H.R.7305 - To amend the Internal Revenue Code of 1986 to establish a deduction for attorney fees awarded with respect to certain wildfire damages and to exclude from gross income settlement funds received with respect to such damages was cosponsored by Doug Lamalfa.
It was referred to the Ways and Means committee.
This bill allows a deduction from gross income (above the line deduction) for attorney fees and court costs awarded with respect to a qualifying wildfire disaster (i.e., any forest or range fire that is a federally declared disaster, occurs in a disaster area, and occurs in 2015 or later).
The bill excludes from the gross income of a taxpayer, for income tax purposes, amounts paid to compensate victims for losses or damages in connection with a qualifying wildfire disaster.
117th CONGRESS 2d Session |
To amend the Internal Revenue Code of 1986 to establish a deduction for attorney fees awarded with respect to certain wildfire damages and to exclude from gross income settlement funds received with respect to such damages.
March 30, 2022
Mr. Thompson of California (for himself and Mr. LaMalfa) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to establish a deduction for attorney fees awarded with respect to certain wildfire damages and to exclude from gross income settlement funds received with respect to such damages.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. Above the line deduction for attorney fees relating to awards for property damage due to certain wildfires.
(a) In general.—Section 62(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(22) ATTORNEY FEES AND COURT COSTS RELATING TO AWARDS WITH RESPECT TO CERTAIN WILDFIRES.—
“(A) IN GENERAL.—Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any award with respect to a qualifying wildfire disaster. The preceding sentence shall not apply to any deduction in excess of the amount includible in the taxpayer's gross income for the taxable year on account of a judgment or settlement (whether by suit or agreement and whether as lump sum or periodic payments) resulting from such claim.
“(B) QUALIFYING WILDFIRE DISASTER.—For purposes of subparagraph (A), the term ‘qualifying wildfire disaster’ means any forest or range fire that—
“(i) is a federally declared disaster (as such term is defined in section 165(i)(5)(A)),
“(ii) occurs in a disaster area (as such term is defined in section 165(i)(5)(B)), and
“(iii) occurs in calendar year 2015 or later.”.
(b) Effective date.—The amendment made by this section shall apply to attorney fees and court costs awarded after May 31, 2020.
SEC. 2. Exclusion of certain wildfire settlement proceeds from gross income.
(a) In general.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:
“(a) In general.—Gross income shall not include amounts paid by a qualified settlement fund established to compensate victims for losses or damages in connection with a qualifying wildfire disaster (as defined in section 62(a)(22)(B)).
“(b) Qualified settlement fund.—The term ‘qualified settlement fund’ has the meaning given such term in Section 1.468B–1 of title 26, Code of Federal Regulations.”.
(b) Clerical amendment.—The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item:
“Sec. 139J. Wildfire settlement proceeds. ”.
(c) Effective date.—The amendment made by this section shall apply to amounts paid after May 31, 2020.
You can read the bill here.
