### Question
How does METHODS OF ACCOUNTING define designated settlement fund?


### Answer
Under *26 U.S.C. § 468B*, **designated settlement fund** is defined as:

> any fund—



(A) which is established pursuant to a court order and which extinguishes completely the taxpayer's tort liability with respect to claims described in subparagraph (D),



(B) with respect to which no amounts may be transferred other than in the form of qualified payments,



(C) which is administered by persons a majority of whom are independent of the taxpayer,



(D) which is established for the principal purpose of resolving and satisfying present and future claims against the taxpayer (or any related person or formerly related person) arising out of personal injury, death, or property damage,



(E) under the terms of which the taxpayer (or any related person) may not hold any beneficial interest in the income or corpus of the fund, and



(F) with respect to which an election is made under this section by the taxpayer

#### Citation:
  - *26 U.S.C. § 468B*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart C-Taxable Year for Which Deductions Taken**

