,,ii  #aaeth ,,congress  #ast ,session  
,s4 #baae  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,november #i1  
#bjag,mr4 ,leahy 7for himself1 ,mr4     
,blumenthal1 ,mr4 ,reed1 ,mrs4          
,gillibrand1 and ,ms4 ,hassan7          
introduced the following bill2 which was
 read twice and referred to the         
,committee on ,finance  ,a ,,bill  ,to  
amend the ,internal ,revenue ,code of   
#aihf to disallow any deduction for     
punitive damages1 and for other         
purposes4  #a4 ,disallowance of         
deduction for punitive damages  7a7     
,disallowance of deduction  7#a7 ,in    
general ,section #afb7;g7 of the        
,internal ,revenue ,code of #aihf is    
amended--  7,a7 by redesignating        
paragraphs 7#a7 and 7#b7 as             
subparagraphs 7,a7 and 7,b71            
respectively2  7,b7 by striking ,if and 
inserting3  7#a7 ,treble damages ,if  2 
and  7,c7 by adding at the end the      
following new paragraph3  7#b7 ,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 between       
private parties4  4  7#b7 ,conforming   
amendment ,the heading for section      
#afb7;g7 of such ,code is amended by    
inserting or ,punitive ,damages after   
,laws4  7b7 ,inclusion in income of     
punitive damages paid by insurer or     
otherwise  7#a7 ,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  
7#b7 ,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  
7#c7 ,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  7c7 ,effective ,date ,the amendments 
made by this section shall apply to     
damages paid or incurred on or after the
 date of the enactment of this ,act4