as amounts described in section 301(c)(1), to the ex-
tent of current accumulated earnings and profits of
the sponsoring Native Corporation as of the close of
such taxable year after proper adjustment is made
for all distributions made by the sponsoring Native
Corporation during such taxable year.
‘‘(4) Fourth, as amounts distributed by the
trust in excess of the distributable net income of
such trust for such taxable year.
Amounts distributed to which paragraph (3) applies shall
not be treated as a corporate distribution subject to sec-
tion 311(b), and for purposes of determining the amount
of a distribution for purposes of paragraph (3) and the
basis to the recipients, section 643(e) and not section
301(b) or (d) shall apply.
‘‘(f) SPECIAL RULES WHERE TRANSFER RESTRIC-
TIONS MODIFIED.—
‘‘(1) TRANSFER OF BENEFICIAL INTERESTS.—
If, at any time, a beneficial interest in an electing
Settlement Trust may be disposed of to a person in
a manner which would not be permitted by section
7(h) of the Alaska Native Claims Settlement Act (43
U.S.C. 1606(h)) if such interest were Settlement
Common Stock—
‘‘(A) no election may be made under sub-
section (c) with respect to such trust, and
‘‘(B) if such an election is in effect as of
such time—
‘‘(i) such election shall cease to apply
as of the first day of the taxable year in
which such disposition is first permitted,
‘‘(ii) the provisions of this section
shall not apply to such trust for such tax-
able year and all taxable years thereafter,
and
‘‘(iii) the distributable net income of
such trust shall be increased by the cur-
rent and accumulated earnings and profits
of the sponsoring Native Corporation as of
the close of such taxable year after proper
adjustment is made for all distributions
made by the sponsoring Native Corpora-
tion during such taxable year.
In no event shall the increase under clause (iii) ex-
ceed the fair market value of the trust’s assets as
of the date the beneficial interest of the trust first
becomes so disposable. The earnings and profits of
the sponsoring Native Corporation shall be adjusted
as of the last day of such taxable year by the
amount of earnings and profits so included in the
distributable net income of the trust.
‘‘(2) STOCK IN CORPORATION.—If—
‘‘(A) the Settlement Common Stock in the
sponsoring Native Corporation may be disposed
of to a person in any manner not permitted by
section 7(h) of the Alaska Native Claims Settle-
ment Act (43 U.S.C. 1606(h)), and
‘‘(B) at any time after such disposition of
stock is first permitted, such corporation trans-
fers assets to a Settlement Trust,
paragraph (1)(B) shall be applied to such trust on
and after the date of the transfer in the same man-
ner as if the trust permitted dispositions of bene-
ficial interests in the trust in a manner not per-
mitted by such section 7(h).
‘‘(3) CERTAIN DISTRIBUTIONS.—For purposes
of this section, the surrender of an interest in a Na-
tive Corporation or an electing Settlement Trust in
order to accomplish the whole or partial redemption
of the interest of a shareholder or beneficiary in
such corporation or trust, or to accomplish the whole
or partial liquidation of such corporation or trust,
shall be deemed to be a transfer permitted by sec-
tion 7(h) of the Alaska Native Claims Settlement
Act.
‘‘(g) TAXABLE INCOME.—For purposes of this title,
the taxable income of an electing Settlement Trust shall
be determined under section 641(b) without regard to any
deduction under section 651 or 661.
‘‘(h) DEFINITIONS.—For purposes of this section—
‘‘(1) ELECTING
SETTLEMENT
TRUST.—The
term ‘electing Settlement Trust’ means a Settlement
Trust which has made the election, effective for a
taxable year, described in subsection (c).
‘‘(2) NATIVE CORPORATION.—The term ‘Native
Corporation’ has the meaning given such term by
section 3(m) of the Alaska Native Claims Settlement
Act (43 U.S.C. 1602(m)).
