Fair Tax Treatment for Insurance Agents' Termination Payments Act of 2002

Fair Tax Treatment for Insurance Agents' Termination Payments Act of 2002- Amends the Internal Revenue Code to consider a qualified termination payment received from an insurance company by a former insurance salesman for such company as a sale or exchange of a capital asset held for more than 12 months.

[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2827 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2827

To amend the Internal Revenue Code of 1986 to provide for capital gains 
treatment for certain termination payments received by former insurance 
                               salesmen.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 31, 2002

Mr. Torricelli introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for capital gains 
treatment for certain termination payments received by former insurance 
                               salesmen.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Tax Treatment for Insurance 
Agents' Termination Payments Act of 2002''.

SEC. 2. CAPITAL GAINS TREATMENT OF QUALIFIED TERMINATION PAYMENTS 
              RECEIVED BY FORMER INSURANCE SALESMEN.

    (a) In General.--Part IV of subchapter P of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 1261. QUALIFIED TERMINATION PAYMENTS RECEIVED BY FORMER 
              INSURANCE SALESMEN.

    ``(a) General.--A qualified termination payment received during the 
taxable year from an insurance company by an individual in the capacity 
of a former insurance salesman for such company shall be considered a 
sale or exchange of a capital asset held for more than 12 months.
    ``(b) Qualified Termination Payment.--For purposes of this section, 
the term `qualified termination payment' means any amount received by a 
former insurance salesman if--
            ``(1) such amount is received after termination of such 
        individual's agreement to perform services as an insurance 
        salesman for such company,
            ``(2) such individual performs no services for such company 
        after such termination and before the close of such taxable 
        year,
            ``(3) such individual enters into a covenant not to compete 
        against such company which applies to at least the 1-year 
        period beginning on the date of such termination, and
            ``(4) the amount of such payment depends primarily on 
        policies sold by or credited to the account of such individual 
        or the extent to which such policies remain in force for some 
        period after such termination, or both.''.
    (b) Clerical Amendment.--The table of sections for such part IV is 
amended by adding at the end the following new item:

                              ``Sec. 1261. Qualified termination 
                                        payments received by former 
                                        insurance salesmen.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.
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