Section 1 Short title
This Act may be cited as the “Settlement Trust Improvement Act of 2017”.
Settlement Trust Improvement Act of 2017
A BILL
To amend the Internal Revenue Code of 1986 to clarify the treatment of contributions to Alaska Native Settlement Trusts, and for other purposes.
Sec. 2 Exclusion for ANCSA payments assigned to Alaska Native Settlement Trusts
In general— Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before section 140 the following new section:
“139G. Assignments to Alaska Native Settlement Trusts
“(a) In general—In the case of a Native Corporation, gross income shall not include the value of any payments that would otherwise be made, or treated as being made, to such Native Corporation pursuant to, or as required by, any provision of the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), including any payment that would otherwise be made to a Village Corporation pursuant to section 7(j) of the Alaska Native Claims Settlement Act (43 U.S.C. 1606(j)), provided that any such payments—
“(1) are assigned in writing to a Settlement Trust, and
“(2) were not received by such Native Corporation prior to the assignment described in paragraph (1).
“(b) Inclusion in gross income—In the case of a Settlement Trust which has been assigned payments described in subsection (a), gross income shall include such payments as and when such payments are received by such Settlement Trust pursuant to the assignment and shall have the same character as if such payments were received by the Native Corporation.
“(c) Amount and scope of assignment—The amount and scope of any assignment under subsection (a) shall be described with reasonable particularity and may either be in a percentage of one or more such payments or in a fixed dollar amount.
“(d) Duration of assignment; revocability—Any assignment under subsection (a) shall specify—
“(1) a duration either in perpetuity or for a period of time, and
“(2) whether such assignment is revocable.
“(e) Prohibition on deduction—Notwithstanding section 250, no deduction shall be allowed to a Native Corporation for purposes of any amounts described in subsection (a).
“(f) Definitions—For purposes of this section, the terms Native Corporation and Settlement Trust have the same meaning given such terms under section 646(h).”
Conforming amendment— The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting before the item relating to section 140 the following new item:
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2016.
Sec. 3 Deduction of contributions to Alaska Native Settlement Trusts
In general— Part VIII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“250. Contributions to Alaska Native Settlement Trusts
“(a) In general—In the case of a Native Corporation, there shall be allowed a deduction for any contributions made by such Native Corporation to a Settlement Trust (regardless of whether an election under section 646 is in effect for such Settlement Trust) for which the Native Corporation has made an annual election under subsection (e).
“(b) Amount of deduction—The amount of the deduction under subsection (a) shall be equal to—
“(1) in the case of a cash contribution (regardless of the method of payment, including currency, coins, money order, or check), the amount of such contribution, or
“(2) in the case of a contribution not described in paragraph (1), the Native Corporation's adjusted basis in the property contributed.
“(c) Limitation and carryover
“(1) In general—Subject to paragraph (2), the deduction allowed under subsection (a) for any taxable year shall not exceed the taxable income of the Native Corporation for the taxable year in which the contribution was made.
“(2) Carryover—If the aggregate amount of contributions described in subsection (a) for any taxable year exceeds the limitation under paragraph (1), such excess shall be treated as a contribution described in subsection (a) in each of the 15 succeeding years in order of time.
“(d) Definitions—For purposes of this section, the terms Native Corporation and Settlement Trust have the same meaning given such terms under section 646(h).
“(e) Manner of making election
“(1) In general—For each taxable year, a Native Corporation may elect to have this section apply for such taxable year on the income tax return or amended income tax return of the Native Corporation, with such election to have effect solely for such taxable year.
“(2) Revocation—Any election made by a Native Corporation pursuant to this subsection may be revoked pursuant to an amended income tax return which has been timely filed by such Native Corporation.
“(f) Additional rules
“(1) Earnings and profits—Notwithstanding section 646(d)(2), in the case of a Native Corporation which claims a deduction under this section for any taxable year, the earnings and profits of such Native Corporation for such taxable year shall be reduced by the amount of such deduction.
“(2) Gain or loss—No gain or loss shall be recognized by the Native Corporation with respect to a contribution of property for which a deduction is allowed under this section.
“(3) Income—Subject to subsection (g), a Settlement Trust shall report income in the amount of any deduction allowed under this section in the taxable year in which the Settlement Trust actually receives such contribution.
“(4) Period—In determining the period that a Settlement Trust has held property for which a deduction is allowed under this section, the period the Native Corporation has held such property shall be included.
“(5) Basis—The basis that a Settlement Trust has for which a deduction is allowed under this section shall be equal to the adjusted basis of the Native Corporation in such property immediately before such contribution.
“(6) Prohibition—No deduction shall be allowed under this section with respect to any contributions made to a Settlement Trust which are in violation of subsection (a)(2) or (c)(2) of section 39 of the Alaska Native Claims Settlement Act (43 U.S.C. 1629e).
“(g) Election by Settlement Trust To Defer Income Recognition
“(1) In general—In the case of a contribution which consists of property other than cash, a Settlement Trust may elect to defer recognition of any income related to such property until the sale or exchange of such property, in whole or in part, by the Settlement Trust.
