26 U.S.C. § 130: Certain personal injury liability assignments

Any amount received for agreeing to a qualified assignment shall not be included in gross income to the extent that such amount does not exceed the aggregate cost of any qualified funding assets. the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and any gain recognized on a disposition of such asset shall be treated as ordinary income. if the assignee assumes such liability from a person who is a party to the suit or agreement, or the workmen’s compensation claim, and such periodic payments are fixed and determinable as to amount and time of payment, such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments, the assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability, and such periodic payments are excludable from the gross income of the recipient under paragraph (1) or (2) of section 104(a). such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment, the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates, such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.