[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2229 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2229

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

                             June 19, 2001

 Mrs. Johnson of Connecticut 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. 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.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2001.
                                 <all>