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 CONNECTION WITH THE EXXON 
              VALDEZ LITIGATION.

    (a) Income Averaging of Amounts Received From the Exxon Valdez 
Litigation.--
            (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 taxable 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 
                        settlement income were included in gross income 
                        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 increased by an amount equal 
                to the applicable fraction of the elected qualified 
                settlement income reduced by any expenses (otherwise 
                allowable as a deduction to the taxpayer) attributable 
                to such elected qualified settlement income.
        Any adjustment under this section for any taxable year shall be 
        taken into account in applying this section for any subsequent 
        taxable year.
            (2) Coordination with farm income averaging.--If a 
        qualified taxpayer makes an election with respect to any 
        qualified settlement income under paragraph (1) for any taxable 
        year, such taxpayer may not elect to treat such amount as 
        elected farm income under section 1301 of the Internal Revenue 
        Code of 1986.
            (3) Definitions.--For purposes of this subsection--
                    (A) Applicable period.--The term ``applicable 
                period'' means the period beginning on January 1, 1994, 
                and ending on December 31 of the year in which the 
                elected qualified settlement income is received.
                    (B) Applicable fraction.--The term ``applicable 
                fraction'' means the fraction the numerator of which is 
                one and the denominator of which is the number of years 
                in the applicable period.
                    (C) Elected qualified settlement income.--The term 
                ``elected qualified settlement 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 Retirement Accounts.--
            (1) In general.--Any qualified taxpayer who receives 
        qualified settlement income during the taxable year may, at any 
        time before the end of the taxable year in which such income 
        was received, make one or more contributions to an eligible 
        retirement plan of which such qualified taxpayer is a 
        beneficiary in an aggregate amount not to exceed the amount of 
        qualified settlement income received during such year.
            (2) Time when contributions deemed made.--For purposes of 
        paragraph (1), a qualified taxpayer shall be deemed to have 
        made a contribution 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).
            (3) Treatment of contributions to eligible retirement 
        plans.--For purposes of the Internal 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 considered 
                        to be investment in the contract, and
                    (B) the qualified taxpayer shall, to the extent of 
                the amount of the contribution, be treated--
                            (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
                                    (II) in the case of any other 
                                eligible retirement plan, in an 
                                eligible rollover 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 
        contribution 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 purpose of this 
        subsection, the term ``eligible retirement plan'' has the 
        meaning given such term under section 402(c)(8)(B) of the 
        Internal Revenue Code of 1986.
    (c) Qualified Settlement Income Not Included in SECA.--For purposes 
of chapter 2 of the Internal Revenue Code of 1986 and section 211 of 
the Social Security Act, no portion of qualified settlement income 
received by a qualified taxpayer shall be treated as self-employment 
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 relative of that 
                plaintiff.
    (e) Qualified Settlement Income.--For purposes of this section, the 
term ``qualified settlement income'' 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) (D. Alaska), 
including interest (whether pre- or post judgment and whether related 
to a settlement or judgment).
Exxon Valdez Oil Spill Tax Treatment Act - Allows taxpayers who are plaintiffs in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska), or their heirs or dependents, to: (1) elect to average, for income tax purposes, income received in settlement of such civil action for the period beginning on January 1, 1994, and ending on December 31 of the year in which any settlement income is received; and (2) make contributions of any amount of such settlement income to certain tax-exempt retirement plans in the year such income is received.
{"src": "billsum_test", "title": "A bill to provide for the tax treatment of income received in connection with the litigation concerning the Exxon Valdez oil spill and for other purposes."}