119-hr440

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 440 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 440

 To amend the Internal Revenue Code of 1986 to provide for Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) accounts.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 15, 2025

 Ms. Lee of Florida (for herself, Mr. Moskowitz, Mr. Buchanan, and Mr. 
 Scott Franklin of Florida) introduced the following bill; which was 
 referred to the Committee on Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to provide for Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) accounts.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``READY Accounts Act''.

SEC. 2. READY ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating 

section 224 
as 

section 225 and by inserting after 

section 223 the following new 
section:

``

SEC. 224. RESIDENTIAL EMERGENCY ASSET-ACCUMULATION DEFERRED TAXATION 
 YIELD

    (READY) ACCOUNTS.

 ``

    (a) Deduction Allowed.--In the case of an individual, there shall 
be allowed as a deduction for the taxable year an amount equal to the 
aggregate amount paid in cash during such taxable year by or on behalf 
of such individual to a Residential Emergency Asset-accumulation 
Deferred Taxation Yield

    (READY) account such individual.
 ``

    (b) Limitation.--
 ``

    (1) In general.--The amount allowable as a deduction 
 under subsection

    (a) to an individual for the taxable year 
 shall not exceed $4,500.
 ``

    (2) Inflation adjustment.--
 ``
        (A) In general.--In the case of any taxable year 
 beginning in a calendar year after 2025, the $4,500 
 dollar amount under paragraph

    (1) shall be increased by 
 an amount equal to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) the cost-of-living adjustment 
 determined under 

section 1

    (f)

    (3) for the 
 calendar year in which the taxable year begins, 
 determined by substituting in subparagraph
        (A)
            (ii) thereof `calendar year 2024' for 
 `calendar year 2016'.
 ``
        (B) Rounding.--If any amount as adjusted under 
 paragraph

    (1) is not a multiple of $50, such dollar 
 amount shall be rounded to the next lowest multiple of 
 $50.
 ``
            (c) Residential Emergency Asset-Accumulation Deferred Taxation 
Yield

    (READY) Account.--For purposes of this section--
 ``

    (1) In general.--The term `Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account' means a 
 trust created or organized in the United States as a 
 Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) account exclusively for the purpose of paying the 
 qualified home disaster mitigation and recovery expenses of the 
 account beneficiary, but only if the written governing 
 instrument creating the trust meets the following requirements:
 ``
        (A) Except in the case of a rollover contribution 
 described in subsection

    (e)

    (5) , no contribution will be 
 accepted--
 ``
            (i) unless it is in cash, or
 ``
            (ii) to the extent such contribution, 
 when added to previous contributions to the 
 trust for the calendar year, exceeds the dollar 
 amount in effect under subsection

    (b)

    (1) .
 ``
        (B) The trustee is a bank (as defined in 

section 408

    (n) ) or another person who demonstrates to the 
 satisfaction of the Secretary that the manner in which 
 such person will administer the trust will be 
 consistent with the requirements of this section.
 ``
            (C) No part of the trust assets will be invested 
 in life insurance contracts.
 ``
            (D) The assets of the trust will not be 
 commingled with other property except in a common trust 
 fund or common investment fund.
 ``
        (E) The interest of an individual in the balance 
 in his account is nonforfeitable.
 ``

