To amend the Internal Revenue Code of 1986 to provide relief for payment of asbestos-related claims.

April 4, 2001

Mr. COLLINS (for himself, Mr. LEWIS of Georgia, Mr. HYDE, Mr. CONYERS, Mr. SENSENBRENNER, Mr. BACHUS, Mr. BARR of Georgia, Mr. BECERRA, Mr. BERMAN, Mr. BLUNT, Mr. BOEHNER, Mr. BOUCHER, Mr. CAMP, Mr. CARDIN, Mr. COMBEST, Mr. CONDIT, Mr. CRANE, Mr. DAVIS of Illinois, Mr. DEAL of Georgia, Mr. DOOLITTLE, Ms. DUNN, Mr. EDWARDS, Mr. FARR of California, Mr. FOLEY, Mr. FRANK, Mr. GILLMOR, Mr. GOODE, Mr. GOODLATTE, Mr. GONZALEZ, Mr. GRAHAM, Mr. HALL of Texas, Mr. HALL of Ohio, Mr. HAYWORTH, Mr. HERGER, Mr. HOBSON, Mr. HOUGHTON, Mr. HUTCHINSON, Mr. ISAKSON, Mr. JEFFERSON, Mr. SAM JOHNSON of Texas, Mrs. JONES of Ohio, Mr. KANJORSKI, Ms. KAPTUR, Mr. KING, Mr. KLECZKA, Mr. LATOURETTE, Ms. LEE, Mr. LEWIS of Kentucky, Mr. MATSUI, Ms. MCKINNEY, Mr. MCNULTY, Mr. OXLEY, Mr. PHELPS, Mr. PORTMAN, Ms. PRYCE of Ohio, Mr. REYES, Ms. ROYBAL-ALLARD, Mr. SAWYER, Mr. SCARBOROUGH, Mr. SCOTT, Mr. SESSIONS, Mr. SHIMKUS, Mr. SPENCE, Mr. STRICKLAND, Mr. TANNER, Mr. TIBERI, Mr. THOMPSON of California, Mr. THORNBERRY, Mrs. THURMAN, Mr. VITTER, Mr. WATKINS, Mr. WELDON of Florida, Mr. WELLER, Mr. PITTS, and Mr. REGULA) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide relief for payment of asbestos-related claims.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION. 1. EXEMPTION FOR ASBESTOS-RELATED SETTLEMENT FUNDS.

(a) EXEMPTION FOR ASBESTOS-RELATED SETTLEMENT FUNDS- Subsection (b) of section 468B of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

`(6) EXEMPTION FROM TAX FOR ASBESTOS-RELATED SETTLEMENT FUNDS- Notwithstanding paragraph (1), no tax shall be imposed under this section or any other provision of this subtitle on any settlement fund to which this section or the regulations thereunder applies that is established for the principal purpose of resolving and satisfying present and future claims relating to asbestos.'.

(b) CONFORMING AMENDMENTS-

(1) Paragraph (1) of section 468B(b) of such Code is amended by striking `There' and inserting `Except as provided in paragraph (6), there'.

(2) Subsection (g) of section 468B of such Code is amended by inserting `(other than subsection (b)(6))' after `Nothing in any provision of law'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending on or after December 31, 2000.

SEC. 2. MODIFY TREATMENT OF ASBESTOS-RELATED NET OPERATING LOSSES.

(a) ASBESTOS-RELATED NET OPERATING LOSSES- Subsection (f) of section 172 of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), respectively, and by inserting after paragraph (3) the following new paragraph:

`(4) SPECIAL RULES FOR ASBESTOS LIABILITY LOSSES-

`(A) IN GENERAL- At the election of the taxpayer, the portion of any specified liability loss that is attributable to asbestos may, for purposes of subsection (b)(1)(C), be carried back to the taxable year in which the taxpayer, including any predecessor corporation, was first involved in the production or distribution of products containing asbestos and each subsequent taxable year. In determining its specified liability losses attributable to asbestos, the taxpayer may elect to take into account payments of related parties attributable to asbestos-related products produced or distributed by the taxpayer.

`(B) COORDINATION WITH CREDITS- If a deduction is allowable for any taxable year by reason of a carryback described in subparagraph (A)--

`(i) the credits allowable under part IV (other than subpart C) of subchapter A shall be determined without regard to such deduction, and

`(ii) the amount of taxable income taken into account with respect to the carryback under subsection (b)(2) for such taxable year shall be reduced by an amount equal to--

`(I) the increase in the amount of such credits allowable for such taxable year solely by reason of clause (i), divided by

`(II) the maximum rate of tax under section 1 or 11 (whichever is applicable) for such taxable year.

`(C) CARRYFORWARDS TAKEN INTO ACCOUNT BEFORE ASBESTOS-RELATED DEDUCTIONS- For purposes of this section--

`(i) in determining whether a net operating loss carryforward may be carried under subsection (b)(2) to a taxable year, taxable income for such year shall be determined without regard to the deductions referred to in paragraph (1)(A) with respect to asbestos, and

`(ii) if there is a net operating loss for such year after taking into account such carryforwards and deductions, the portion of such loss attributable to such deductions shall be treated as a specified liability loss that is attributable to asbestos.

`(D) LIMITATION- The amount of reduction in income tax liability arising from the election described in subparagraph (A) that exceeds the amount of reduction in income tax liability that would have resulted if the taxpayer utilized the 10-year carryback period under subsection (b)(1)(C) shall be devoted by the taxpayer solely to asbestos claimant compensation and related costs, through a settlement fund or otherwise.

`(E) COORDINATION WITH OTHER CARRYBACK LIMITATIONS- The amount of asbestos-related specified liability loss that may be absorbed in a prior taxable year (and the amount of refund attributable to such loss absorption) shall be determined without regard to any limitation under section 381, 382, or 1502 or the regulations thereunder.

`(F) PREDECESSOR CORPORATION- For purposes of this paragraph, a predecessor corporation shall include a corporation that transferred or distributed assets to the taxpayer in a transaction to which section 381(a) applies or that distributed the stock of the taxpayer in a transaction to which section 355 applies.'.

(b) CONFORMING AMENDMENT- Paragraph (7) of section 172(f) of such Code, as redesignated by this section, is amended by striking `10-year'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending on or after December 31, 2000.

END