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. BECER-
RA, Mr. BERMAN, Mr. BLUNT, Mr. BOEHNER, Mr. BOUCHER, Mr. CAMP,
Mr. CARDIN, Mr. COMBEST, Mr. CONDIT, Mr. CRANE, Mr. DAVIS of Illi-
nois, 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. KAP-
TUR, 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. ROY-
BAL-ALLARD, Mr. SAWYER, Mr. SCARBOROUGH, Mr. SCOTT, Mr. SES-
SIONS, Mr. SHIMKUS, Mr. SPENCE, Mr. STRICKLAND, Mr. TANNER, Mr.
TIBERI, Mr. THOMPSON of California, Mr. THORNBERRY, Mrs. THUR-
MAN, Mr. VITTER, Mr. WATKINS, Mr. WELDON of Florida, Mr. WELLER,
Mr. PITTS, and Mr. REGULA) introduced the following bill; which was re-
ferred 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION. 1. EXEMPTION FOR ASBESTOS-RELATED SETTLE-
MENT FUNDS.
(a) EXEMPTION FOR ASBESTOS-RELATED SETTLE-
MENT FUNDS.—Subsection (b) of section 468B of the In-
ternal Revenue Code of 1986 is amended by adding at the
end the following new paragraph:
‘‘(6) EXEMPTION FROM TAX FOR ASBESTOS-RE-
LATED
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 regula-
tions thereunder applies that is established for the
principal purpose of resolving and satisfying present
and future claims relating to asbestos.’’.
(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 on or after
December 31, 2000.
SEC. 2. MODIFY TREATMENT OF ASBESTOS-RELATED NET
OPERATING LOSSES.
(a) ASBESTOS-RELATED NET OPERATING LOSSES.—
Subsection (f) of section 172 of the Internal Revenue Code
of 1986 is amended by redesignating paragraphs (4), (5),
and (6) as paragraphs (5), (6), and (7), respectively, and
by inserting after paragraph (3) the following new para-
graph:
‘‘(4) SPECIAL RULES FOR ASBESTOS LIABILITY
LOSSES.—
‘‘(A) IN GENERAL.—At the election of the
taxpayer, the portion of any specified liability
loss that is attributable to asbestos may, for
purposes of subsection (b)(1)(C), be carried
back to the taxable year in which the taxpayer,
including any predecessor corporation, was first
involved in the production or distribution of
products containing asbestos and each subse-
quent taxable year. In determining its specified
liability losses attributable to asbestos, the tax-
payer may elect to take into account payments
of related parties attributable to asbestos-re-
lated products produced or distributed by the
taxpayer.
‘‘(B) COORDINATION WITH CREDITS.—If a
deduction is allowable for any taxable year by
reason of a carryback described in subpara-
graph (A)—
‘‘(i) the credits allowable under part
IV (other than subpart C) of subchapter A
shall be determined without regard to such
deduction, and
‘‘(ii) the amount of taxable income
taken into account with respect to the
carryback under subsection (b)(2) for such
taxable year shall be reduced by an
amount equal to—
‘‘(I) the increase in the amount
of such credits allowable for such tax-
able year solely by reason of clause
(i), divided by
‘‘(II) the maximum rate of tax
under section 1 or 11 (whichever is
applicable) for such taxable year.
‘‘(C) CARRYFORWARDS
TAKEN
INTO
AC-
COUNT
BEFORE
ASBESTOS-RELATED
DEDUC-
TIONS.—For purposes of this section—
‘‘(i) in determining whether a net op-
erating loss carryforward may be carried
under subsection (b)(2) to a taxable year,
taxable income for such year shall be de-
termined without regard to the deductions
referred to in paragraph (1)(A) with re-
spect to asbestos, and
‘‘(ii) if there is a net operating loss
for such year after taking into account
such carryforwards and deductions, the
portion of such loss attributable to such
deductions shall be treated as a specified
liability loss that is attributable to asbes-
tos.
‘‘(D) LIMITATION.—The amount of reduc-
tion in income tax liability arising from the
election described in subparagraph (A) that ex-
ceeds the amount of reduction in income tax li-
ability that would have resulted if the taxpayer
utilized the 10-year carryback period under sub-
section (b)(1)(C) shall be devoted by the tax-
payer solely to asbestos claimant compensation
and related costs, through a settlement fund or
otherwise.
‘‘(E) 
COORDINATION
WITH
OTHER
CARRYBACK LIMITATIONS.—The amount of as-
bestos-related specified liability loss that may be
absorbed in a prior taxable year (and the
amount of refund attributable to such loss ab-
sorption) shall be determined without regard to
any limitation under section 381, 382, or 1502
or the regulations thereunder.
‘‘(F) PREDECESSOR
CORPORATION.—For
purposes of this paragraph, a predecessor cor-
poration shall include a corporation that trans-
ferred or distributed assets to the taxpayer in
a transaction to which section 381(a) applies or
that distributed the stock of the taxpayer in a
transaction to which section 355 applies.’’.
(b) CONFORMING AMENDMENT.—Paragraph (7) of
section 172(f) of such Code, as redesignated by this sec-
tion, is amended by striking ‘‘10-year’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending on or after
December 31, 2000.
Æ