I
118TH CONGRESS
1ST SESSION H. R. 176
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.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 9, 2023
Mr. L AMALFA (for himself, Mr. T HOMPSON of California, Mr. M CCLINTOCK, and Mr. H UFFMAN) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
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 in-
come settlement funds received with respect to such dam- ages.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 21:42 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H176.IH H176pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 176 IH
SECTION 1. ABOVE THE LINE DEDUCTION FOR ATTORNEY 1
FEES RELATING TO AWARDS FOR PROPERTY 2
DAMAGE DUE TO CERTAIN WILDFIRES. 3
(a) IN GENERAL.—Section 62(a) of the Internal Rev-4
enue Code of 1986 is amended by adding at the end the 5 following new paragraph: 6
‘‘(22) ATTORNEY FEES AND COURT COSTS RE -7
LATING TO AWARDS WITH RESPECT TO CERTAIN 8
WILDFIRES.— 9
‘‘(A) IN GENERAL .—Any deduction allow-10
able under this chapter for attorney fees and 11
court costs paid by, or on behalf of, the tax-12
payer in connection with any award with re-13
spect to a qualifying wildfire disaster. The pre-14
ceding sentence shall not apply to any deduc-15
tion in excess of the amount includible in the 16
taxpayer’s gross income for the taxable year on 17
account of a judgment or settlement (whether 18
by suit or agreement and whether as lump sum 19
or periodic payments) resulting from such 20
claim. 21
‘‘(B) QUALIFYING WILDFIRE DISASTER .— 22
For purposes of subparagraph (A), the term 23
‘qualifying wildfire disaster’ means any forest 24
or range fire that— 25
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‘‘(i) is a federally declared disaster (as 1
such term is defined in section 2
165(i)(5)(A)), 3
‘‘(ii) occurs in a disaster area (as such 4
term is defined in section 165(i)(5)(B)), 5
and 6
‘‘(iii) occurs in calendar year 2015 or 7
later.’’. 8
(b) E FFECTIVE DATE.—The amendment made by 9
this section shall apply to attorney fees and court costs 10 awarded after May 31, 2020. 11
SEC. 2. EXCLUSION OF CERTAIN WILDFIRE SETTLEMENT 12
PROCEEDS FROM GROSS INCOME. 13
(a) IN GENERAL.—Part III of subchapter B of chap-14
ter 1 of the Internal Revenue Code of 1986 is amended 15 by inserting after section 139I the following new section: 16 ‘‘SEC. 139J. CERTAIN WILDFIRE SETTLEMENT PROCEEDS. 17
‘‘(a) IN GENERAL.—Gross income shall not include 18
amounts paid by a qualified settlement fund established 19 to compensate victims for losses or damages in connection 20 with a qualifying wildfire disaster (as defined in section 21 62(a)(22)(B)). 22
‘‘(b) QUALIFIED SETTLEMENT FUND.—The term 23
‘qualified settlement fund’ has the meaning given such 24 VerDate Sep 11 2014 21:42 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H176.IH H176pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 176 IH
term in Section 1.468B–1 of title 26, Code of Federal 1 Regulations.’’. 2
(b) C LERICAL AMENDMENT.—The table of sections 3
for part III of subchapter B of chapter 1 of such Code 4 is amended by inserting after the item relating to section 5 139I the following new item: 6
‘‘Sec. 139J. Certain wildfire settlement proceeds.’’.
(c) E FFECTIVE DATE.—The amendment made by 7
this section shall apply to amounts paid after May 31, 8 2020. 9
Æ
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