross income of an individual for taxable years ending on or after the applicable disaster date, does not include amounts received, from an organization described in section 170(c) of such Code, as reimbursement of operating expenses with respect to use of a passenger automobile for the benefit of such organization in connection with providing relief during the period beginning on the applicable disaster date, and ending on December 31, 2017, and relating to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1). The preceding sentence shall apply only to the extent that the expenses which are reimbursed would be deductible under chapter 1 of such Code if section 274(d) of such Code were applied—

(1)

by using the standard business mileage rate in effect under section 162(a) at the time of such use, and

(2)

as if the individual were an employee of an organization not described in section 170(c) of such Code.

(b)

Application To volunteer services only

Subsection (a) shall not apply with respect to any expenses relating to the performance of services for compensation.

(c)

No double benefit

No deduction or credit shall be allowed under any other provision of such Code with respect to the expenses excludable from gross income under subsection (a).

305.

Charitable deduction for contributions of book inventories to public schools

(a)

In general

Section 170(e)(3)(D)(iv) of the Internal Revenue Code of 1986 is amended to read as follows:

(i)

Termination

This subparagraph shall not apply to contributions made—

(I)

after December 31, 2016, and before the applicable disaster date (as defined in section 2(3) of the Louisiana Flood and Storm Devastation Tax Relief Act of 2016), or

(II)

after December 31, 2016.

.

(b)

Effective date

The amendments made by this section shall apply to contributions made on or after the applicable disaster date, in taxable years ending after such date.

IV

ADDITIONAL TAX RELIEF PROVISIONS

401.

Exclusions of certain cancellations of indebtedness by reason of 2016 Louisiana storms and flooding

(a)

In general

For purposes of the Internal Revenue Code of 1986, gross income shall not include any amount which (but for this section) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of a natural person described in subsection (b) by an applicable entity (as defined in section 6050P(c)(1) of such Code).

(b)

Persons described

A natural person is described in this subsection if the principal place of abode of such person on the applicable disaster date, was located—

(1)

in the core disaster area, or

(2)

in the Louisiana storm and flood disaster area (but outside the core disaster area) and such person suffered economic loss by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(c)

Exceptions

(1)

Business indebtedness

Subsection (a) shall not apply to any indebtedness incurred in connection with a trade or business.

(2)

Real property outside core disaster area

Subsection (a) shall not apply to any discharge of indebtedness to the extent that real property constituting security for such indebtedness is located outside of the Louisiana storm and flood disaster area.

(d)

Denial of double benefit

For purposes of the Internal Revenue Code of 1986, the amount excluded from gross income under subsection (a) shall be treated in the same manner as an amount excluded under section 108(a) of such Code.

(e)

Effective date

This section shall apply to discharges made on or after the applicable disaster date, and before January 1, 2018.

402.

Suspension of certain limitations on personal casualty losses

Paragraphs (1) and (2)(A) of section 165(h) of the Internal Revenue Code of 1986 shall not apply to losses described in section 165(c)(3) of such Code which arise in the Louisiana storm and flood disaster area on or after the applicable disaster date, and which are attributable to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1). In the case of any other losses, section 165(h)(2)(A) of such Code shall be applied without regard to the losses referred to in the preceding sentence.

403.

Required exercise of authority under section 7508A for tax relief relating to 2016 Louisiana storms and flooding

(a)

In general

In the case of any taxpayer determined by the Secretary of the Treasury to be affected by the Presidentially declared disaster relating to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), any relief provided by the Secretary of the Treasury under section 7508A of the Internal Revenue Code of 1986 shall be for a period ending not earlier than February 10, 2017, and shall be treated as applying to the filing of returns relating to, and the payment of, employment and excise taxes.

(b)

Effective date

The amendment made by subsection (a) shall apply for any period for performing an act which has not expired before the applicable disaster date.

404.

Special rules for mortgage revenue bonds relating to 2016 Louisiana storms and flooding

(a)

In general

In the case of financing provided with respect to a qualified Louisiana storm and flood recovery residence, section 143(d) of the Internal Revenue Code of 1986 shall be applied as if such residence were a targeted area residence.

