[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 356 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 356

To amend the Internal Revenue Code of 1986 to provide that the unearned 
income of children attributable to personal injury awards shall not be 
               taxed at the marginal rate of the parents.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 5, 1993

 Mr. Slattery 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 that the unearned 
income of children attributable to personal injury awards shall not be 
               taxed at the marginal rate of the parents.

    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 ``Children's Personal Injury Awards 
Tax Equity Act''.

SEC. 2. TREATMENT OF UNEARNED INCOME OF CHILDREN ATTRIBUTABLE TO 
              PERSONAL INJURY AWARDS.

    (a) In General.--Paragraph (4) of section 1(g) of the Internal 
Revenue Code of 1986 (relating to taxation of unearned income of minor 
children at parent's rate) is amended by redesignating subparagraph (B) 
as subparagraph (C) and by inserting after subparagraph (A) the 
following new subparagraph:
                    ``(B) Exception for unearned income attributable to 
                personal injury awards.--
                            ``(i) In general.--There shall not be taken 
                        into account under subparagraph (A)(i) any 
                        qualified injury award income.
                            ``(ii) Qualified injury award income.--For 
                        purposes of clause (i), the term `qualified 
                        injury award income' means income attributable 
                        to an amount excluded from the gross income of 
                        the child by reason of section 104(a)(2) if--
                                    ``(I) the excluded amount is 
                                received by the child in a lump sum, 
                                and
                                    ``(II) the income accrues on the 
                                excluded amount while in a custodial 
                                account (other than a trust) the 
                                amounts in which are prohibited under 
                                State law from being used to satisfy 
                                any person's obligation to support or 
                                maintain the child.''
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 1986.
            (2) Statute of limitations.--If a credit or refund of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), credit or refund of such overpayment (to the extent 
        attributable to the application of such amendments) may, 
        nevertheless, be allowed or made if a claim for credit or 
        refund is filed before the close of such 1-year period.

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