26 U.S.C. § 130

Certain personal injury liability assignments

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(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.

(b) Treatment of qualified funding assetIn the case of any qualified funding asset—(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(2) any gain recognized on a disposition of such asset shall be treated as ordinary income.(c) Qualified assignmentFor 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)—(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(2) if—(A) such periodic payments are fixed and determinable as to amount and time of payment,(B) such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments,(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(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.(d) Qualified funding assetFor 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—(1) such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,(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,(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(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 Pub. L. 97–473, title I, § 101(b)(1), Jan. 14, 1983, 96 Stat. 2605; 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, § 962(a), Aug. 5, 1997, 111 Stat. 891.)Editorial NotesPrior Provisions

A prior section 130 was renumbered section 140 of this title.

Amendments

1997—Subsec. (c). Pub. L. 105–34, § 962(a)(1), inserted “, or as compensation under any workmen’s compensation act,” after “(whether by suit or agreement)” in introductory provisions.

Subsec. (c)(1). Pub. L. 105–34, § 962(a)(2), inserted “or the workmen’s compensation claim,” after “agreement,”.

Subsec. (c)(2)(D). Pub. L. 105–34, § 962(a)(3), substituted “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)”.

Statutory Notes and Related SubsidiariesEffective Date of 1997 Amendment

Pub. L. 105–34, title IX, § 962(b), Aug. 5, 1997, 111 Stat. 892, provided that: “The amendments made by subsection (a) [amending this section] 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

Pub. L. 100–647, title VI, § 6079(b)(2), Nov. 10, 1988, 102 Stat. 3710, 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

Pub. L. 99–514, title X, § 1002(b), Oct. 22, 1986, 100 Stat. 2388, 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

Pub. L. 97–473, title I, § 101(c), Jan. 14, 1983, 96 Stat. 2606, 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.”

Notes of Decisions

Cited in 44 cases (5 in the last 5 years), 1996–2024 · leading case: In Re Kaufman

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In Re Kaufman (2001) okla · cites it 2× “Title 26 U.S.C. § 130 (c) (1997) provides: "Qualified assignment.”

CGU Life Insurance v. Singer Asset Finance Co. (2001) gactapp · cites it 4× “” 26 USC § 130 (c) (2) (B). Should the IRS determine that the sale or assignment of future benefits to a third party violates the above-listed conditions, such a transfer could jeopardize the tax advantages of the structured settlement agreements under IRS regulations.”

WebBank v. American General Annuity Service Corp. (2002) utah “§ 104 (a)(2) (2002) (exeluding such payments from the calculation of an individual's gross income for federal income tax purposes); 26 U.S.C. § 130 (2002) (providing tax benefits to certain personal injury liability assignments and qualified funding assets).”

Grieve v. General American Life Insurance (1999) vtd · cites it 3× “26 U.S.C.A. § 130 (1988 and Supp.1999). The settlement agreement in this case was drafted to enable the parties to take advantage of these tax benefits.”

Henderson v. Roadway Express (1999) illappct · cites it 2× “The court found the language of the antiassignment clause mirrored the language of section 130 of the Internal Revenue Code of 1986 (hereinafter Internal Revenue Code) ( 26 U.S.C. § 130 (1994)) relating to the tax treatment of the assignee of liability and therefore was…”

In Re Th Estate of Powless (2000) illappct · cites it 4× “In its objections to the assignment, Safeco also contended that it could possibly lose its favorable tax treatment pursuant to section 130(c)(2)(B) of the Internal Revenue Code ( 26 U.S.C. § 130 (c)(2)(B) (1988)) if the assignment was allowed.”

Am. Gen. Life Ins. Co. v. DRB Capital, LLC (2018) moctapp · cites it 4× “Further, 26 U.S.C. § 130 states: (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.”

Transamerica Assurance Corporation v. Settlement Capital Corporation, United States of America, Gary Steele (2007) ca6 · cites it 2× “§ 104 and enactment of 26 U.S.C. § 130 clarified the tax treatment of structured settlements and revealed their potential advantages.”

Singer Asset Finance Co. v. CGU Life Insurance Co. of America (2002) ga · cites it 2× “” 26 USC § 130 (c) (2). 3. Did the assignment of some of the future payments to Singer run afoul of 26 USC § 130 (c) (2)? Singer argues that its purchase of the future payments did not constitute an acceleration or deferment of the periodic payments by the Revills, and that,…”

Johnson v. First Colony Life Insurance (1998) cacd · cites it 2× “26 U.S.C. § 130 . To qualify for this exclusion from taxation, the assignment of the liability must be a "qualified assignment,” which means that the periodic payments "cannot be accelerated, deferred, increased, or decreased by the recipient of such payments.”

Renaldo White v. Symetra Assigned Benefits Service Company (2024) ca9 “See 26 U.S.C. § 130 (c)(2). Further, as the district court noted, plaintiffs “have limited the class to those contracts which include the limitation on transfers,” i.”

Union Planters Bank, N.A. v. Thompson Coburn LLP (2010) illappct “SBU offered tax-advantaged structured settlements to personal injury plaintiffs under section 130 of the Internal Revenue Code ( 26 U.S.C. §130 (1994)). In short, under section 130, the injured plaintiffs received a tax shelter by disclaiming any power of direction over the…”

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