(b)

Qualified Louisiana storms and flooding recovery residence

For purposes of this section, the term qualified Louisiana storm and flood recovery residence means—

(1)

any residence in the core disaster area, and

(2)

any other residence if—

(A)

such other residence is located in the same State as the principal residence referred to in subparagraph (B), and

(B)

the mortgagor with respect to such other residence owned a principal residence on the applicable disaster date, which—

(i)

was located in the Louisiana storm and flood disaster area, and

(ii)

was rendered uninhabitable by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(c)

Special rule for home improvement loans

In the case of any loan with respect to a residence in the Louisiana storm and flood disaster area, section 143(k)(4) of such Code shall be applied by substituting $150,000 for the dollar amount contained therein to the extent such loan is for the repair of damage by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(d)

Application

Subsection (a) shall not apply to financing provided after December 31, 2018.

405.

Extension of replacement period for nonrecognition of gain for property located in Louisiana storm and flood disaster area

Section 1033(a)(2)(B)(i) of the Internal Revenue Code of 1986 shall be applied by substituting 5 years for 2 years with respect to property in the Louisiana storm and flood disaster area which is compulsorily or involuntarily converted on or after the applicable disaster date, by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), but only if substantially all of the use of the replacement property is in such area.

406.

Special rule for determining earned income

(a)

In general

In the case of a qualified individual, if the earned income of the taxpayer for the taxable year which includes the applicable disaster date, is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting—

(1)

such earned income for the preceding taxable year, for

(2)

such earned income for the taxable year which includes the applicable disaster date.

(b)

Qualified individual

For purposes of this section, the term qualified individual means any individual whose principal place of abode on the applicable disaster date, was located—

(1)

in the core disaster area, or

(2)

in the Louisiana storm and flood disaster area (but outside the core disaster area) and such individual was displaced from such principal place of abode by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).

(c)

Earned income

For purposes of this section, the term earned income has the meaning given such term under section 32(c) of such Code.

(d)

Special rules

(1)

Application to joint returns

For purposes of subsection (a), in the case of a joint return for a taxable year which includes the applicable disaster date—

(A)

such subsection shall apply if either spouse is a qualified individual, and

(B)

the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year.

(2)

Uniform application of election

Any election made under subsection (a) shall apply with respect to both section 24(d) and section 32 of such Code.

(3)

Errors treated as mathematical error

For purposes of section 6213 of such Code, an incorrect use on a return of earned income pursuant to subsection (a) shall be treated as a mathematical or clerical error.

(4)

No effect on determination of gross income, etc

Except as otherwise provided in this section, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under subsection (a).

407.

Secretarial authority to make adjustments regarding taxpayer and dependency status

With respect to taxable years beginning in 2016 or 2017, the Secretary of the Treasury or the Secretary’s delegate may make such adjustments in the application of the internal revenue laws as may be necessary to ensure that taxpayers do not lose any deduction or credit or experience a change of filing status by reason of temporary relocations by reason of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1). Any adjustments made under the preceding sentence shall ensure that an individual is not taken into account by more than one taxpayer with respect to the same tax benefit.

408.

Low-income housing credit

(a)

Additional housing credit dollar amount

(1)

In general

For purposes of section 42 of the Internal Revenue Code of 1986, in the case of calendar years 2017, 2018, and 2019, the State housing credit ceiling of Louisiana shall be increased by the lesser of—

(A)

the aggregate housing credit dollar amount allocated by the State housing credit agency of Louisiana to buildings located in the Louisiana storm and flood disaster area for such calendar year, or

(B)

the Louisiana storm and flood housing amount for such State for such calendar year.

(2)

Louisiana storm and flood housing amount

For purposes of paragraph (1), the term Louisiana storm and flood housing amount means, for any calendar year, the amount equal to the product of $18.00 multiplied by the portion of the Louisiana population which is in the Louisiana storm and flood disaster area (as determined on the basis of the most recent census estimate of resident population released by the Bureau of the Census before August 28, 2016).

(3)

Allocations treated as made first from additional allocation amount for purposes of determining carryover

For purposes of determining the unused State housing credit ceiling under section 42(h)(3)(C) of such Code for any calendar year, any increase in the State housing credit ceiling under paragraph (1) shall be treated as an amount described in clause (ii) of such section.

(b)

Additional housing credit dollar amount for Louisiana

For purposes of section 42 of such Code, in the case of calendar year 2017, the State housing credit ceiling of Louisiana shall each be increased by $3,500,000.

