Page:United States Statutes at Large Volume 100 Part 3.djvu/1007

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2815

"(5) COORDINATION WITH SUBTITLE F.—For purposes of subtitle F— "(A) a designated settlement fund shall be treated as a corporation, and "(B) any tax imposed by this subsection shall be treated as a tax imposed by section 11. "(c)

DEDUCTIONS NOT ALLOWED FOR TRANSFER OF INSURANCE

AMOUNTS.—No deduction shall be allowable for any qualified payment by the taxpayer of any amounts received from the settlement of any insurance claim to the extent such amounts are excluded from the gross income of the taxpayer. "(d) DEFINITIONS.—For purposes of this section— "(1) QUALIFIED PAYMENT.—The term 'qualified payment' means any money or property which is transferred to any designated settlement fund pursuant to a court order, other than— "(A) any amount which may be transferred from the fund to the taxpayer, or "(B) the transfer of any stock or indebtedness of the taxpayer (or any related person). "(2) DESIGNATED SETTLEMENT FUND.—The term 'designated settlement fund' means any fund— "(A) which is established pursuant to a court order, "(B) with respect to which no amounts may be transferred other than in the form of qualified payments, ,o/ "(C) which is administered by persons a majority of whom are independent of the taxpayer, "(D) which is established for the principal purpose of resolving and satisfying present and future claims against the taxpayer (or any related person or formerly related person) arising out of personal injury, death, or property damage, "(E) under the terms of which the taxpayer may not hold any beneficial interest in the income or corpus of the fund, and "(F) with respect to which an election is made under this section by the taxpayer. An election under this section shall be made at such time and in such manner as the Secretary shall by regulation prescribe. Such an election, once made, may be revoked only with the consent of the Secretary. "(3) RELATED PERSON.—The term 'related person' means a person related to the taxpayer within the meaning of section 267(b). "(e) NoNAPPLICABILITY OF SECTION.—This section shall not apply with respect to any liability of the taxpayer arising under any workers' compensation Act or any contested liability of the taxpayer within the meaning of section 461(f). "(f) OTHER FUNDS.—Except as provided in regulations, any payment in respect of a liability described in subsection (d)(2)(D) (and not described in subsection (e)) to a trust fund or escrow fund which is not a designated settlement fund shall not be treated as constituting economic performance." (B) CLERICAL AMENDMENT.—The table of sections for subpart C of part II of subchapter E of chapter 1 is amended by adding after the item relating to section 468A the following new item:

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