,i  #aacth ,,congress  #ast ,session    
,h4 ,r4 #cdde  ,,in ,,the ,,house ,,of  
,,representatives  ,october #cj1        
#bjac,mr4 ,welch 7for himself and ,mr4  
,gutirrez7 introduced the following     
bill2 which was referred to the         
,committee on ,ways and ,means  ,a      
,,bill  ,to amend the ,internal ,revenue
 ,code of #aihf to disallow deductions  
for the payment of compensatory and     
punitive damages to a government1 and   
for other purposes4  #a4 ,short title   
,this ,act may be cited as the ,stop    
,deducting ,damages ,act of #bjac4  #b4 
,treatment of payments of compensatory  
and punitive damages paid to a          
government  7a7 ,in general ,section    
#afb7;f7 of the ,internal ,revenue ,code
 of #aihf is amended to read as follows3
  7f7 ,damages paid to a government     
7#a7 ,fines and penalties ,no deduction 
shall be allowed under subsection 7a7   
for any fine or similar penalty paid to 
a government for the violation of any   
law4  7#b7 ,compensatory damages ,no    

deduction shall be allowed under this   
chapter for any amount paid or incurred 
for compensatory damages in connection  
with any judgment in1 or settlement of1 
any action against a government4  7#c7  
,punitive damages ,no deduction shall be
 allowed under this chapter for any     
amount paid or incurred for punitive    
damages in connection with any judgment 
in1 or settlement of1 any action against
 a government4 ,this paragraph shall not
 apply to punitive damages described in 
section #ajd7;c74  4  7b7 ,effective    
date ,the amendments made by this       
section shall apply to damages paid or  
incurred after ,october #cj1 #bjac4  #c4
 ,inclusion in income of punitive       
damages paid by insurer or otherwise    
7a7 ,in general ,part ,,ii of subchapter
 ,b of chapter #a of the ,internal      
,revenue ,code of #aihf is amended by   
adding at the end the following new     
section3  #ia4 ,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 7or agreement7 to  
pay punitive damages4  4  7b7 ,reporting
 requirements ,section #fjda of such    
,code is amended by adding at the end   
the following new subsection3  7h7      
,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 7or agreement7 to pay
 punitive damages4  4  7c7 ,conforming  
amendment ,the table of sections for    
part ,,ii of subchapter ,b of chapter #a
 of such ,code is amended by adding at  
the end the following new item3  ,sec4  
#ia4 ,punitive damages compensated by   
insurance or otherwise4  4  7d7         
,effective date ,the amendments made by 
this section shall apply to damages paid
 or incurred after ,october #cj1 #bjac4