(c)

Difficult development area

(1)

In general

For purposes of section 42 of such Code, in the case of property placed in service during the period beginning on January 1, 2017, and ending on December 31, 2021, the Louisiana storm and flood disaster area—

(A)

shall be treated as difficult development areas designated under subclause (I) of section 42(d)(5)(B)(iii) of such Code, and

(B)

shall not be taken into account for purposes of applying the limitation under subclause (II) of such section.

(2)

Application

Paragraph (1) shall apply only to—

(A)

housing credit dollar amounts allocated during the period beginning on January 1, 2017, and ending on December 31, 2019, and

(B)

buildings placed in service during the period described in paragraph (1) to the extent that paragraph (1) of section 42(h) does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued after December 31, 2016.

(d)

Special rule for applying income tests

In the case of property placed in service—

(1)

during 2017, 2018, or 2019,

(2)

in the Louisiana storm and flood disaster area, and

(3)

in a nonmetropolitan area (as defined in section 42(d)(5)(B)(iv)(IV)),

section 42 of such Code shall be applied by substituting national nonmetropolitan median gross income (determined under rules similar to the rules of section 142(d)(2)(B)) for area median gross income in subparagraphs (A) and (B) of section 42(g)(1) of such Code.
(e)

Definitions

Any term used in this section which is also used in section 42 shall have the same meaning as when used in such section.

409.

Application of new markets tax credit to investments in community development entities serving Louisiana storm and flood disaster area

For purposes of section 45D of the Internal Revenue Code of 1986—

(1)

a qualified community development entity shall be eligible for an allocation under subsection (f)(2) thereof of the increase in the new markets tax credit limitation described in paragraph (2) only if a significant mission of such entity is the recovery and redevelopment of the Louisiana storm and flood disaster area,

(2)

the new markets tax credit limitation otherwise determined under subsection (f)(1) thereof shall be increased by an amount equal to—

(A)

$300,000,000 for 2016 and 2017, to be allocated among qualified community development entities to make qualified low-income community investments within the Louisiana storm and flood disaster area, and

(B)

$400,000,000 for 2018, to be so allocated, and

(3)

subsection (f)(3) thereof shall be applied separately with respect to the amount of the increase under paragraph (2).

410.

Tax-exempt bond financing

(a)

In general

For purposes of the Internal Revenue Code of 1986—

(1)

any qualified Louisiana storm and flood disaster area bond described in paragraph (2)(A)(i) shall be treated as an exempt facility bond, and

(2)

any qualified Louisiana storm and flood disaster area bond described in paragraph (2)(A)(ii) shall be treated as a qualified mortgage bond.

(b)

Qualified Louisiana storm and flood disaster area bond

For purposes of this subsection, the term qualified Louisiana storm and flood disaster area bond means any bond issued as part of an issue if—

(1)
(A)

95 percent or more of the net proceeds (as defined in section 150(a)(3) of such Code) of such issue are to be used for qualified project costs, or

(B)

such issue meets the requirements of a qualified mortgage issue, except as otherwise provided in this subsection,

(2)

such bond is issued by Louisiana, or any political subdivision thereof,

(3)

such bond is designated for purposes of this section by—

(A)

in the case of a bond which is required under State law to be approved by the bond commission of Louisiana, such bond commission, and

(B)

in the case of any other bond, the Governor of Louisiana,

(4)

such bond is issued after the date of the enactment of this section and before January 1, 2023, and

(5)

no portion of the proceeds of such issue is to be used to provide any property described in section 144(c)(6)(B) of such Code.

(c)

Limitation on bonds

(1)

Aggregate amount designated

The maximum aggregate face amount of bonds which may be designated under this subsection with respect to any State shall not exceed the product of $2,500 multiplied by the portion of the Louisiana population which is in the Louisiana storm and flood disaster area (as determined on the basis of the most recent census estimate of resident population released by the Bureau of the Census before August 28, 2016).

(2)

Movable property

No bonds shall be issued which are to be used for movable fixtures and equipment.

(d)

Qualified project costs

For purposes of this subsection, the term qualified project costs means—

(1)

the cost of any qualified residential rental project (as defined in section 142(d) of such Code) located in the Louisiana storm and flood disaster area, and

(2)

the cost of acquisition, construction, reconstruction, and renovation of—

(A)

nonresidential real property (including fixed improvements associated with such property) located in the Louisiana storm and flood disaster area, and

(B)

public utility property (as defined in section 168(i)(10) of such Code) located in the Louisiana storm and flood disaster area.

