I.R.C. § 130(a) In General —
Any amount received for agreeing to a qualified assignment shall not be included
in gross income to the extent that such amount does not exceed the aggregate cost
of any qualified funding assets.
I.R.C. § 130(b) Treatment Of Qualified Funding Asset —
In the case of any qualified funding asset—
I.R.C. § 130(b)(1) —
the basis of such asset shall be reduced by the amount excluded from gross income
under subsection (a) by reason of the purchase of such asset, and
I.R.C. § 130(b)(2) —
any gain recognized on a disposition of such asset shall be treated as ordinary
income.
I.R.C. § 130(c) Qualified Assignment —
For purposes of this section, the term “qualified assignment"
means any assignment of a liability to make periodic payments as damages (whether
by suit or agreement), or as compensation under any workmen's compensation act,
on account of personal injury or sickness (in a case involving physical injury or
physical sickness)—
I.R.C. § 130(c)(1) —
if the assignee assumes such liability from a person who is a party to the suit
or agreement, or the workmen's compensation claim, and
I.R.C. § 130(c)(2) —
if—
I.R.C. § 130(c)(2)(A) —
such periodic payments are fixed and determinable as to amount and time of payment,
I.R.C. § 130(c)(2)(B) —
such periodic payments cannot be accelerated, deferred, increased, or decreased
by the recipient of such payments,
I.R.C. § 130(c)(2)(C) —
the assignee's obligation on account of the personal injuries or sickness is no
greater than the obligation of the person who assigned the liability, and
I.R.C. § 130(c)(2)(D) —
such periodic payments are excludable from the gross income of the recipient under
paragraph (1) or (2) of section 104(a).
The determination for purposes of this chapter of when
the recipient is treated as having received any payment with respect to which there
has been a qualified assignment shall be made without regard to any provision of
such assignment which grants the recipient rights as a creditor greater than those
of a general creditor.
I.R.C. § 130(d) Qualified Funding Asset —
For purposes of this section, the term “qualified funding asset” means any annuity
contract issued by a company licensed to do business as an insurance company under
the laws of any State, or any obligation of the United States, if—
I.R.C. § 130(d)(1) —
such annuity contract or obligation is used by the assignee to fund periodic payments
under any qualified assignment,
I.R.C. § 130(d)(2) —
the periods of the payments under the annuity contract or obligation are reasonably
related to the periodic payments under the qualified assignment, and the amount of
any such payment under the contract or obligation does not exceed the periodic payment
to which it relates,
I.R.C. § 130(d)(3) —
such annuity contract or obligation is designated by the taxpayer (in such manner
as the Secretary shall by regulations prescribe) as being taken into account under
this section with respect to such qualified assignment, and
I.R.C. § 130(d)(4) —
such annuity contract or obligation is purchased by the taxpayer not more than 60
days before the date of the qualified assignment and not later than 60 days after
the date of such assignment.
(Added by Pub. L. 97-473, title I, 101(b)(1), Jan. 14, 1983, 96 Stat. 2605, and amended Pub. L. 99-514, title X, 1002(a), Oct. 22, 1986, 100 Stat. 2388; Pub. L. 100-647, title VI, 6079(b)(1), Nov. 10, 1988, 102 Stat. 3709; Pub. L. 105-34, title IX, Sec. 962(a), Aug. 5, 1997, 111 Stat 788.)
BACKGROUND NOTES
AMENDMENTS
1997—Subsec. (c). Pub. L. 105-34, Sec. 962(a), amended the material preceding par. (1) by inserting “, or compensation under any
workmen's compensation act” after “(whether by suit or agreement)”;
amended par. (1) by inserting “or the workmen's compensation claim"
after “agreement”; and amended par. (2)(D) by substituting “paragraph
(1) or (2) of section 104(a)” for “section 104(a)(2)”.
1988—Subsec. (c). Pub. L. 100-647, in par. (2), redesignated subpars. (D) and (E) as (C) and (D), respectively, struck
out former subpar. (C) which provided that the assignee does not provide to the recipient
of such payments rights against the assignee which are greater than those of a general
creditor, and as concluding provisions, inserted at end “The determination for purposes
of this chapter of when the recipient is treated as having received any payment with
respect to which there has been a qualified assignment shall be made without regard
to any provision of such assignment which grants the recipient rights as a creditor
greater than those of a general creditor.”
1986—Subsec. (c). Pub. L. 99-514 inserted “(in a case involving physical injury or physical sickness)”.
EFFECTIVE DATE OF 1997 AMENDMENTS
Section 962(b) of Pub. L. 105-34 provided that: “The amendments made by
subsection (a) shall apply to claims under workmen's compensation acts filed after
the date of the enactment of this Act” [Aug. 5, 1997].
EFFECTIVE DATE OF 1988 AMENDMENT
Section 6079(b)(2) of Pub. L. 100-647 provided that: “The amendment made by paragraph (1) [amending this section] shall
apply to assignments after the date of the enactment of this Act [Nov. 10, 1988].”
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1002(b) of Pub. L. 99-514 provided that: “The amendment made by this section [amending this section] shall
apply to assignments entered into after December 31, 1986, in taxable years ending
after such date.”
EFFECTIVE DATE
Section 101(c) of Pub. L. 97-473 provided that: “The amendments made by this section [enacting this section and amending
section 104 of this title] shall apply to taxable years ending after December 31,
1982.”
PRIOR PROVISIONS
A prior section 130 was renumbered section 136 of this title.
