(a) In general
A taxpayer may elect to treat any qualified disaster expenses which are paid or incurred by the taxpayer as an expense which is not chargeable to capital account. Any expense which is so treated shall be allowed as a deduction for the taxable year in which it is paid or incurred.
(b) Qualified disaster expense
For purposes of this section, the term “qualified disaster expense” means any expenditure—
(1) which is paid or incurred in connection with a trade or business or with business-related property,
(2) which is—
(A) for the abatement or control of hazardous substances that were released on account of a federally declared disaster occurring before January 1, 2010,
(B) for the removal of debris from, or the demolition of structures on, real property which is business-related property damaged or destroyed as a result of a federally declared disaster occurring before such date, or
(C) for the repair of business-related property damaged as a result of a federally declared disaster occurring before such date, and
(3) which is otherwise chargeable to capital account.
(c) Other definitions
For purposes of this section—
(1) Business-related property
The term “business-related property” means property—
(A) held by the taxpayer for use in a trade or business or for the production of income, or
(B) described in section 1221(a)(1) in the hands of the taxpayer.
(2) Federally declared disaster
The term “federally declared disaster” has the meaning given such term by section 165(h)(3)(C)(i).
(d) Deduction recaptured as ordinary income on sale, etc.
Solely for purposes of section 1245, in the case of property to which a qualified disaster expense would have been capitalized but for this section—
(1) the deduction allowed by this section for such expense shall be treated as a deduction for depreciation, and
(2) such property (if not otherwise section 1245 property) shall be treated as section 1245 property solely for purposes of applying section 1245 to such deduction.
(e) Coordination with other provisions
Sections 198, 280B, and 468 shall not apply to amounts which are treated as expenses under this section.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
(Added Pub. L. 110–343, div. C, title VII, §707(a), Oct. 3, 2008, 122 Stat. 3923.)
Pub. L. 110–343, div. C, title VII, §707(c), Oct. 3, 2008, 122 Stat. 3924, provided that: “The amendments made by this section [enacting this section] shall apply to amounts paid or incurred after December 31, 2007[,] in connection with disaster[s] declared after such date.”