(e)

Special rules

In applying this title to any qualified Louisiana storm and flood disaster area bond, the following modifications shall apply:

(1)

Section 142(d)(1) of such Code (defining qualified residential rental project) shall be applied—

(A)

by substituting 60 percent for 50 percent in subparagraph (A) thereof, and

(B)

by substituting 70 percent for 60 percent in subparagraph (B) thereof.

(2)

Section 143 of such Code (relating to mortgage revenue bonds: qualified mortgage bond and qualified veterans’ mortgage bond) shall be applied—

(A)

only with respect to owner-occupied residences in the Louisiana storm and flood disaster area,

(B)

by treating any such residence in the Louisiana storm and flood disaster area as a targeted area residence,

(C)

by applying subsection (f)(3) thereof without regard to subparagraph (A) thereof, and

(D)

by substituting $150,000 for $15,000 in subsection (k)(4) thereof.

(3)

Except as provided in section 143 of such Code, repayments of principal on financing provided by the issue of which such bond is a part may not be used to provide financing.

(4)

Section 146 of such Code (relating to volume cap) shall not apply.

(5)

Section 147(d)(2) of such Code (relating to acquisition of existing property not permitted) shall be applied by substituting 50 percent for 15 percent each place it appears.

(6)

Section 148(f)(4)(C) of such Code (relating to exception from rebate for certain proceeds to be used to finance construction expenditures) shall apply to the available construction proceeds of bonds which are part of an issue described in subsection (b)(1)(A).

(7)

Section 57(a)(5) of such Code (relating to tax-exempt interest) shall not apply.

(f)

Special rule for repairs and reconstructions

(1)

In general

For purposes of section 143 of the Internal Revenue Code of 1986 and this section, any qualified Louisiana storm and flood disaster area repair or reconstruction shall be treated as a qualified rehabilitation.

(2)

Qualified Louisiana storm and flood disaster area repair or reconstruction

For purposes of subparagraph (A), the term qualified Louisiana storm and flood disaster area repair or reconstruction means any repair of damage caused by the severe storms and flooding giving rise to the Presidential declaration described in section 2(1) (or reconstruction of such building in the case of damage constituting destruction) if the expenditures for such repair or reconstruction are 25 percent or more of the mortgagor’s adjusted basis in the residence. For purposes of the preceding sentence, the mortgagor's adjusted basis shall be determined as of the completion of the repair or reconstruction or, if later, the date on which the mortgagor acquires the residence.

(3)

Termination

This paragraph shall apply only to owner-financing provided after the date of the enactment of this subsection and before January 1, 2023.

411.

Expensing for certain demolition and clean-up costs

(a)

In general

A taxpayer may elect to treat 50 percent of any qualified Louisiana storm and flood disaster area clean-up cost as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which such cost is paid or incurred.

(b)

Qualified Louisiana storm and flood disaster area clean-Up cost

For purposes of this subsection, the term qualified Louisiana storm and flood disaster area clean-up cost means any amount paid or incurred during the period beginning on the applicable disaster date, and ending on December 31, 2018, for the removal of debris from, or the demolition of structures on, real property which is located in the Louisiana storm and flood disaster area and which is—

(1)

held by the taxpayer for use in a trade or business or for the production of income, or

(2)

property described in section 1221(a)(1) in the hands of the taxpayer.

For purposes of the preceding sentence, amounts paid or incurred shall be taken into account only to the extent that such amount would (but for subsection (a)) be chargeable to capital account.
412.

Extension of expensing for environmental remediation costs

With respect to any qualified environmental remediation expenditure (as defined in section 198(b)) paid or incurred on or after the applicable disaster date, in connection with a qualified contaminated site located in the Louisiana storm and flood disaster area, section 198 (relating to expensing of environmental remediation costs) shall be applied—

(1)

in the case of expenditures paid or incurred on or after the applicable disaster date, and before January 1, 2019, by substituting December 31, 2018 for the date contained in section 198(h), and

(2)

except as provided in section 198(d)(2), by treating petroleum products (as defined in section 4612(a)(3)) as a hazardous substance.

413.

Treatment of net operating losses attributable to Louisiana storm and flood disaster area losses

(a)

In general

If a portion of any net operating loss of the taxpayer for any taxable year is a qualified Louisiana storm and flood disaster area loss, the following rules shall apply:

(1)

Extension of carryback period

Section 172(b)(1) of the Internal Revenue Code of 1986 shall be applied with respect to such portion—

(A)

by substituting 5 taxable years for 2 taxable years in subparagraph (A)(i) thereof, and

(B)

by not taking such portion into account in determining any eligible loss of the taxpayer under subparagraph (F) thereof for the taxable year.

