II

106TH CONGRESS

2D SESSION S. 2955

To amend the Internal Revenue Code of 1986 to provide relief for payment

of asbestos-related claims.

IN THE SENATE OF THE UNITED STATES

JULY 27, 2000

Mr. DEWINE (for himself, Mr. HATCH, Mr. VOINOVICH, and Mr. LEAHY) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

relief for payment of asbestos-related claims.

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

3 SECTION 1. EXEMPTION FOR ASBESTOS-RELATED SETTLE4 MENT FUNDS.

5 (a) EXEMPTION FOR ASBESTOS-RELATED SETTLE6 MENT FUNDS.—Subsection (b) of section 468B of the In7 ternal Revenue Code of 1986 is amended by adding at the

8 end the following new paragraph:

9 ‘‘(6) EXEMPTION FROM TAX FOR ASBESTOS-RE10 LATED DESIGNATED SETTLEMENT FUNDS.—Not-
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1 withstanding paragraph (1), no tax shall be imposed

2 under this section or any other provision of this sub3 title on any designated settlement fund established

4 for the principal purpose of resolving and satisfying

5 present and future claims relating to asbestos.’’

6 (b) CONFORMING AMENDMENTS.—

7 (1) Paragraph (1) of section 468B(b) of the In8 ternal Revenue Code of 1986 is amended by striking

9 ‘‘There’’ and inserting ‘‘Except as provided in para10 graph (6), there’’.

11 (2) Subsection (g) of section 468B of such Code

12 is amended by inserting ‘‘(other than subsection

13 (b)(6))’’ after ‘‘Nothing in any provision of law’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years ending after the

16 date of enactment of this Act.

17 SEC. 2. MODIFY TREATMENT OF ASBESTOS-RELATED NET

18 OPERATING LOSSES.

19 (a) ASBESTOS-RELATED NET OPERATING LOSSES.—

20 Subsection (f) of section 172 of the Internal Revenue Code

21 of 1986 is amended by redesignating paragraphs (4), (5),

22 and (6) as paragraphs (5), (6), and (7), respectively, and

23 by inserting after paragraph (3) the following new para24 graph:
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1 ‘‘(4) SPECIAL RULES FOR ASBESTOS LIABILITY

2 LOSSES.—

3 ‘‘(A) IN GENERAL.—At the election of the

4 taxpayer, the portion of any specified liability

5 loss that is attributable to asbestos may, for

6 purposes of subsection (b)(1)(C), be carried

7 back to the taxable year in which the taxpayer,

8 including any predecessor corporation, was first

9 involved in the production or distribution of

10 products containing asbestos and each subse11 quent taxable year.

12 ‘‘(B) COORDINATION WITH CREDITS.—If a

13 deduction is allowable for any taxable year by

14 reason of a carryback described in subpara15 graph (A)—

16 ‘‘(i) the credits allowable under part

17 IV (other than subpart C) of subchapter A

18 shall be determined without regard to such

19 deduction, and

20 ‘‘(ii) the amount of taxable income

21 taken into account with respect to the

22 carryback under subsection (b)(2) for such

23 taxable year shall be reduced by an

24 amount equal to—
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1 ‘‘(I) the increase in the amount

2 of such credits allowable for such tax3 able year solely by reason of clause

4 (i), divided by

5 ‘‘(II) the maximum rate of tax

6 under section 1 or 11 (whichever is

7 applicable) for such taxable year.

8 ‘‘(C) CARRYFORWARDS TAKEN INTO AC9 COUNT BEFORE ASBESTOS-RELATED DEDUC10 TIONS.—For purposes of this section—

11 ‘‘(i) in determining whether a net op12 erating loss carryforward may be carried

13 under subsection (b)(2) to a taxable year,

14 taxable income for such year shall be de15 termined without regard to the deductions

16 referred to in paragraph (1)(A) with re17 spect to asbestos, and

18 ‘‘(ii) if there is a net operating loss

19 for such year after taking into account

20 such carryforwards and deductions, the

21 portion of such loss attributable to such

22 deductions shall be treated as a specified

23 liability loss that is attributable to asbes24 tos.
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1 ‘‘(D) LIMITATION.—The amount of reduc2 tion in income tax liability arising from the

3 election described in subparagraph (A) that ex4 ceeds the amount of reduction in income tax li5 ability that would have resulted if the taxpayer

6 utilized the 10-year carryback period under sub7 section (b)(1)(C) shall be devoted by the tax8 payer solely to asbestos claimant compensation

9 and related costs, through a designated settle10 ment fund or otherwise.

11 ‘‘(E) CONSOLIDATED GROUPS.—For pur12 poses of this paragraph, all members of an af13 filiated group of corporations that join in the

14 filing of a consolidated return pursuant to sec15 tion 1501 (or a predecessor section) shall be

16 treated as 1 corporation.

17 ‘‘(F) PREDECESSOR CORPORATION.—For

18 purposes of this paragraph, a predecessor cor19 poration shall include a corporation that trans20 ferred or distributed assets to the taxpayer in

21 a transaction to which section 381(a) applies or

22 that distributed the stock of the taxpayer in a

23 transaction to which section 355 applies.’’

24 (b) CONFORMING AMENDMENT.—Paragraph (7) of

25 section 172(f) of the Internal Revenue Code of 1986, as
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1 redesignated by this section, is amended by striking ‘‘10-

2 year’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years ending after the

5 date of enactment of this Act.

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