A bill to provide tax relief to persons whose property was destroyed or damaged as a result of the collapse of the Teton Dam.

Excludes all compensation received for property damaged as a result of the Teton Dam failure in Idaho from gross income. Adjusts the basis of all property damaged as a result of such failure by subtracting compensation received.

Provides for nonrecognition of gain on sales of property which lost at least 50 percent of its market value as a result of the disaster when sold within two years by persons who owned the property at the time of the failure.

Prohibits any recapture of investment credits previously taken on property whose accelerated disposition or retirement was caused by the Teton Dam failure. Extends these provisions to all capital assets and property used in a trade or business without regard to any holding period requirement.