Title: Settlement Trust Improvement Act of 2017
Policy area: Taxation

Summary:
Settlement Trust Improvement Act of 2017
This bill amends the Internal Revenue Code, with respect to the tax treatment of Alaska Native Settlement Trusts, to: (1) allow an Alaska Native Corporation to assign certain payments referenced in the Alaska Native Claims Settlement Act to a trust without including the payments in the gross income of the corporation, (2) allow the corporation to elect annually to deduct contributions made to a trust, (3) allow a trust to elect to defer the recognition of gains related to contributions of property other than cash until the sale or exchange of the property, and (4) establish information reporting requirements for deductible contributions to a trust.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1698 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1698

To amend the Internal Revenue Code of 1986 to clarify the treatment of 
    contributions to Alaska Native Settlement Trusts, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 1, 2017

 Ms. Murkowski (for herself and Mr. Sullivan) 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 clarify the treatment of 
    contributions to Alaska Native Settlement Trusts, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Settlement Trust Improvement Act of 
2017''.

SEC. 2. EXCLUSION FOR ANCSA PAYMENTS ASSIGNED TO ALASKA NATIVE 
              SETTLEMENT TRUSTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before section 
140 the following new section:

``SEC. 139G. ASSIGNMENTS TO ALASKA NATIVE SETTLEMENT TRUSTS.

    ``(a) In General.--In the case of a Native Corporation, gross 
income shall not include the value of any payments that would otherwise 
be made, or treated as being made, to such Native Corporation pursuant 
to, or as required by, any provision of the Alaska Native Claims 
Settlement Act (43 U.S.C. 1601 et seq.), including any payment that 
would otherwise be made to a Village Corporation pursuant to section 
7(j) of the Alaska Native Claims Settlement Act (43 U.S.C. 1606(j)), 
provided that any such payments--
            ``(1) are assigned in writing to a Settlement Trust, and
            ``(2) were not received by such Native Corporation prior to 
        the assignment described in paragraph (1).
    ``(b) Inclusion in Gross Income.--In the case of a Settlement Trust 
which has been assigned payments described in subsection (a), gross 
income shall include such payments as and when such payments are 
received by such Settlement Trust pursuant to the assignment and shall 
have the same character as if such payments were received by the Native 
Corporation.
    ``(c) Amount and Scope of Assignment.--The amount and scope of any 
assignment under subsection (a) shall be described with reasonable 
particularity and may either be in a percentage of one or more such 
payments or in a fixed dollar amount.
    ``(d) Duration of Assignment; Revocability.--Any assignment under 
subsection (a) shall specify--
            ``(1) a duration either in perpetuity or for a period of 
        time, and
            ``(2) whether such assignment is revocable.
    ``(e) Prohibition on Deduction.--Notwithstanding section 250, no 
deduction shall be allowed to a Native Corporation for purposes of any 
amounts described in subsection (a).
    ``(f) Definitions.--For purposes of this section, the terms `Native 
Corporation' and `Settlement Trust' have the same meaning given such 
terms under section 646(h).''.
    (b) Conforming Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting before 
the item relating to section 140 the following new item:

``Sec. 139G. Assignments to Alaska Native Settlement Trusts.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 3. DEDUCTION OF CONTRIBUTIONS TO ALASKA NATIVE SETTLEMENT TRUSTS.

    (a) In General.--Part VIII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 250. CONTRIBUTIONS TO ALASKA NATIVE SETTLEMENT TRUSTS.

