119 STAT. 21 PUBLIC LAW 109–7—APR. 15, 2005
Public Law 109–7
109th Congress
An Act
To amend the Internal Revenue Code of 1986 to provide for the proper tax treatment
of certain disaster mitigation payments.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled ,
SECTION 1. PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGA-
TION PAYMENTS.
(a) Q UALIFIED DISASTER MITIGATION PAYMENTS EXCLUDED
FROM GROSS INCOME .—
(1) I N GENERAL .—Section 139 of the Internal Revenue Code
of 1986 (relating to disaster relief payments) is amended byadding at the end the following new subsections:‘‘(g) Q
UALIFIED DISASTER MITIGATION PAYMENTS .—
‘‘(1) I N GENERAL .—Gross income shall not include any
amount received as a qualified disaster mitigation payment.
‘‘(2) Q UALIFIED DISASTER MITIGATION PAYMENT DEFINED .—
For purposes of this section, the term ‘qualified disaster mitiga-tion payment’ means any amount which is paid pursuant tothe Robert T. Stafford Disaster Relief and Emergency Assist-ance Act (as in effect on the date of the enactment of thissubsection) or the National Flood Insurance Act (as in effecton such date) to or for the benefit of the owner of any propertyfor hazard mitigation with respect to such property. Such termshall not include any amount received for the sale or dispositionof any property.
‘‘(3) N
O INCREASE IN BASIS .—Notwithstanding any other
provision of this subtitle, no increase in the basis or adjustedbasis of any property shall result from any amount excludedunder this subsection with respect to such property.‘‘(h) D
ENIAL OF DOUBLE BENEFIT .—Notwithstanding any other
provision of this subtitle, no deduction or credit shall be allowed
(to the person for whose benefit a qualified disaster relief paymentor qualified disaster mitigation payment is made) for, or by reasonof, any expenditure to the extent of the amount excluded underthis section with respect to such expenditure.’’.
(2) C
ONFORMING AMENDMENTS .—
(A) Subsection (d) of section 139 of such Code is
amended by striking ‘‘a qualified disaster relief payment’’and inserting ‘‘qualified disaster relief payments and quali-fied disaster mitigation payments’’.
(B) Subsection (e) of section 139 of such Code is
amended by striking ‘‘and (f)’’ and inserting ‘‘, (f), and(g)’’.26 USC 139.Apr. 15, 2005
[H.R. 1134]
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LEGISLATIVE HISTORY—H.R. 1134:
CONGRESSIONAL RECORD, Vol. 151 (2005):
Mar. 14, considered and passed House.Apr. 13, considered and passed Senate, amended.Apr. 14, House concurred in Senate amendment.(b) C ERTAIN DISPOSITIONS OF PROPERTY UNDER HAZARD MITIGA –
TION PROGRAMS TREATED AS INVOLUNTARY CONVERSIONS .—Section
1033 of such Code (relating to involuntary conversions) is amendedby redesignating subsection (k) as subsection (l) and by insertingafter subsection (j) the following new subsection:
‘‘(k) S
ALES OR EXCHANGES UNDER CERTAIN HAZARD MITIGATION
PROGRAMS .—For purposes of this subtitle, if property is sold or
otherwise transferred to the Federal Government, a State or localgovernment, or an Indian tribal government to implement hazardmitigation under the Robert T. Stafford Disaster Relief and Emer-gency Assistance Act (as in effect on the date of the enactmentof this subsection) or the National Flood Insurance Act (as ineffect on such date), such sale or transfer shall be treated asan involuntary conversion to which this section applies.’’.
(c) E
FFECTIVE DATE.—
(1) Q UALIFIED DISASTER MITIGATION PAYMENTS .—The
amendments made by subsection (a) shall apply to amountsreceived before, on, or after the date of the enactment of thisAct.
(2) D
ISPOSITIONS OF PROPERTY UNDER HAZARD MITIGATION
PROGRAMS .—The amendments made by subsection (b) shall
apply to sales or other dispositions before, on, or after thedate of the enactment of this Act.
Approved April 15, 2005.26 USC 1033
note.26 USC 139 note.
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Brief
The Public Law 109-7 was enacted on April 15, 2005, to amend the Internal Revenue Code and provide proper tax treatment for certain disaster mitigation payments. The law excludes qualified disaster mitigation payments from gross income and denies a double benefit by not allowing deductions or credits for expenditures related to such payments. It also treats sales or transfers of property under hazard mitigation programs as involuntary conversions. This law applies to amounts received before, on, or after its enactment date.
Highlights content goes here...
Purpose
The purpose of Public Law 109-7, enacted on April 15, 2005, is to amend the Internal Revenue Code of 1986 to provide for the proper tax treatment of certain disaster mitigation payments. The law aims to exclude qualified disaster mitigation payments from gross income and ensure that no increase in basis or adjusted basis of any property results from such payments.
Key Provisions
The key provisions of Public Law 109-7 include:
- Qualified Disaster Mitigation Payments Excluded from Gross Income: Section 139 of the Internal Revenue Code is amended to exclude qualified disaster mitigation payments from gross income.
- Definition of Qualified Disaster Mitigation Payment: The term “qualified disaster mitigation payment” is defined as any amount paid pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act for hazard mitigation with respect to a property.
- No Increase in Basis: No increase in basis or adjusted basis of any property results from any amount excluded under this subsection.
- Denial of Double Benefit: No deduction or credit is allowed for, or by reason of, any expenditure to the extent of the amount excluded under this section with respect to such expenditure.
Industry Impact
The industry impact of Public Law 109-7 is significant, particularly for individuals and businesses affected by natural disasters. The law provides clarity on tax treatment for disaster mitigation payments, ensuring that recipients are not subject to unnecessary tax burdens. Additionally, the law’s provisions related to hazard mitigation programs under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act may influence property valuations and sales transactions.
Updates/Amendments
Public Law 109-7 has undergone amendments since its enactment in 2005. Section 1033 of the Internal Revenue Code is amended to treat certain dispositions of property under hazard mitigation programs as involuntary conversions. This amendment applies to sales or other dispositions before, on, or after the date of the enactment of this Act.
