A bill to encourage Physicians' and Surgeons' Mutual Protection and Indemnity Associations.

Amends the Internal Revenue Code to exclude from the gross income of any eligible physicians' and surgeons' mutual protection and indemnity association any capital contributions by a member joining such association. Requires such payment to be included in gross income for the taxable year with respect to any member who elects to deduct such payment as a trade or business expense.

Allows any member of such an association to elect, with the consent of the association, to treat any capital contribution made during the taxable year as an ordinary and necessary business expense for purposes of the deduction allowed for business expenses to the extent such payment does not exceed the amount which would be payable to an independent insurance company for similar insurance coverage and further reduced by any annual dues, assessments, or premiums paid during such taxable year. Requires any refund of such capital contribution in a subsequent year to be included in income for the taxable year received to the extent a deduction for such payment was allowed.

Requires the association: (1) to have been operative and providing protection under the laws of any State prior to January 1, 1984; (2) to not be subject to regulation by any State insurance department; (3) to have a right to make unlimited assessments against all members to cover current claims and losses; and (4) to not be a member of, nor subject to protection by, any insurance guaranty plan or association of any State.