Credit for disaster mitigation expenditures

(a) In general Subpart B of part IV of subchapter A of chapter 1 is amended by inserting after section 27 the following new section: 28. Disaster mitigation expenditures (a) In general There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the expenditures paid for qualifying mitigation activities paid or incurred by the taxpayer during such taxable year with respect to real property owned or leased by the taxpayer. (b) Qualifying mitigation activities For purposes of this section, the term qualifying mitigation activity means an activity relating to a housing unit— (1) for property to— (A) improve the strength of a roof deck attachment; (B) create a secondary water barrier to prevent water intrusion or mitigate against potential water intrusion from wind-driven rain; (C) improve the durability, impact resistance (not less than class 3 or 4 rating), or fire resistance (not less than class A rating) of a roof covering; (D) brace gable-end walls; (E) reinforce the connection between a roof and supporting wall; (F) protect openings from penetration by wind-borne debris; (G) protect exterior doors and garages from natural hazards; (H) complete measures contained in the publication of the Federal Emergency Management Agency entitled Wind Retrofit Guide for Residential Buildings (P–804); (I) elevate the qualified dwelling unit, as well as utilities, machinery, or equipment, above the base flood elevation or other applicable minimum elevation requirement; (J) seal walls in the basement of the qualified dwelling unit using waterproofing compounds; or (K) protect propane tanks or other external fuel sources; (2) to install— (A) check valves to prevent flood water from backing up into drains; (B) flood vents, breakaway walls or open lattice for homes located in V zones; (C) a stormwater drainage system or improve an existing system; (D) natural or nature-based features for flood control, including living shorelines; (E) roof coverings, sheathing, flashing, roof and attic vents, eaves, or gutters that conform to ignition-resistant construction standards; (F) wall components for wall assemblies that conform to ignition-resistant construction standards; (G) a wall-to-foundation anchor or connector, or a shear transfer anchor or connector; (H) wood structural panel sheathing for strengthening cripple walls; (I) anchorage of the masonry chimney to the framing; (J) prefabricated lateral resisting systems; (K) a standby generator system consisting of a standby generator and an automatic transfer switch; (L) a storm shelter that meets the design and construction standards established by the International Code Council and the National Storm Shelter Association (ICC–500), or a safe room that satisfies the criteria contained in— (i) the publication of the Federal Emergency Management Agency entitled Safe Rooms for Tornadoes and Hurricanes (P–361); or (ii) the publication of the Federal Emergency Management Agency entitled Taking Shelter from the Storm (P–320); (M) a lightning protection system; (N) exterior walls, doors, windows, or other exterior dwelling unit elements that conform to ignition-resistant construction standards; (O) exterior deck or fence components that conform to ignition-resistant construction standards; (P) structure-specific water hydration systems, including fire mitigation systems such as interior sprinkler systems; (Q) flood openings for fully enclosed areas below the lowest floor of the dwelling unit; (R) lateral bracing for wall elements, foundation elements, and garage doors or other large openings to resist seismic loads; or (S) automatic shutoff valves for water and gas lines; (3) for services or equipment to— (A) create buffers around the qualified dwelling unit through the removal or reduction of flammable vegetation, including vertical clearance of tree branches; (B) create buffers around the dwelling unit through— (i) the removal of exterior deck or fence components or ignition-prone landscape features; or (ii) replacement of the components or features described in clause (i) with components or features that conform to ignition-resistant construction standards; (C) perform fire maintenance procedures identified by the Federal Emergency Management Agency or the United States Forest Service, including fuel management techniques such as creating fuel and fire breaks; or (D) replace flammable vegetation with less flammable species; (4) for property relating to satisfying the standards required for receipt of a FORTIFIED designation from the Insurance Institute for Business and Home Safety, provided that the qualified dwelling unit receives such designation following installation of such property; (5) for property relating to satisfying the standards required for receipt of a Wildfire Prepared Homes designation from the Insurance Institute for Business and Home Safety, provided that the qualified dwelling unit receives such designation following installation of such property; or (6) for any other hazard mitigation activity identified by the President, in consultation with the Administrator of the Federal Emergency Management Agency, for mitigation of a natural hazard. (c) Application with other credits (1) Business credit treated as part of general business credit So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to expenditures made in the ordinary course of the taxpayer’s trade or business (or, in the case of expenditures made by a State, would have been expenditures made in the ordinary course of the taxpayer’s trade or business if made by the taxpayer) shall be treated as a credit listed in section 38(b) for taxable year (and not allowed under subsection (a)). (2) Personal credit For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year. (d) Reduction of credit percentage where taxpayer expenditures less than 30 percent (1) In general If the expenditure percentage with respect to any item of expenditure described under subsection (a) is less than 30 percent, subsection (a) shall be applied by substituting the expenditure percentage for 30 percent with respect to such item of expenditure. (2) Expenditure percentage For purposes of this section, the term expenditure percentage means, with respect to any item of expenditure described under subsection (a) any portion of which is paid or incurred by a State, the ratio (expressed as a percentage) of— (A) the taxpayer’s expenditure for such item, divided by (B) the sum of the taxpayer’s and such State’s expenditures for such item. (e) Special rules (1) Treatment of expenditures related to marketable timber An expenditure shall not be taken into account for purposes of this section (whether made by the taxpayer or a State) if such expenditure is properly allocable to timber which is sold or exchanged by the taxpayer. The preceding sentence shall not apply to the extent that such amount exceeds the gain on such sale or exchange. (2) Treatment of reimbursements Any amount originally paid or incurred by the taxpayer which is reimbursed by a State under a qualified State disaster mitigation program shall be treated as paid by such State (and not by such taxpayer). (3) Basis reduction For purposes of this subtitle, if the basis of any property would (but for this paragraph) be determined by taking into account any expenditure described under subsection (a), the basis of such property shall be reduced by the amount of the credit allowed under subsection (a) with respect to such expenditure (determined without regard to subsection (c)). (4) Denial of double benefit The amount of any deduction or other credit allowable under this chapter for any expenditure for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such expenditure (determined without regard to subsection (c)).. (b) Conforming amendments (1) Section 38(b), as amended by the preceding provisions of this Act, is amended by striking plus at the end of paragraph (42), by striking the period at the end of paragraph (43) and inserting, plus, and by adding at the end the following new paragraph: (44) the portion of the disaster mitigation expenditures credit to which section 28(c)(1) applies.. (2) Section 1016(a), as amended by the preceding provisions of this Act, is amended by striking and at the end of paragraph (39), by striking the period at the end of paragraph (40) and inserting, and, and by adding at the end the following new paragraph: (41) to the extent provided in section 28(e)(2).. (3) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 27 the following new item: Sec. 28. Qualified disaster mitigation expenditures.. (c) Effective date The amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.