    (2) Qualified home disaster mitigation and recovery 
 expenses.--
 ``
        (A) In general.--The term `qualified home 
 disaster mitigation and recovery expenses' means, with 
 respect to an account beneficiary, amounts paid by such 
 beneficiary for--
 ``
            (i) qualified disaster mitigation 
 measures, or
 ``
            (ii) qualified disaster recovery costs,
 with respect to a qualified home of the taxpayer.
 ``
        (B) Qualified disaster mitigation measures.--For 
 purposes of subparagraph
        (A) --
 ``
            (i) In general.--The term `qualified 
 disaster mitigation measures' means any measure 
 described in clause
            (ii) with respect to a 
 qualified home of the taxpayer if--
 ``
            (I) such measure meets such 
 criteria as the Secretary, in 
 consultation with the Administrator of 
 the Federal Emergency Management 
 Agency, considers appropriate to 
 mitigate damage from a natural or other 
 disaster, and
 ``
            (II) is certified by a qualified 
 industry professional as meeting such 
 criteria.
 ``
            (ii) Mitigation measures.--The following 
 measures are measures described in this clause:
 ``
            (I) Installing a roofing 
 underlayment to sheathing.
 ``
            (II) Replacing a roof covering.
 ``
            (III) Applying a foam adhesive to 
 reinforce the roof structure.
 ``
            (IV) Strengthening connection of 
 roof deck to roof framing.
 ``
            (V) Strengthening roof-to-wall 
 connections.
 ``
            (VI) Strengthening soffits.
 ``
            (VII) Strengthening attic 
 ventilation openings.
 ``
            (VIII) Installing impact-
 resistant windows.
 ``
            (IX) Installing impact-resistant 
 entry doors.
 ``
            (X) Elevating the residential 
 home.
 ``
            (XI) Installing ground anchors.
 ``
            (XII) If the qualified home was 
 built according to a building code from 
 a prior year, achieving the current 
 building code standard in the 
 applicable State or locality.
 ``
            (XIII) Such other measures 
 determined by the Secretary, in 
 consultation with the Administrator of 
 the Federal Emergency Management 
 Agency, to be consistent with the 
 purposes of this section.
 ``
            (iii) Qualified industry professional.--
 The term `qualified industry professional' 
 means an individual who meets such rules and 
 standards as determined appropriate by the 
 Secretary, in consultation with the 
 Administrator of the Federal Emergency 
 Management Agency.
 ``
            (C) Qualified disaster recovery costs.--For 
 purposes of subparagraph
        (A) , the term `qualified 
 disaster recovery costs' means costs for repairing 
 damage to the qualified home of the taxpayer if such 
 damage arises from fire, storm, or other casualty and 
 such costs are not compensated for by insurance or 
 otherwise.
 ``
            (D) Qualified home.--For purposes of this 
 section, the term `qualified home' means, with respect 
 to any taxable year, any structure which is--
 ``
            (i) owned by the taxpayer, and
 ``
            (ii) used by the taxpayer as the 
 taxpayer's principal residence (within the 
 meaning of 

section 121) for the taxable year.
 ``

    (3) Account beneficiary.--The term `account beneficiary' 
 means the individual on whose behalf the Residential Emergency 
 Asset-accumulation Deferred Taxation Yield

    (READY) account was 
 established.
 ``

    (4) Certain rules to apply.--Rules similar to the 
 following rules shall apply for purposes of this section:
 ``
        (A) Section 219
            (d) (2) (relating to no deduction 
 for rollovers).
 ``
        (B) Section 219

    (f)

    (3) (relating to time when 
 contributions deemed made).
 ``
            (C) Section 219

    (f)

    (5) (relating to employer 
 payments).
 ``
            (D) Section 408

    (g) (relating to community 
 property laws).
 ``
        (E) Section 408

    (h) (relating to custodial 
 accounts).
 ``
            (d) Tax Treatment of Accounts.--
 ``

    (1) In general.--A Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account is exempt 
 from taxation under this subtitle unless such account has 
 ceased to be a Residential Emergency Asset-accumulation 
 Deferred Taxation Yield

    (READY) account. Notwithstanding the 
 preceding sentence, any such account is subject to the taxes 
 imposed by 

section 511 (relating to imposition of tax on 
 unrelated business income of charitable, etc. organizations).
 ``

    (2) Account terminations.--Rules similar to the rules of 
 paragraphs

    (2) and

    (4) of 

section 408

    (e) shall apply to 
 Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) accounts, and any amount treated as distributed 
 under such rules shall be treated as not used to pay qualified 
 home disaster mitigation and recovery expenses.
 ``

    (e) Tax Treatment of Distributions.--
 ``

    (1) Amounts used for qualified home disaster mitigation 
 and recovery expenses.--Any amount paid or distributed out of a 
 Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) account which is used exclusively to pay 
 qualified home disaster mitigation and recovery expenses of the 
 account beneficiary shall not be includible in gross income.
 ``

    (2) Inclusion of amounts not used for qualified home 
 disaster mitigation and recovery expenses.--Any amount paid or 
 distributed out of a Residential Emergency Asset-accumulation 
 Deferred Taxation Yield

    (READY) account which is not used 
 exclusively to pay the qualified home disaster mitigation and 
 recovery expenses of the account beneficiary shall be included 
 in the gross income of such beneficiary.
 ``

    (3) Excess contributions returned before due date of 
 return.--
 ``
        (A) In general.--If any excess contribution is 
 contributed for a taxable year to any Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account of an individual, paragraph

    (2) shall 
 not apply to distributions from the Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) accounts of such individual (to the extent such 
 distributions do not exceed the aggregate excess 
 contributions to all such accounts of such individual 
 for such year) if--
 ``
            (i) such distribution is received by the 
 individual on or before the last day prescribed 
 by law (including extensions of time) for 
 filing such individual's return for such 
 taxable year, and
 ``
            (ii) such distribution is accompanied by 
 the amount of net income attributable to such 
 excess contribution.
 Any net income described in clause
            (ii) shall be 
 included in the gross income of the individual for the 
 taxable year in which it is received.
 ``
        (B) Excess contribution.--For purposes of 
 subparagraph
        (A) , the term `excess contribution' means 
 any contribution (other than a rollover contribution 
 described in paragraph

