Page:United States Statutes at Large Volume 96 Part 2.djvu/1243

 PUBLIC LAW 97-473—JAN. 14, 1983

Public Law 97-473 97th Congress

96 STAT. 2605

An Act

To amend the Internal Revenue Code of 1954 with respect to the tax treatment of periodic payments for damages received on account of personal injury or sickness, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. AMENDMENT OF 1954 CODE.

Whenever in title I or II an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954.

Jan. 14, 1983 [H.R. 5470] Dcunages for personal injury or sickness, tax treatment of periodic payments. 26 USC 1 et seq.

TITLE I—INCOME TAX PROVISIONS SEC. 101. TREATMENT OF RECIPIENT OF SETTLEMENT PERIODIC PAYMENTS. (a) TREATMENT OF RECIPIENT.—Paragraph (2) of section 104(a)

26 USC 104.

(relating to compensation for injuries or sickness) is amended by striking out "whether by suit or agreement" and inserting in lieu thereof "whether by suit or agreement and whether as lump sums or as periodic payments". (b) TREATMENT OF ASSIGNEE-PAYOR.—

(1) IN GENERAL.—Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by redesignating section 130 as section 131 and by inserting 26 USC 131. after section 129 the following new section: "SEC. 130. CERTAIN PERSONAL INJURY LIABILITY ASSIGNMENTS.

"(a) IN GENERAL.—Any amount received for agreeing to a qualified assignment shall not be included in gross income to the extent that such amount does not exceed the aggregate cost of any qualified funding assets. "(b) TREATMENT OP QUALIFIED FUNDING ASSET.—In the case of any qualified funding asset— "(1) the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and "(2) any gain recognized on a disposition of such asset shall be treated as ordinary income. "(c) QUALIFIED ASSIGNMENT.—For purposes of this section, the term 'qualified assignment' means any assignment of a liability to make periodic payments as damages (whether by suit or agreement) on account of personal injury or sickness— "(1) if the assignee assumes such liability from a person who is a party to the suit or agreement, and "(2) if—

26 USC 130.

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