I 

118TH CONGRESS 

2D SESSION H. R. 9431 

To amend the Internal Revenue Code of 1986 to exclude from gross income 

the discharge of indebtedness of certain individuals who are unlawfully 

or wrongfully detained abroad. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 30, 2024 

Mr. BACON (for himself and Mr. GOTTHEIMER) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

from gross income the discharge of indebtedness of certain individuals who are unlawfully or wrongfully detained abroad. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Hostage Private Debt 

5 Tax Freedom Act’’. 


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1 SEC. 2. EXCLUSION FROM GROSS INCOME OF DISCHARGE 

2 OF INDEBTEDNESS OF CERTAIN INDIVIDUALS 

3 UNLAWFULLY OR WRONGFULLY DETAINED 

4 ABROAD. 

5 (a) IN GENERAL.—Section 108(a)(1) of the Internal 

6 Revenue Code of 1986 is amended by striking ‘‘or’’ at the 

7 end of subparagraph (D), by striking the period at the 

8 end of subparagraph (E) and inserting ‘‘, or’’, and by add9 ing at the end the following new subparagraph: 

10 ‘‘(F) in the case of a wrongfully detained 

11 abroad individual or such individual’s spouse, 

12 the indebtedness discharged is specified wrong13 fully detained indebtedness.’’. 

14 (b) RULES RELATED TO WRONGFULLY DETAINED

15 ABROAD INDIVIDUALS.—Section 108 of such Code is 

16 amended by adding at the end the following new sub17 section: 

18 ‘‘(j) PROVISIONS RELATED TO WRONGFULLY DE19 TAINED ABROAD INDIVIDUALS.—For purposes of this sec20 tion— 

21 ‘‘(1) IN GENERAL.—The term ‘wrongfully de22 tained abroad individual’ means any United States 

23 national (as defined in section 307 of the Robert 

24 Levinson Hostage Recovery and Hostage-Taking Ac25 countability Act) if the Secretary of State has deter26 mined for purposes of section 302(b) of such Act 


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1 that there is credible information that such United 

2 States national is wrongfully or unlawfully detained 

3 abroad. 

4 ‘‘(2) SPECIFIED WRONGFULLY DETAINED IN5 DEBTEDNESS.— 

6 ‘‘(A) IN GENERAL.—The term ‘specified 

7 wrongfully detained indebtedness’ means, with 

8 respect to any wrongfully detained abroad indi9 vidual, any indebtedness— 

10 ‘‘(i) which is discharged during the 

11 period beginning on the date on which 

12 such individual is first wrongfully or un13 lawfully detained and ending on the date 

14 that is 2 years after the conclusion of such 

15 detention, and 

16 ‘‘(ii) with respect to which the tax17 payer elects (at such time and in such 

18 manner as the Secretary may provide) the 

19 application of this subparagraph. 

20 ‘‘(B) DOLLAR LIMITATION.—The aggre21 gate amount of indebtedness which may be 

22 treated as specified wrongfully detained indebt23 edness with respect to any wrongfully detained 

24 abroad individual (including any amount treat25 ed as such indebtedness with respect to such inVerDate Sep 11 2014 21:57 Sep 09, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H9431.IH H9431

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1 dividual’s spouse) for any taxable year shall not 

2 exceed the excess (if any) of $5,000 over the 

3 aggregate amount so treated for all prior tax4 able years.’’. 

5 (c) COORDINATION OF EXCLUSIONS.— 

6 (1) COORDINATION WITH TITLE 11 EXCLU7 SION.—Section 108(a)(2)(A) of such Code is amend8 ed by striking ‘‘and (E)’’ and inserting ‘‘(E), and 

9 (F)’’. 

10 (2) COORDINATION WITH INSOLVENCY EXCLU11 SION.—Section 108(a)(2) of such Code is amended 

12 by adding at the end the following new subpara13 graph: 

14 ‘‘(D) WRONGFULLY DETAINED ABROAD

15 EXCLUSION TAKES PRECEDENCE OVER INSOL16 VENCY AND QUALIFIED FARM INDEBTEDNESS

17 EXCLUSION UNLESS ELECTED OTHERWISE.— 

18 Subparagraphs (B) and (C) of paragraph (1) 

19 shall not apply to a discharge to which para20 graph (1)(F) applies unless the taxpayer elects 

21 to apply subparagraph (B) or (C) of paragraph 

22 (1) in lieu of paragraph (1)(F).’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to discharges of indebtedness after 

3 December 31, 2023. 

Æ 


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