“(2) Treatment—In the case of property described in paragraph (1), any income or gain received by the Settlement Trust upon sale or exchange of such property shall be treated as—
“(A) for such amount of the income or gain as is equal to or less than the amount of income deferred pursuant to this subsection, ordinary income, and
“(B) for any amounts of the income or gain which are in excess of the amount of income deferred pursuant to this subsection, having the same character as if this subsection did not apply.
“(3) Election
“(A) In general—For each taxable year, a Settlement Trust may elect to apply this subsection for any property described in paragraph (1) which was contributed during such year. Any property to which the election applies shall be identified and described with reasonable particularity on the income tax return or amended income tax return of the Settlement Trust, with such election to have effect solely for such taxable year.
“(B) Revocation—Any election made by a Settlement Trust pursuant to this subsection may be revoked pursuant to an amended income tax return which has been timely filed by such Settlement Trust.
“(C) Certain dispositions
“(i) In general—In the case of any property for which an election is in effect under this subsection and which is disposed of within the first taxable year subsequent to the taxable year in which such property was contributed to the Settlement Trust—
“(I) such election shall be voided as to such property,
“(II) the Settlement Trust shall be required to file an amended return for the taxable year in which such property was contributed, and
“(III) the Settlement Trust shall pay any tax applicable to such property, including interest and a penalty equal to 10 percent of the amount of such tax.
“(ii) Assessment—Notwithstanding section 6501(a), any amount described in subclause (III) of clause (i) may be assessed, or a proceeding in court with respect to such amount may be initiated without assessment, within 4 years after the date on which the return making the election under this subsection for such property was filed.”
Conforming amendment— The table of sections for part VIII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Permissive Amendments to Trust Agreements Establishing Settlement Trusts—
In general— Notwithstanding any provision of law, including any provision of the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), Alaska State law, or the terms of any trust agreement of a Settlement Trust (as defined under section 3(t) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(t))), the terms of any trust agreement of a Settlement Trust may, within the 1-year period following the date of the enactment of this Act, be amended as necessary to allow such Trust to make an election described in subsection (g) of section 250 of the Internal Revenue Code of 1986 (as added by subsection (a)).
Amendment— An amendment described in paragraph (1) shall be enacted pursuant to one or more agreements between the Native Corporation that established the Settlement Trust and the trustees of such Trust and shall not require any vote by the beneficiaries of such Trust or the shareholders of such Native Corporation.
Registration statement— Any Settlement Trust which was registered in accordance with Alaska State law prior to the date of the enactment of an amendment described in paragraph (1) shall not be required to file a new or amended registration statement to reflect such amendment.
Effective date—
In general— The amendments made by this section shall apply to taxable years for which the period of limitation on refund or credit under section 6511 of the Internal Revenue Code of 1986 has not expired.
One-year waiver of statute of limitations— If the period of limitation on a credit or refund resulting from the amendments made by subsection (a) expires before the end of the 1-year period beginning on the date of the enactment of this Act, refund or credit of such overpayment (to the extent attributable to such amendments) may, nevertheless, be made or allowed if claim therefor is filed before the close of such 1-year period.
Sec. 4 Information reporting for deductible contributions to Alaska Native Settlement Trusts
in the heading, by striking “sponsoring”, and
by adding at the end the following new subsection:
“(e) Deductible contributions by Native Corporations to Alaska Native Settlement Trusts
“(1) In general—Any Native Corporation (as defined in subsection (m) of section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m))) which has made a contribution to a Settlement Trust (as defined in subsection (t) of such section) to which an election under subsection (e) of section 250 applies shall provide such Settlement Trust with a statement regarding such election not later than January 31 of the calendar year subsequent to the calendar year in which the contribution was made.
“(2) Content of Statement—The statement described in paragraph (1) shall include—
“(A) the total amount of contributions to which the election under subsection (e) of section 250 applies,
“(B) for each contribution, whether such contribution was in cash,
“(C) for each contribution which consists of property other than cash, the date that such property was acquired by the Native Corporation and the adjusted basis of such property on the date such property was contributed to the Settlement Trust,
“(D) the date on which each contribution was made to the Settlement Trust, and
“(E) such information as the Secretary determines to be necessary or appropriate for the identification of each contribution and the accurate reporting of income relating to such contributions by the Settlement Trust.”
Conforming amendment— The item relating to section 6039H in the table of sections for subpart A of part III of subchapter A of chapter 61 of the Internal Revenue Code of 1986 is amended to read as follows:
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2016.
Sec. 5 Statutory construction
This Act is remedial Indian legislation enacted under the plenary authority of the Congress under the Constitution of the United States to regulate Indian affairs, and any ambiguities in section 139F or 250 of the Internal Revenue Code of 1986, as added by this Act, shall be resolved in favor of Native Corporations attempting to exclude income or claim a deduction thereunder.