(2)

Suspension of 90 percent amt limitation

Section 56(d)(1) of such Code shall be applied by increasing the amount determined under subparagraph (A)(ii)(I) thereof by the sum of the carrybacks and carryovers of any net operating loss attributable to such portion.

(b)

Qualified Louisiana storm and flood disaster area loss

(1)

In general

For purposes of subsection (a), the term qualified Louisiana storm and flood disaster area loss means the lesser of—

(A)

the excess of—

(i)

the net operating loss for such taxable year, over

(ii)

the specified liability loss for such taxable year to which a 10-year carryback applies under section 172(b)(1)(C) of such Code, or

(B)

the aggregate amount of the following deductions to the extent taken into account in computing the net operating loss for such taxable year:

(i)

Any deduction for any qualified Louisiana storm and flood disaster area casualty loss.

(ii)

Any deduction for moving expenses paid or incurred after the applicable disaster date, and before January 1, 2019, and allowable under this chapter to any taxpayer in connection with the employment of any individual—

(I)

whose principal place of abode was located in the Louisiana storm and flood disaster area before the applicable disaster date,

(II)

who was unable to remain in such abode as the result of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), and

(III)

whose principal place of employment with the taxpayer after such expense is located in the Louisiana storm and flood disaster area.

For purposes of this subparagraph, the term moving expenses has the meaning given such term by section 217(b) of such Code, except that the taxpayer’s former residence and new residence may be the same residence if the initial vacating of the residence was as the result of the severe storms and flooding giving rise to the Presidential declaration described in section 2(1).
(iii)

Any deduction allowable under this chapter for expenses paid or incurred on or after the applicable disaster date, and before January 1, 2019, to temporarily house any employee of the taxpayer whose principal place of employment is in the Louisiana storm and flood disaster area.

(iv)

Any deduction for depreciation (or amortization in lieu of depreciation) allowable under this chapter with respect to any qualified Louisiana storm and flood disaster area property for the taxable year such property is placed in service.

(v)

Any deduction allowable under this chapter for repair expenses (including expenses for removal of debris) paid or incurred on or after the applicable disaster date, and before January 1, 2019, with respect to any damage attributable to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1) and in connection with property which is located in the Louisiana storm and flood disaster area.

(2)

Qualified Louisiana storm and flood disaster area property

For purposes of this subsection—

(A)

In general

The term qualified Louisiana storm and flood disaster area property means property—

(i)
(I)

which is described in section 168(k)(2)(A)(i) of the Internal Revenue Code of 1986, or

(II)

which is nonresidential real property or residential rental property,

(ii)

substantially all of the use of which is in the Louisiana storm and flood disaster area and is in the active conduct of a trade or business by the taxpayer in such area,

(iii)

the original use of which in the Louisiana storm and flood disaster area commences with the taxpayer on or after the applicable disaster date,

(iv)

which is acquired by the taxpayer by purchase (as defined in section 179(d) of such Code) on or after the applicable disaster date, but only if no written binding contract for the acquisition was in effect before the applicable disaster date, and

(v)

which is placed in service by the taxpayer on or before December 31, 2018 (December 31, 2019, in the case of nonresidential real property and residential rental property).

(B)

Exceptions

(i)

Alternative depreciation property

Such term shall not include any property described in section 168(k)(2)(D) of such Code.

(ii)

Tax-exempt bond-financed property

Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of such Code.

(iii)

Qualified revitalization buildings

Such term shall not include any qualified revitalization building with respect to which the taxpayer has elected the application of paragraph (1) or (2) of section 1400I(a) of such Code.

(c)

Qualified Louisiana storm and flood area casualty loss

(1)

In general

For purposes of paragraph (1)(B)(i), the term qualified Louisiana storm and flood area casualty loss means any uncompensated section 1231 loss (as defined in section 1231(a)(3)(B) of such Code) of property located in the Louisiana storm and flood disaster area, if—

(A)

such loss is allowed as a deduction under section 165 of such Code for the taxable year, and

(B)

such loss is by reason of the storms and flooding giving rise to the Presidential declaration described in section 2(1).