    ``(a) In General.--In the case of a Native Corporation, there shall 
be allowed a deduction for any contributions made by such Native 
Corporation to a Settlement Trust (regardless of whether an election 
under section 646 is in effect for such Settlement Trust) for which the 
Native Corporation has made an annual election under subsection (e).
    ``(b) Amount of Deduction.--The amount of the deduction under 
subsection (a) shall be equal to--
            ``(1) in the case of a cash contribution (regardless of the 
        method of payment, including currency, coins, money order, or 
        check), the amount of such contribution, or
            ``(2) in the case of a contribution not described in 
        paragraph (1), the Native Corporation's adjusted basis in the 
        property contributed.
    ``(c) Limitation and Carryover.--
            ``(1) In general.--Subject to paragraph (2), the deduction 
        allowed under subsection (a) for any taxable year shall not 
        exceed the taxable income of the Native Corporation for the 
        taxable year in which the contribution was made.
            ``(2) Carryover.--If the aggregate amount of contributions 
        described in subsection (a) for any taxable year exceeds the 
        limitation under paragraph (1), such excess shall be treated as 
        a contribution described in subsection (a) in each of the 15 
        succeeding years in order of time.
    ``(d) Definitions.--For purposes of this section, the terms `Native 
Corporation' and `Settlement Trust' have the same meaning given such 
terms under section 646(h).
    ``(e) Manner of Making Election.--
            ``(1) In general.--For each taxable year, a Native 
        Corporation may elect to have this section apply for such 
        taxable year on the income tax return or amended income tax 
        return of the Native Corporation, with such election to have 
        effect solely for such taxable year.
            ``(2) Revocation.--Any election made by a Native 
        Corporation pursuant to this subsection may be revoked pursuant 
        to an amended income tax return which has been timely filed by 
        such Native Corporation.
    ``(f) Additional Rules.--
            ``(1) Earnings and profits.--Notwithstanding section 
        646(d)(2), in the case of a Native Corporation which claims a 
        deduction under this section for any taxable year, the earnings 
        and profits of such Native Corporation for such taxable year 
        shall be reduced by the amount of such deduction.
            ``(2) Gain or loss.--No gain or loss shall be recognized by 
        the Native Corporation with respect to a contribution of 
        property for which a deduction is allowed under this section.
            ``(3) Income.--Subject to subsection (g), a Settlement 
        Trust shall report income in the amount of any deduction 
        allowed under this section in the taxable year in which the 
        Settlement Trust actually receives such contribution.
            ``(4) Period.--In determining the period that a Settlement 
        Trust has held property for which a deduction is allowed under 
        this section, the period the Native Corporation has held such 
        property shall be included.
            ``(5) Basis.--The basis that a Settlement Trust has for 
        which a deduction is allowed under this section shall be equal 
        to the adjusted basis of the Native Corporation in such 
        property immediately before such contribution.
            ``(6) Prohibition.--No deduction shall be allowed under 
        this section with respect to any contributions made to a 
        Settlement Trust which are in violation of subsection (a)(2) or 
        (c)(2) of section 39 of the Alaska Native Claims Settlement Act 
        (43 U.S.C. 1629e).
    ``(g) Election by Settlement Trust To Defer Income Recognition.--
            ``(1) In general.--In the case of a contribution which 
        consists of property other than cash, a Settlement Trust may 
        elect to defer recognition of any income related to such 
        property until the sale or exchange of such property, in whole 
        or in part, by the Settlement Trust.
            ``(2) Treatment.--In the case of property described in 
        paragraph (1), any income or gain received by the Settlement 
        Trust upon sale or exchange of such property shall be treated 
        as--
                    ``(A) for such amount of the income or gain as is 
                equal to or less than the amount of income deferred 
                pursuant to this subsection, ordinary income, and
                    ``(B) for any amounts of the income or gain which 
                are in excess of the amount of income deferred pursuant 
                to this subsection, having the same character as if 
                this subsection did not apply.
            ``(3) Election.--
                    ``(A) In general.--For each taxable year, a 
                Settlement Trust may elect to apply this subsection for 
                any property described in paragraph (1) which was 
                contributed during such year. Any property to which the 
                election applies shall be identified and described with 
                reasonable particularity on the income tax return or 
                amended income tax return of the Settlement Trust, with 
                such election to have effect solely for such taxable 
                year.
                    ``(B) Revocation.--Any election made by a 
                Settlement Trust pursuant to this subsection may be 
                revoked pursuant to an amended income tax return which 
                has been timely filed by such Settlement Trust.
                    ``(C) Certain dispositions.--
                            ``(i) In general.--In the case of any 
                        property for which an election is in effect 
                        under this subsection and which is disposed of 
                        within the first taxable year subsequent to the 
                        taxable year in which such property was 
                        contributed to the Settlement Trust--
                                    ``(I) such election shall be voided 
                                as to such property,
                                    ``(II) the Settlement Trust shall 
                                be required to file an amended return 
                                for the taxable year in which such 
                                property was contributed, and
                                    ``(III) the Settlement Trust shall 
                                pay any tax applicable to such 
                                property, including interest and a 
                                penalty equal to 10 percent of the 
                                amount of such tax.
                            ``(ii) Assessment.--Notwithstanding section 
                        6501(a), any amount described in subclause 
                        (III) of clause (i) may be assessed, or a 
                        proceeding in court with respect to such amount 
                        may be initiated without assessment, within 4 
                        years after the date on which the return making 
                        the election under this subsection for such 
                        property was filed.''.
    (b) Conforming Amendment.--The table of sections for part VIII of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

