NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.

SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.(a) In General.—Paragraph (1) of section 172(b) is amended by adding at the end the following new subparagraph:“(J) Certain losses attributable federally declared disasters.—In the case of a taxpayer who has a qualified disaster loss (as defined in subsection (j)), such loss shall be a net operating loss carryback to each of the 5 taxable years preceding the taxable year of such loss.”.(b) Qualified Disaster Loss.—Section 172 is amended by redesignating subsections (j) and (k) as subsections (k) and (l), respectively, and by inserting after subsection (i) the following new subsection:“(j) Rules Relating to Qualified Disaster Losses.—For purposes of this section—“(1) In general.—The term ‘qualified disaster loss’ means the lesser of—“(A) the sum of—“(i) the losses allowable under section 165 for the taxable year—“(I) attributable to a federally declared disaster (as defined in section 165(h)(3)(C)(i)) occurring before January 1, 2010, and“(II) occurring in a disaster area (as defined in section 165(h)(3)(C)(ii)), and“(ii) the deduction for the taxable year for qualified disaster expenses which is allowable under section 198A(a) or which would be so allowable if not otherwise treated as an expense, or“(B) the net operating loss for such taxable year.“(2) Coordination with subsection (b)(2).—For purposes of applying subsection (b)(2), a qualified disaster loss for any taxable year shall be treated in a manner similar to the manner in which a specified liability loss is treated.“(3) Election.—Any taxpayer entitled to a 5-year carryback under subsection (b)(1)(J) from any loss year may elect to have the carryback period with respect to such loss year determined without regard to subsection (b)(1)(J). Such 122 STAT. 3925 election shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the net operating loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.“(4) Exclusion.—The term ‘qualified disaster loss’ shall not include any loss with respect to any property described in section 1400N(p)(3).”.(c) Loss Deduction Allowed in Computing Alternative Minimum Taxable Income.—Subsection (d) of section 56 is amended by adding at the end the following new paragraph:“(3) Net operating loss attributable to federally declared disasters.—In the case of a taxpayer which has a qualified disaster loss (as defined by section 172(b)(1)(J)) for the taxable year, paragraph (1) shall be applied by increasing the amount determined under subparagraph (A)(ii)(I) thereof by the sum of the carrybacks and carryovers of such loss.”.(d) Conforming Amendments.—(1) Clause (ii) of section 172(b)(1)(F) is amended by inserting “or qualified disaster loss (as defined in subsection (j))” before the period at the end of the last sentence.(2) Paragraph (1) of section 172(i) is amended by adding at the end the following new flush sentence:“Such term shall not include any qualified disaster loss (as defined in subsection (j)).”.(e) Effective Date.—The amendments made by this section shall apply to losses arising in taxable years beginning after December 31, 2007, in connection with disasters declared after such date.