Internal Revenue Code:Sec. 130. Certain personal injury liability assignments

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter B - Computation of Taxable Income
         PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
       

Statute

    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 of 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), or as compensation under
    any workmen's compensation act, on account of personal injury or
    sickness (in a case involving physical injury or physical sickness)
    -
        (1) if the assignee assumes such liability from a person who is
      a party to the suit or agreement, or the workmen's compensation
      claim, and
        (2) if -
          (A) such periodic payments are fixed and determinable as to
        amount and time of payment,
          (B) such periodic payments cannot be accelerated, deferred,
        increased, or decreased by the recipient of such payments,
          (C) the assignee's obligation on account of the personal
        injuries or sickness is no greater than the obligation of the
        person who assigned the liability, and
          (D) such periodic payments are excludable from the gross
        income of the recipient under paragraph (1) or (2) of section
        104(a).
    The determination for purposes of this chapter of when the
    recipient is treated as having received any payment with respect to
    which there has been a qualified assignment shall be made without
    regard to any provision of such assignment which grants the
    recipient rights as a creditor greater than those of a general
    creditor.
    (d) Qualified funding asset
      For purposes of this section, the term ''qualified funding
    asset'' means any annuity contract issued by a company licensed to
    do business as an insurance company under the laws of any State, or
    any obligation of the United States, if -
        (1) such annuity contract or obligation is used by the assignee
      to fund periodic payments under any qualified assignment,
        (2) the periods of the payments under the annuity contract or
      obligation are reasonably related to the periodic payments under
      the qualified assignment, and the amount of any such payment
      under the contract or obligation does not exceed the periodic
      payment to which it relates,
        (3) such annuity contract or obligation is designated by the
      taxpayer (in such manner as the Secretary shall by regulations
      prescribe) as being taken into account under this section with
      respect to such qualified assignment, and
        (4) such annuity contract or obligation is purchased by the
      taxpayer not more than 60 days before the date of the qualified
      assignment and not later than 60 days after the date of such
      assignment.
 

Sources

    (Added Pub. L. 97-473, title I, Sec. 101(b)(1), Jan. 14, 1983, 96
    Stat. 2605; amended Pub. L. 99-514, title X, Sec. 1002(a), Oct. 22,
    1986, 100 Stat. 2388; Pub. L. 100-647, title VI, Sec. 6079(b)(1),
    Nov. 10, 1988, 102 Stat. 3709; Pub. L. 105-34, title IX, Sec.
    962(a), Aug. 5, 1997, 111 Stat. 891.)
 

Miscellaneous

                              PRIOR PROVISIONS
      A prior section 130 was renumbered section 140 of this title.
                                 AMENDMENTS
      1997 - Subsec. (c). Pub. L. 105-34, Sec. 962(a)(1), inserted '',
    or as compensation under any workmen's compensation act,'' after
    ''(whether by suit or agreement)'' in introductory provisions.
      Subsec. (c)(1). Pub. L. 105-34, Sec. 962(a)(2), inserted ''or the
    workmen's compensation claim,'' after ''agreement,''.
      Subsec. (c)(2)(D). Pub. L. 105-34, Sec. 962(a)(3), substituted
    ''paragraph (1) or (2) of section 104(a)'' for ''section
    104(a)(2)''.
      1988 - Subsec. (c). Pub. L. 100-647, in par. (2), redesignated
    subpars. (D) and (E) as (C) and (D), respectively, struck out
    former subpar. (C) which provided that the assignee does not
    provide to the recipient of such payments rights against the
    assignee which are greater than those of a general creditor, and as
    concluding provisions, inserted at end ''The determination for
    purposes of this chapter of when the recipient is treated as having
    received any payment with respect to which there has been a
    qualified assignment shall be made without regard to any provision
    of such assignment which grants the recipient rights as a creditor
    greater than those of a general creditor.''
      1986 - Subsec. (c). Pub. L. 99-514 inserted ''(in a case
    involving physical injury or physical sickness)''.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 962(b) of Pub. L. 105-34 provided that: ''The amendments
    made by subsection (a) (amending this section) shall apply to
    claims under workmen's compensation acts filed after the date of
    the enactment of this Act (Aug. 5, 1997).''
                      EFFECTIVE DATE OF 1988 AMENDMENT
      Section 6079(b)(2) of Pub. L. 100-647 provided that: ''The
    amendment made by paragraph (1) (amending this section) shall apply
    to assignments after the date of the enactment of this Act (Nov.
    10, 1988).''
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Section 1002(b) of Pub. L. 99-514 provided that: ''The amendment
    made by this section (amending this section) shall apply to
    assignments entered into after December 31, 1986, in taxable years
    ending after such date.''
                               EFFECTIVE DATE
      Section 101(c) of Pub. L. 97-473 provided that: ''The amendments
    made by this section (enacting this section and amending section
    104 of this title) shall apply to taxable years ending after
    December 31, 1982.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 72, 5891 of this title.