BILL NUMBER: SB 935	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Roth
   (Principal coauthor: Senator Liu)

                        FEBRUARY 2, 2016

   An act to add Section 10113.22 to the Insurance Code, relating to
insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 935, as introduced, Roth. Life insurance: life settlements:
favorable tax treatment.
   Existing law defines a "life settlement contract" as, among other
things, a written agreement solicited, negotiated, or entered into in
this state between a provider and an owner, establishing the terms
under which compensation or anything of value will be paid, and that
compensation or thing of value is less than the expected death
benefit of the insurance policy or certificate.
   Existing law prohibits a person from entering into, brokering, or
soliciting life settlements unless the person is licensed by the
Insurance Commissioner. Life settlement licensees are required to,
among other things, provide certain disclosures, file an annual
statement with the Department of Insurance, and are prohibited from
engaging in any false or misleading advertising, solicitation, or
practice, as provided. A violation of these provisions is a
misdemeanor.
   This bill would require a licensee that solicits, negotiates, or
enters into a life or viatical settlement that is intended to qualify
for special tax treatment under a specified provision of the federal
Internal Revenue Code (IRC) as an amount paid to a person suffering
from a chronic illness to file with the department a legal memorandum
from outside tax counsel stating that the proceeds from that
transaction would receive preferable tax treatment pursuant to that
provision of the IRC.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10113.22 is added to the Insurance Code,
immediately following Section 10113.2, to read:
   10113.22.  (a) A licensee that solicits, negotiates, or enters
into a life or viatical settlement that is intended to qualify for
special tax treatment under Section 101(g) of the Internal Revenue
Code (26 U.S.C. Sec. 101(g)) as an amount paid to a person suffering
from a chronic illness shall file with the department a legal
memorandum from outside tax counsel stating that the proceeds from
that transaction would receive preferable tax treatment pursuant to
Section 101(g) of the Internal Revenue Code.
   (b) A violation of this section is not subject to subdivision (t)
of Section 10113.2.