A bill to amend the Internal Revenue Code of 1986 to provide that unearned income of a child attributable to damages received on account of personal injuries or sickness of the child shall not be taxed at the marginal rate of such child's parents.

Amends Internal Revenue Code provisions governing situations in which certain unearned income of a child under age 14 is taxed as if it were parental income. Excludes from the calculations of net unearned income for such income tax treatment income that: (1) is attributable to any amount a child receives in a lump sum as payment for damages received on account of personal injuries or sickness; and (2) accrues while the damage payment is in a custodial account whose uses are restricted by State law.