    (5) ) which is not deductible 
 under this section.
 ``

    (4) Additional tax on distributions not used for 
 qualified home disaster mitigation and recovery expenses.--The 
 tax imposed by this chapter on the account beneficiary for any 
 taxable year in which there is a payment or distribution from a 
 Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) account of such beneficiary which is includible 
 in gross income under paragraph

    (2) shall be increased by 20 
 percent of the amount which is so includible.
 ``

    (5) Rollover contribution.--An amount is described in 
 this paragraph as a rollover contribution if it meets the 
 requirements of subparagraphs
        (A) and
        (B) .
 ``
        (A) In general.--Paragraph

    (2) shall not apply to 
 any amount paid or distributed from a Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account to the account beneficiary to the 
 extent the amount received is paid into a Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account for the benefit of such beneficiary not 
 later than the 60th day after the day on which the 
 beneficiary receives the payment or distribution.
 ``
        (B) Limitation.--This paragraph shall not apply 
 to any amount described in subparagraph
        (A) received by 
 an individual from a Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account 
 if, at any time during the 1-year period ending on the 
 day of such receipt, such individual received any other 
 amount described in subparagraph
        (A) from a Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account which was not includible in the 
 individual's gross income because of the application of 
 this paragraph.
 ``

    (6) Transfer of account incident to divorce.--The 
 transfer of an individual's interest in a Residential Emergency 
 Asset-accumulation Deferred Taxation Yield

    (READY) account to 
 an individual's spouse or former spouse under a divorce or 
 separation instrument described in clause
            (i) of 

section 121
            (d) (3)
            (C) shall not be considered a taxable transfer made by 
 such individual notwithstanding any other provision of this 
 subtitle, and such interest shall, after such transfer, be 
 treated as a Residential Emergency Asset-accumulation Deferred 
 Taxation Yield

    (READY) account with respect to which such 
 spouse is the account beneficiary.
 ``

    (7) Treatment after death of account beneficiary.--
 ``
        (A) Treatment if designated beneficiary is 
 spouse.--If the account beneficiary's surviving spouse 
 acquires such beneficiary's interest in a Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account by reason of being the designated 
 beneficiary of such account at the death of the account 
 beneficiary, such Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account 
 shall be treated as if the spouse were the account 
 beneficiary.
 ``
        (B) Other cases.--If, by reason of the death of 
 the account beneficiary, any person acquires the 
 account beneficiary's interest in a Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account in a case to which subparagraph
        (A) does not apply--
 ``
            (i) such account shall cease to be a 
 Residential Emergency Asset-accumulation 
 Deferred Taxation Yield

    (READY) account as of 
 the date of death, and
 ``
            (ii) an amount equal to the fair market 
 value of the assets in such account on such 
 date shall be includible if such person is not 
 the estate of such beneficiary, in such 
 person's gross income for the taxable year 
 which includes such date, or if such person is 
 the estate of such beneficiary, in such 
 beneficiary's gross income for the last taxable 
 year of such beneficiary.
 ``

    (f) Reports.--
 ``

    (1) In general.--The Secretary may require the trustee of 
 a Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) account to make such reports regarding such 
 account to the Secretary and to the account beneficiary with 
 respect to contributions, distributions, the return of excess 
 contributions, and such other matters as the Secretary 
 determines appropriate.
 ``

    (2) Time and manner of reports.--The reports required by 
 this subsection shall be filed at such time and in such manner 
 and furnished to such individuals at such time and in such 
 manner as may be required by the Secretary.
 ``

    (g) Regulations.-- The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section and to prevent the abuse of such purposes.''.

    (b) Excess Contributions.--

    (1) In general.--

Section 4973

    (a) of the Internal Revenue 
 Code of 1986 is amended by striking ``or'' at the end of 
 paragraph

    (5) , by inserting ``or'' at the end of paragraph

    (6) , 
 and by inserting after paragraph

    (6) the following new 
 paragraph:
 ``

    (7) a Residential Emergency Asset-accumulation Deferred 
 Taxation Yield

    (READY) account (within the meaning of 

section 224),''.

