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New Tax Provision

TJCA does not change the basic tax regime applicable to electing §646 Settlement Trusts or to Settlements Trusts that

did not made the § 646 election. This provision comprises three separate but related Internal Revenue Code sections.

New IRC § 139G, Assignments to Alaska Native Settlement Trusts

The new Code section allows a Native Corporation to assign certain payments described in ANCSA to a § 646 electing
Settlement Trust without having to recognize gross income from those payments, provided the assignment is in writing

and the Native Corporation has not received the payment prior to assignment. The Settlement Trust is required to include

the assigned payment in gross income when received. This Code section is effective for taxable years beginning after
December 31, 2016.

New IRC § 247, Contributions to Alaska Native Settlement Trusts

This new Code section allows a Native Corporation to elect annually to deduct contributions made to a Settlement Trust. If

the contribution is in cash, the deduction is the amount of cash contributed. If the contribution is property other than cash,
the deduction is the amount of the Native Corporation’s basis in the contributed property (or the fair market value of such

property, if less than the basis), and no gain or loss can be recognized on the contribution. The Native Corporation’s

deduction is limited to the amount of its taxable income for that year, and any unused deduction may be carried forward
15 additional years. The Native Corporation’s earnings and profits for the taxable year are reduced by the amount of any
deduction claimed for that year.

Generally, the Settlement Trust must include income equal to the deduction taken by the Native Corporation. For

contributions of property other than cash, the Settlement Trust takes a basis in the property equal to its basis in the hands
of the Native Corporation immediately before the contribution (or the fair market value of such property, if less than the

corporation’s basis), and may elect to defer recognition of income associated with such property until the Settlement Trust
sells or disposes of the property. In that case, any income that is deferred is treated as ordinary income, while any gain in

excess of the amount that is deferred takes the same character as if the election had not been made. The Settlement
Trust’s holding period includes the period the property was held by the Native Corporation.

73233-102 13821-4 Tax Cuts and Jobs Act