A bill to amend the Internal Revenue Code of 1954 to allow a business deduction for certain self-insurance reserves.

Amends the Internal Revenue Code to allow an income tax deduction in an amount equal to self-insured losses attributable to the conduct of the taxpayer's trade or business. Limits the amount of such deduction for taxpayers maintaining a self-insurance trust to an amount equal to the value of total liability for self-insured losses per year minus the amount in the taxpayer's reserve account or self-insurance trust. Limits the amount of such deduction for taxpayers self-insuring through either an affiliated or unaffiliated insurer to an amount equal to the premium paid to the insurer.

Provides that payments made with respect to self-insured losses shall be deductible only to the extent they exceed in the aggregate the contribution made to the self-insurance trust or reserve account for the year in which the losses were incurred. Requires an annual accounting of self-insured losses whether or not a deduction is taken with respect to that year.

Includes in the gross income of the taxpayer any amount in a reserve account which exceeds any liability with respect to self-insured losses.

Defines and sets requirements for a self-insurance trust. Defines "self-insured losses" as: (1) losses, to the extent not compensated by insurance (other than insurance provided by an affiliated insurance company) or otherwise; and (2) amounts paid to insurers unrelated to the taxpayer to the extent such amounts are not otherwise deductible as insurance expenses when the insurer assumes risks of the taxpayer's business and adjusts the taxpayer's premium subsequent to payment.

Requires the taxpayer to notify the Secretary of the Treasury, by means of attachment to the income tax return, of those classes and amounts of self-insurable risks that he is self-insuring.