    (2) Excess contributions.--

Section 4973 of such Code is 
 amended by adding at the end the following new subsection:
 ``
            (i) Excess Contributions to READY Accounts.--
 ``

    (1) In general.--For purposes of this section, in the 
 case of a Residential Emergency Asset-accumulation Deferred 
 Taxation Yield

    (READY) account (within the meaning of 

section 224), the term `excess contributions' means the sum of--
 ``
        (A) the aggregate amount contributed for the 
 taxable year to such accounts (other than rollover 
 contributions described in 

section 224

    (e)

    (5) ) which is 
 not allowed as a deduction under 

section 224 fo such 
 year, and, and
 ``
        (B) the amount determined under this subsection 
 for the preceding taxable year, reduced by the sum of--
 ``
            (i) the distributions out of the accounts 
 which were included in gross income under 
 

section 224

    (e)

    (2) , and
 ``
            (ii) the excess (if any) of the maximum 
 amount allowed as a deduction under 

section 224

    (b) for the taxable year over the amount 
 contributed to the accounts for the taxable 
 year.
 ``

    (2) Special rules.--For purposes of this subsection, any 
 contribution which is distributed out of the Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) account in a distribution to which 

section 223

    (e)

    (3) applies 
 shall be treated as an amount not contributed.''.
            (c) Application of Prohibited Transaction Rules.--

    (1) In general.--

Section 4975

    (e)

    (1) of the Internal Revenue 
 Code of 1986 is amended by striking ``or'' at the end of 
 subparagraph
        (F) , by redesignating subparagraph
        (G) as 
 subparagraph
        (H) , and by inserting after subparagraph
        (F) the 
 following new subparagraph:
 ``
        (G) a Residential Emergency Asset-accumulation 
 Deferred Taxation Yield

    (READY) account described in 
 

section 224, or''.

    (2) Special rule.--

Section 4975
            (c) of such Code is amended 
 by adding at the end the following new paragraph:
 ``

    (8) Special rule for residential emergency asset-
 accumulation deferred taxation yield

    (ready) accounts.--An 
 individual for whose benefit a Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account (within 
 the meaning of 

section 224) is established shall be exempt from 
 the tax imposed by this section with respect to any transaction 
 concerning such account (which would otherwise be taxable under 
 this section) if, with respect to such transaction, the account 
 ceases to be a Residential Emergency Asset-accumulation 
 Deferred Taxation Yield

    (READY) account by reason of the 
 application of 

section 224
            (d) (2) to such account.''.
            (d) Conforming Amendments.--

    (1) Section 26

    (b)

    (2) of the Internal Revenue Code of 1986 
 is amended by striking ``and'' at the end of subparagraph
        (Y) , 
 by striking the period at the end of subparagraph
        (Z) and 
 inserting ``, and'', and by inserting after subparagraph
        (Y) the following:
 ``

    (AA) section 224

    (e)

    (4) .''.

    (2) Section 62

    (a) of such Code is amended by inserting 
 after paragraph

    (21) the following new paragraph:
 ``

    (22) Residential emergency asset-accumulation deferred 
 taxation yield

    (ready) account.--The deduction allowed by 
 

section 224.''.

    (3) Section 165

    (h) of such Code is amended by adding at the 
 end the following new paragraph:
 ``

    (6) Coordination with expenditures from ready accounts.--
 No deduction shall be allowed with respect to any loss 
 described in subsection

    (a)

    (3) to the extent the taxpayer has 
 made an expenditure from a Residential Emergency Asset-
 accumulation Deferred Taxation Yield

    (READY) account (as 
 defined in 

section 224) which is taken into account under 
 

section 224
            (c) (2)
            (C) as a cost with respect to such loss.''.

    (4) Section 877A of such Code is amended--
        (A) in subsection

    (e)

    (2) by inserting ``a 
 Residential Emergency Asset-accumulation Deferred 
 Taxation Yield

    (READY) account (as defined in 

section 224),'' after ``a health savings account (as defined in 
 

section 223),'', and
        (B) in subsection

    (g)

    (6) by inserting 
 ``224

    (e)

    (4) ,'' after ``223

    (f)

    (4) ,''.

    (5) Section 6693

    (a)

    (2) of such Code is amended by striking 
 ``and'' at the end of subparagraph
        (E) , by striking the period 
 at the end of subparagraph
        (F) and inserting ``, and'', and by 
 inserting after subparagraph
        (F) the following new 
 subparagraph:
 ``
        (G) section 224

    (f) (relating to Residential 
 Emergency Asset-accumulation Deferred Taxation Yield

    (READY) accounts).''.

    (6) The table of sections for part VII of subchapter B of 
 chapter 1 of such Code is amended redesignating the item 
 relating to 

section 224 as relating to 

section 225 and by 
 inserting after the item relating to 

section 223 the following 
 new item:

``

Sec. 224. Residential Emergency Asset-accumulation Deferred Taxation 
 Yield

    (READY) accounts.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.
 <all>