``Sec. 250. Contributions to Alaska Native Settlement Trusts.''.
    (c) Permissive Amendments to Trust Agreements Establishing 
Settlement Trusts.--
            (1) In general.--Notwithstanding any provision of law, 
        including any provision of the Alaska Native Claims Settlement 
        Act (43 U.S.C. 1601 et seq.), Alaska State law, or the terms of 
        any trust agreement of a Settlement Trust (as defined under 
        section 3(t) of the Alaska Native Claims Settlement Act (43 
        U.S.C. 1602(t))), the terms of any trust agreement of a 
        Settlement Trust may, within the 1-year period following the 
        date of the enactment of this Act, be amended as necessary to 
        allow such Trust to make an election described in subsection 
        (g) of section 250 of the Internal Revenue Code of 1986 (as 
        added by subsection (a)).
            (2) Amendment.--An amendment described in paragraph (1) 
        shall be enacted pursuant to one or more agreements between the 
        Native Corporation that established the Settlement Trust and 
        the trustees of such Trust and shall not require any vote by 
        the beneficiaries of such Trust or the shareholders of such 
        Native Corporation.
            (3) Registration statement.--Any Settlement Trust which was 
        registered in accordance with Alaska State law prior to the 
        date of the enactment of an amendment described in paragraph 
        (1) shall not be required to file a new or amended registration 
        statement to reflect such amendment.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years for which the period of limitation on 
        refund or credit under section 6511 of the Internal Revenue 
        Code of 1986 has not expired.
            (2) One-year waiver of statute of limitations.--If the 
        period of limitation on a credit or refund resulting from the 
        amendments made by subsection (a) expires before the end of the 
        1-year period beginning on the date of the enactment of this 
        Act, refund or credit of such overpayment (to the extent 
        attributable to such amendments) may, nevertheless, be made or 
        allowed if claim therefor is filed before the close of such 1-
        year period.

SEC. 4. INFORMATION REPORTING FOR DEDUCTIBLE CONTRIBUTIONS TO ALASKA 
              NATIVE SETTLEMENT TRUSTS.

    (a) In General.--Section 6039H of the Internal Revenue Code of 1986 
is amended--
            (1) in the heading, by striking ``sponsoring'', and
            (2) by adding at the end the following new subsection:
    ``(e) Deductible Contributions by Native Corporations to Alaska 
Native Settlement Trusts.--
            ``(1) In general.--Any Native Corporation (as defined in 
        subsection (m) of section 3 of the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1602(m))) which has made a 
        contribution to a Settlement Trust (as defined in subsection 
        (t) of such section) to which an election under subsection (e) 
        of section 250 applies shall provide such Settlement Trust with 
        a statement regarding such election not later than January 31 
        of the calendar year subsequent to the calendar year in which 
        the contribution was made.
            ``(2) Content of statement.--The statement described in 
        paragraph (1) shall include--
                    ``(A) the total amount of contributions to which 
                the election under subsection (e) of section 250 
                applies,
                    ``(B) for each contribution, whether such 
                contribution was in cash,
                    ``(C) for each contribution which consists of 
                property other than cash, the date that such property 
                was acquired by the Native Corporation and the adjusted 
                basis of such property on the date such property was 
                contributed to the Settlement Trust,
                    ``(D) the date on which each contribution was made 
                to the Settlement Trust, and
                    ``(E) such information as the Secretary determines 
                to be necessary or appropriate for the identification 
                of each contribution and the accurate reporting of 
                income relating to such contributions by the Settlement 
                Trust.''.
    (b) Conforming Amendment.--The item relating to section 6039H in 
the table of sections for subpart A of part III of subchapter A of 
chapter 61 of the Internal Revenue Code of 1986 is amended to read as 
follows:

``Sec. 6039H. Information With Respect to Alaska Native Settlement 
                            Trusts and Native Corporations.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 5. STATUTORY CONSTRUCTION.

    This Act is remedial Indian legislation enacted under the plenary 
authority of the Congress under the Constitution of the United States 
to regulate Indian affairs, and any ambiguities in section 139F or 250 
of the Internal Revenue Code of 1986, as added by this Act, shall be 
resolved in favor of Native Corporations attempting to exclude income 
or claim a deduction thereunder.
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