I 
110TH CONGRESS 
1ST SESSION H. R. 1334 
To provide for the tax treatment of income received in connection with 
the litigation concerning the Exxon Valdez oil spill, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2007 
Mr. YOUNG of Alaska (for himself and Mr. REICHERT) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To provide for the tax treatment of income received in con-
nection with the litigation concerning the Exxon Valdez 
oil spill, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Exxon Valdez Oil Spill 
Tax Treatment Act’’. 
SEC. 2. TAX TREATMENT OF INCOME RECEIVED IN CON-
NECTION WITH THE EXXON VALDEZ LITIGA-
TION. 
(a) INCOME AVERAGING
OF AMOUNTS RECEIVED 
FROM THE EXXON VALDEZ LITIGATION.— 
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(1) IN GENERAL.—At the election of a qualified 
taxpayer who receives qualified settlement income 
during a taxable year, the tax imposed by chapter 1 
of the Internal Revenue Code of 1986 for such tax-
able year shall be equal to the sum of— 
(A) the tax which would be imposed under 
such chapter if— 
(i) no amount of elected qualified set-
tlement income were included in gross in-
come for such year, and 
(ii) no deduction were allowed for 
such year for expenses (otherwise allowable 
as a deduction to the taxpayer for such 
year) attributable to such elected qualified 
settlement income, plus 
(B) the increase in tax under such chapter 
which would result if taxable income for each of 
the years in the applicable period were in-
creased by an amount equal to the applicable 
fraction of the elected qualified settlement in-
come reduced by any expenses (otherwise allow-
able as a deduction to the taxpayer) attrib-
utable to such elected qualified settlement in-
come. 
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Any adjustment under this section for any taxable 
year shall be taken into account in applying this sec-
tion for any subsequent taxable year. 
(2) COORDINATION WITH FARM INCOME AVER-
AGING.—If a qualified taxpayer makes an election 
with respect to any qualified settlement income 
under paragraph (1) for any taxable year, such tax-
payer may not elect to treat such amount as elected 
farm income under section 1301 of the Internal Rev-
enue Code of 1986. 
(3) DEFINITIONS.—For purposes of this sub-
section— 
(A) APPLICABLE PERIOD.—The term ‘‘ap-
plicable period’’ means the period beginning on 
January 1, 1994, and ending on December 31 
of the year in which the elected qualified settle-
ment income is received. 
(B) APPLICABLE
FRACTION.—The term 
‘‘applicable fraction’’ means the fraction the nu-
merator of which is one and the denominator of 
which is the number of years in the applicable 
period. 
(C) ELECTED QUALIFIED SETTLEMENT IN-
COME.—The term ‘‘elected qualified settlement 
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income’’ means so much of the taxable income 
for the taxable year which is— 
(i) qualified settlement income, and 
(ii) specified under the election under 
paragraph (1). 
(b) CONTRIBUTIONS OF AMOUNTS RECEIVED TO RE-
TIREMENT ACCOUNTS.— 
(1) IN GENERAL.—Any qualified taxpayer who 
receives qualified settlement income during the tax-
able year may, at any time before the end of the tax-
able year in which such income was received, make 
one or more contributions to an eligible retirement 
plan of which such qualified taxpayer is a bene-
ficiary in an aggregate amount not to exceed the 
amount of qualified settlement income received dur-
ing such year. 
(2) TIME
WHEN
CONTRIBUTIONS
DEEMED 
MADE.—For purposes of paragraph (1), a qualified 
taxpayer shall be deemed to have made a contribu-
tion to an eligible retirement plan on the last day of 
the taxable year in which such income is received if 
the contribution is made on account of such taxable 
year and is made not later than the time prescribed 
by law for filing the return for such taxable year 
(not including extensions thereof). 
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(3) TREATMENT OF CONTRIBUTIONS TO ELIGI-
BLE RETIREMENT PLANS.—For purposes of the In-
ternal Revenue Code of 1986, if a contribution is 
made pursuant to paragraph (1) with respect to 
qualified settlement income, then— 
(A) except as provided in paragraph (4)— 
(i) to the extent of such contribution, 
the qualified settlement income shall not 
be included in taxable income, and 
(ii) for purposes of section 72 of such 
Code, such contribution shall not be con-
sidered to be investment in the contract, 
and 
(B) the qualified taxpayer shall, to the ex-
tent of the amount of the contribution, be treat-
ed— 
(i) as having received the qualified 
settlement income— 
(I) in the case of a contribution 
to an individual retirement plan (as 
defined under section 7701(a)(37) of 
such Code), in a distribution described 
in section 408(d)(3) of such Code, 
and 
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(II) in the case of any other eligi-
ble retirement plan, in an eligible roll-
over distribution (as defined under 
section 402(f)(2) of such Code), and 
(ii) as having transferred the amount 
to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days 
of the distribution. 
(4) SPECIAL RULE FOR ROTH IRAS AND ROTH 
401(k)S.—For purposes of the Internal Revenue 
Code of 1986, if a contribution is made pursuant to 
paragraph (1) with respect to qualified settlement 
income to a Roth IRA (as defined under section 
408A(b) of such Code) or as a designated Roth con-
tribution to an applicable retirement plan (within 
the meaning of section 402A of such Code), then— 
(A) the qualified settlement income shall 
be includible in taxable income, and 
(B) for purposes of section 72 of such 
Code, such contribution shall be considered to 
be investment in the contract. 
(5) ELIGIBLE
RETIREMENT
PLAN.—For pur-
pose of this subsection, the term ‘‘eligible retirement 
plan’’ has the meaning given such term under sec-
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tion 402(c)(8)(B) of the Internal Revenue Code of 
1986. 
(c) QUALIFIED
SETTLEMENT
INCOME
NOT
IN-
CLUDED IN SECA.—For purposes of chapter 2 of the In-
ternal Revenue Code of 1986 and section 211 of the Social 
Security Act, no portion of qualified settlement income re-
ceived by a qualified taxpayer shall be treated as self-em-
ployment income. 
(d) QUALIFIED TAXPAYER.—For purposes of this 
section, the term ‘‘qualified taxpayer’’ means— 
(1) any plaintiff in the civil action In re Exxon 
Valdez, No. 89–095–CV (HRH) (Consolidated) (D. 
Alaska); or 
(2) any beneficiary of the estate of such a 
plaintiff who— 
(A) acquired the right to receive qualified 
settlement income from that plaintiff; and 
(B) was the spouse or an immediate rel-
ative of that plaintiff. 
(e) QUALIFIED SETTLEMENT INCOME.—For pur-
poses of this section, the term ‘‘qualified settlement in-
come’’ means income received (whether as lump sums or 
periodic payments) in connection with the civil action In 
re Exxon Valdez, No. 89–095–CV (HRH) (Consolidated) 
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(D. Alaska), including interest (whether pre- or post judg-
ment and whether related to a settlement or judgment). 
Æ 
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