H.R. 1169 — Wildfire Victim Tax Relief and Recovery Act

This section provides that the Act may be cited as the “Wildfire Victim Tax Relief and Recovery Act.”

This section treats Texas Panhandle fire payments as qualified disaster relief payments under section 139(b) of the Internal Revenue Code of 1986. As background, section 139 excludes certain disaster-related payments from gross income, so this provision makes payments received by or on behalf of an individual for loss, damages, expenses, reduced real property value, closing costs, or inconvenience related to specified Texas Panhandle wildfires tax-free if provided by a Federal, State, or local government agency, Xcel Energy, or a subsidiary, insurer, agent, or related person of Xcel Energy. The covered fires are the Smokehouse Creek Fire, Windy Deuce Fire, Grape Vine Creek Fire, 687 Reamer Fire, and Roughneck Fire, which ignited in Hutchinson, Moore, and Gray Counties, Texas, between February 26, 2024, and March 3, 2024. This section applies to amounts received on or after February 26, 2024.

This section revises the involuntary conversion rules under section 1033 of the Internal Revenue Code of 1986 to treat livestock sold because of fire the same as livestock sold because of flood. Specifically, it (1) adds fire to the rule allowing nonrecognition of gain when livestock are sold on account of an involuntary conversion, (2) adds fire to the provision extending the replacement period for such livestock, (3) makes a conforming change to the heading of section 1033(e), and (4) adds fire to the rule allowing replacement of livestock with other property. Thus, taxpayers may defer recognition of gain from livestock sales caused by fire under the same tax treatment currently available for livestock sales caused by flood. The amendments apply to taxable years beginning after December 31, 2023.

This section revises the special tax rule for livestock sold because of weather-related disasters under 26 U.S.C. § 451(g) by adding fire to the list of qualifying events after flood. (Thus, livestock producers may defer recognition of gain from forced sales of livestock due to fire for taxable years beginning after December 31, 2023.)