To amend the Internal Revenue Code of 1986 to provide that tax attributes shall not be reduced in connection with a discharge of indebtedness in a title 11 case of a company having asbestos-related claims against it.

June 18, 2003

Mr. COLLINS (for himself, Mr. LEWIS of Georgia, Ms. JACKSON-LEE of Texas, Mr. ROGERS of Kentucky, Ms. LEE, Mr. CONYERS, Mr. ENGLISH, and Mr. FOLEY) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide that tax attributes shall not be reduced in connection with a discharge of indebtedness in a title 11 case of a company having asbestos-related claims against it.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Asbestos Claims Tax Fairness Act of 2003'.

SEC. 2. PRESERVATION OF TAX ATTRIBUTES IN ASBESTOS TITLE 11 CASES.

(a) NO ATTRIBUTE REDUCTION IN ASBESTOS TITLE 11 CASES- Subsection (b) of section 108 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

`(6) NO ATTRIBUTE REDUCTION IN ASBESTOS TITLE 11 CASES-

`(A) IN GENERAL- Paragraph (1) shall not apply to any amount excluded from gross income under subparagraph (A) of subsection (a)(1) in an asbestos title 11 case.

`(B) ASBESTOS TITLE 11 CASE- For purposes of this paragraph, the term `asbestos title 11 case' means any case under title 11, United States Code, in which more than 50 percent of the value of the claims made against the company relate to liability arising from the manufacture, production, distribution, or use of asbestos.'

(b) EXCEPTION TO 2ND OWNERSHIP CHANGE RULE FOR ASBESTOS TITLE 11 CASES- Section 382(l)(5)(D) is amended by adding at the end the following sentence: `The preceding sentence shall not apply to a 2nd ownership change if the 1st ownership change was in an asbestos title 11 case (within the meaning of section 108(b)(6)(B)).'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to discharges of indebtedness and 2nd ownership changes occurring after December 31, 2002.

SEC. 2. 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. The preceding sentence shall not apply to gains from the sale of stock in any corporation against which such claims originally applied other than gains from a sale of substantially all of the fund's holdings in such corporation occurring within five years after the later of December 31, 2002, or the date the settlement fund first received stock in the corporation.'

(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 after December 31, 2002.

END