IN THE SENATE OF THE UNITED STATES
January 13, 2015
Mr. Leahy introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to disallow any deduction for punitive damages, and for other purposes.
This Act may be cited as the
No Tax Write-offs for Corporate Wrongdoers Act.
Disallowance of deduction for punitive damages
Disallowance of deduction
Section 162(g) of the Internal Revenue Code of 1986 is amended—
by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively,
If and inserting:
by adding at the end the following new paragraph:
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.
The heading for section 162(g) of such Code is amended by inserting
or Punitive Damages after
Inclusion in income of punitive damages paid by insurer or otherwise
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:
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.
Section 6041 of such Code is amended by adding at the end the following new subsection:
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.
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.
The amendments made by this section shall apply to damages paid or incurred on or after the date of the enactment of this Act.