‘‘(3) SETTLEMENT COMMON STOCK.—The term
‘Settlement Common Stock’ has the meaning given
such term by section 3(p) of the Alaska Native
Claims Settlement Act (43 U.S.C. 1602(p)).
‘‘(4) SETTLEMENT TRUST.—The term ‘Settle-
ment Trust’ means a trust that constitutes a settle-
ment trust under section 3(t) of the Alaska Native
Claims Settlement Act (43 U.S.C. 1602(t)).
‘‘(5) SPONSORING NATIVE CORPORATION.—The
term ‘sponsoring Native Corporation’ means the Na-
tive Corporation which transfers assets to an elect-
ing Settlement Trust.
‘‘(i) SPECIAL LOSS DISALLOWANCE RULE.—Any loss
that would otherwise be recognized by a shareholder upon
a disposition of a share of stock of a sponsoring Native
Corporation shall be reduced (but not below zero) by the
per share loss adjustment factor. The per share loss ad-
justment factor shall be the aggregate of all contributions
to all electing Settlement Trusts sponsored by such Native
Corporation made on or after the first day each trust is
treated as an electing Settlement Trust expressed on a per
share basis and determined as of the day of each such
contribution.
‘‘(j) CROSS REFERENCE.—
‘‘For information required with respect to electing
Settlement Trusts and sponsoring Native Corpora-
tions, see section 6039H.’’.
(b) REPORTING.—Subpart A of part III of sub-
chapter A of chapter 61 of subtitle F of such Code (relat-
ing to information concerning persons subject to special
provisions) is amended by inserting after section 6039G
the following new section:
‘‘SEC. 6039H. INFORMATION WITH RESPECT TO ALASKA NA-
TIVE 
SETTLEMENT 
TRUSTS 
AND 
SPON-
SORING NATIVE CORPORATIONS.
‘‘(a) REQUIREMENT.—The fiduciary of an electing
Settlement Trust (as defined in section 646(h)(1)) shall
include with the return of income of the trust a statement
containing the information required under subsection (c).
‘‘(b) APPLICATION WITH OTHER REQUIREMENTS.—
The filing of any statement under this section shall be in
lieu of the reporting requirements under section 6034A
to furnish any statement to a beneficiary regarding
amounts distributed to such beneficiary (and such other
reporting rules as the Secretary deems appropriate).
‘‘(c) REQUIRED INFORMATION.—The information re-
quired under this subsection shall include—
‘‘(1) the amount of distributions made during
the taxable year to each beneficiary,
‘‘(2) the treatment of such distribution under
the applicable provision of section 646, including the
amount that is excludable from the recipient bene-
ficiary’s gross income under section 646, and
‘‘(3) the amount (if any) of any distribution
during such year that is deemed to have been made
by the sponsoring Native Corporation (as defined in
section 646(h)(5)).
‘‘(d) SPONSORING NATIVE CORPORATION.—
‘‘(1) IN
GENERAL.—The electing Settlement
Trust shall, on or before the date on which the
statement under subsection (a) is required to be
filed, furnish such statement to the sponsoring Na-
tive Corporation (as so defined).
‘‘(2) DISTRIBUTEES.—The sponsoring Native
Corporation shall furnish each recipient of a dis-
tribution described in section 646(e)(3) a statement
containing the amount deemed to have been distrib-
uted to such recipient by such corporation for the
taxable year.’’.
(c) CLERICAL AMENDMENT.—
(1) The table of sections for subpart A of part
I of subchapter J of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 646. Tax treatment of Alaska Native Settlement Trusts.’’.
(2) The table of sections for subpart A of part
III of subchapter A of chapter 61 of subtitle F of
such Code is amended by inserting after the item re-
lating to section 6039G the following new item:
‘‘Sec. 6039H. Information with respect to Alaska Native Settle-
ment Trusts and sponsoring Native Corporations.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act and to contributions
made to electing Settlement Trusts for such year or any
subsequent year.
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