[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2486 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 2486

 To amend the Internal Revenue Code of 1986 to disallow deductions for 
 the payment of compensatory and punitive damages to a government, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 20, 2015

  Mr. Welch (for himself and Mr. Gutierrez) 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 disallow deductions for 
 the payment of compensatory and punitive damages to a government, 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 ``Stop Deducting Damages Act of 
2015''.

SEC. 2. TREATMENT OF PAYMENTS OF COMPENSATORY AND PUNITIVE DAMAGES PAID 
              TO A GOVERNMENT.

    (a) In General.--Section 162(f) of the Internal Revenue Code of 
1986 is amended to read as follows:
    ``(f) Damages Paid to a Government.--
            ``(1) Fines and penalties.--No deduction shall be allowed 
        under subsection (a) for any fine or similar penalty paid to a 
        government for the violation of any law.
            ``(2) Compensatory damages.--No deduction shall be allowed 
        under this chapter for any amount paid or incurred for 
        compensatory damages in connection with any judgment in, or 
        settlement of, any action against a government.
            ``(3) Punitive damages.--No deduction shall be allowed 
        under this chapter for any amount paid or incurred for punitive 
        damages in connection with any judgment in, or settlement of, 
        any action against a government. This paragraph shall not apply 
        to punitive damages described in section 104(c).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to damages paid or incurred after December 31, 2014.

SEC. 3. INCLUSION IN INCOME OF PUNITIVE DAMAGES PAID BY INSURER OR 
              OTHERWISE.

    (a) In General.--Part II 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. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR OTHERWISE.

    ``Gross income shall include any amount paid to or on behalf of a 
taxpayer as insurance or otherwise by reason of the taxpayer's 
liability (or agreement) to pay punitive damages.''.
    (b) Reporting Requirements.--Section 6041 of such Code is amended 
by adding at the end the following new subsection:
    ``(h) Section To Apply to Punitive Damages Compensation.--This 
section shall apply to payments by a person to or on behalf of another 
person as insurance or otherwise by reason of the other person's 
liability (or agreement) to pay punitive damages.''.
    (c) Conforming Amendment.--The table of sections for part II of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to damages paid or incurred after December 31, 2014.
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