Internal Revenue Code – Section 130

Sec. 130. Certain personal injury liability assignments

-STATUTE-

(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.

 

-SOURCE-

(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.)

 

 

-MISC1-

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."

 

-End-