119-HR3512

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House Senate President

119th CONGRESS

1st Session

H. R. 3512

1. Short title
2. Litigation financing

1. Short title

This Act may be cited as the "Tackling Predatory Litigation Funding Act".

2. Litigation financing

(a) In general - Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:

(b) Exclusion from definition of capital asset - Section 1221(a) of the Internal Revenue Code of 1986 is amended—

(1) - in paragraph (7), by striking "or" at the end,

(2) - in paragraph (8), by striking the period at the end and inserting "; or", and

(3) - by adding at the end the following new paragraph:

(9) - any financial arrangement created by, or any proceeds derived from, a litigation financing agreement (as defined under section 5000E–2).

(c) Removal from gross income - 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:

139J. Qualified litigation proceeds

Gross income shall not include any qualified litigation proceeds (as defined in section 5000E–2).

(d) Clerical amendments -

(1) - Section 7701(a)(16) of the Internal Revenue Code of 1986 is amended by inserting "5000E–3(c)(1)," before "1441".

(2) - The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 50A the following new item:

(3) - 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:

(e) Effective date - The amendments made by this section shall apply to taxable years beginning after December 31, 2025.