I

107TH CONGRESS

1ST SESSION H. R. 1412

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

of asbestos-related claims.

IN THE HOUSE OF REPRESENTATIVES

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

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,
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1 SECTION. 1. EXEMPTION FOR ASBESTOS-RELATED SETTLE2 MENT FUNDS.

3 (a) EXEMPTION FOR ASBESTOS-RELATED SETTLE4 MENT FUNDS.—Subsection (b) of section 468B of the In5 ternal Revenue Code of 1986 is amended by adding at the

6 end the following new paragraph:

7 ‘‘(6) EXEMPTION FROM TAX FOR ASBESTOS-RE8 LATED SETTLEMENT FUNDS.—Notwithstanding

9 paragraph (1), no tax shall be imposed under this

10 section or any other provision of this subtitle on any

11 settlement fund to which this section or the regula12 tions thereunder applies that is established for the

13 principal purpose of resolving and satisfying present

14 and future claims relating to asbestos.’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Paragraph (1) of section 468B(b) of such

17 Code is amended by striking ‘‘There’’ and inserting

18 ‘‘Except as provided in paragraph (6), there’’.

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

20 is amended by inserting ‘‘(other than subsection

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

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

23 this section shall apply to taxable years ending on or after

24 December 31, 2000.
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1 SEC. 2. MODIFY TREATMENT OF ASBESTOS-RELATED NET

2 OPERATING LOSSES.

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

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

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

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

7 by inserting after paragraph (3) the following new para8 graph:

9 ‘‘(4) SPECIAL RULES FOR ASBESTOS LIABILITY

10 LOSSES.—

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

12 taxpayer, the portion of any specified liability

13 loss that is attributable to asbestos may, for

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

15 back to the taxable year in which the taxpayer,

16 including any predecessor corporation, was first

17 involved in the production or distribution of

18 products containing asbestos and each subse19 quent taxable year. In determining its specified

20 liability losses attributable to asbestos, the tax21 payer may elect to take into account payments

22 of related parties attributable to asbestos-re23 lated products produced or distributed by the

24 taxpayer.

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

26 deduction is allowable for any taxable year by
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1 reason of a carryback described in subpara2 graph (A)—

3 ‘‘(i) the credits allowable under part

4 IV (other than subpart C) of subchapter A

5 shall be determined without regard to such

6 deduction, and

7 ‘‘(ii) the amount of taxable income

8 taken into account with respect to the

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

10 taxable year shall be reduced by an

11 amount equal to—

12 ‘‘(I) the increase in the amount

13 of such credits allowable for such tax14 able year solely by reason of clause

15 (i), divided by

16 ‘‘(II) the maximum rate of tax

17 under section 1 or 11 (whichever is

18 applicable) for such taxable year.

19 ‘‘(C) CARRYFORWARDS TAKEN INTO AC20 COUNT BEFORE ASBESTOS-RELATED DEDUC21 TIONS.—For purposes of this section—

22 ‘‘(i) in determining whether a net op23 erating loss carryforward may be carried

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

25 taxable income for such year shall be de-
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1 termined without regard to the deductions

2 referred to in paragraph (1)(A) with re3 spect to asbestos, and

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

5 for such year after taking into account

6 such carryforwards and deductions, the

7 portion of such loss attributable to such

8 deductions shall be treated as a specified

9 liability loss that is attributable to asbes10 tos.

11 ‘‘(D) LIMITATION.—The amount of reduc12 tion in income tax liability arising from the

13 election described in subparagraph (A) that ex14 ceeds the amount of reduction in income tax li15 ability that would have resulted if the taxpayer

16 utilized the 10-year carryback period under sub17 section (b)(1)(C) shall be devoted by the tax18 payer solely to asbestos claimant compensation

19 and related costs, through a settlement fund or

20 otherwise.

21 ‘‘(E) COORDINATION WITH OTHER

22 CARRYBACK LIMITATIONS.—The amount of as23 bestos-related specified liability loss that may be

24 absorbed in a prior taxable year (and the

25 amount of refund attributable to such loss ab-
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1 sorption) shall be determined without regard to

2 any limitation under section 381, 382, or 1502

3 or the regulations thereunder.

4 ‘‘(F) PREDECESSOR CORPORATION.—For

5 purposes of this paragraph, a predecessor cor6 poration shall include a corporation that trans7 ferred or distributed assets to the taxpayer in

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

9 that distributed the stock of the taxpayer in a

10 transaction to which section 355 applies.’’.

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

12 section 172(f) of such Code, as redesignated by this sec13 tion, is amended by striking ‘‘10-year’’.

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

15 this section shall apply to taxable years ending on or after

16 December 31, 2000.

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