(2)

Reduction for gains from involuntary conversion

The amount of qualified Louisiana storm and flood area casualty loss which would (but for this paragraph) be taken into account under paragraph (1) for any taxable year shall be reduced by the amount of any gain recognized by the taxpayer for such year from the involuntary conversion by reason of the storms and flooding giving rise to the Presidential declaration described in section 2(1) of property located in the Louisiana storm and flood disaster area.

(3)

Coordination with general disaster loss rules

Section 165(i) of such Code shall not apply to any qualified Louisiana storm and flood disaster area casualty loss to the extent such loss is taken into account under this subsection.

(4)

Special rules

For purposes of paragraph (1), rules similar to the rules of paragraphs (2) and (3) of section 172(i) of such Code shall apply with respect to such portion.

414.

Increased expensing for qualified timber property

(a)

In general

In the case of qualified timber property any portion of which is located in the Louisiana storm and flood disaster area, the limitation under subparagraph (B) of section 194(b)(1) of such Code shall be increased by the lesser of—

(1)

the limitation which would (but for this section) apply under such subparagraph, or

(2)

the amount of reforestation expenditures (as defined in section 194(c)(3) of such Code) paid or incurred by the taxpayer with respect to such qualified timber property during the specified portion of the taxable year.

(b)

Definitions

For purposes of this subsection—

(1)

Specified portion

The term specified portion means that portion of the taxable year which is on or after the applicable disaster date, and before January 1, 2019.

(2)

Qualified timber property

The term qualified timber property has the meaning given such term in section 194(c)(1) of such Code.

415.

Disaster loss carryback

(a)

In general

In the case of a loss occurring in the Louisiana storm and flood disaster area and attributable to the severe storms and flooding giving rise to the Presidential declaration described in section 2(1), at the election of the taxpayer, section 165(i)(1) of the Internal Revenue Code of 1986 shall be applied by substituting any of the 3 taxable years preceding for the taxable year immediately preceding.

(b)

Special rules

(1)

Determined without regard to adjusted gross income

Any loss described in subsection (a) shall be determined for the taxable year without regard to section 165(h)(2)(A) of such Code.

(2)

Treated as sale or exchange

Notwithstanding section 165(h)(2)(B) of such Code, any loss described in subsection (a) shall be treated as a loss from a sale or exchange of a capital asset.

416.

Housing relief for individuals affected by Hurricane Katrina

(a)

Exclusion of employer-Provided housing for individual affected by Louisiana storms and flooding

(1)

In general

Gross income of a qualified employee shall not include the value of any lodging furnished in kind to such employee (and such employee's spouse or any of such employee’s dependents) by or on behalf of a qualified employer for any month during the taxable year.

(2)

Limitation

The amount which may be excluded under paragraph (1) for any month for which lodging is furnished during the taxable year shall not exceed $600.

(3)

Treatment of exclusion

The exclusion under paragraph (1) shall be treated as an exclusion under section 119 of such Code (other than for purposes of sections 3121(a)(19) and 3306(b)(14) of such Code).

(b)

Employer credit for housing employees affected by Louisiana storms and flooding

For purposes of section 38, in the case of a qualified employer, the Louisiana storm and flood housing credit for any month during the taxable year is an amount equal to 30 percent of any amount which is excludable from the gross income of a qualified employee of such employer under subsection (a) and not otherwise excludable under section 119 of such Code.

(c)

Qualified employee

For purposes of this section, the term qualified employee means, with respect to any month, an individual—

(1)

who had a principal residence (as defined in section 121 of such Code) in the Louisiana storm and flood disaster area on the applicable disaster date, and

(2)

who performs substantially all employment services—

(A)

in the Louisiana storm and flood disaster area, and

(B)

for the qualified employer which furnishes lodging to such individual.

(d)

Qualified employer

For purposes of this section, the term qualified employer means any employer with a trade or business located in the Louisiana storm and flood disaster area.

(e)

Certain rules To apply

For purposes of this subsection, rules similar to the rules of sections 51(i)(1) and 52 of such Code shall apply.

(f)

Application of section

This section shall apply to lodging furnished during the period—

(1)

beginning on the first day of the first month beginning after the date of the enactment of this section, and

(2)

ending on the date which is 6 months after the first day described in paragraph (1).

(g)

Treated as part of general business credit

The Louisiana storm and flood housing credit determined under subsection (b) shall be treated as listed in section 38(b) of the Internal Revenue Code of 1986.