1. Short title This Act may be cited as the Long-Term Care Account Act . 2. Long-term care account (a) In general Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139G the following new section: 139H. Long-term care account (a) Exclusion of contributions of long-Term gain from sales of life insurance contracts The amount of gain from the sale or assignment of a life insurance contract of a taxpayer shall be reduced (but not below zero) by the amount of contributions to a long-term care account made by such taxpayer during the 30-day period beginning on the date of such sale or assignment. (b) Tax treatment of long-Term care account (1) In general A long-term account is exempt from taxation under this subtitle unless such account has ceased to be a long-term care account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations). (2) Account terminations Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to health savings accounts, and any amount treated as distributed under such rules shall be treated as not used to pay long-term care expenses. (3) Tax treatment of distributions (A) Amounts used for long-term care expenses Any amount paid or distributed out of a long-term care account which is used exclusively to pay long-term care expenses of the account beneficiary or the account beneficiary’s spouse shall not be includible in gross income. (B) Inclusion of amounts not used for long-term care expenses Any amount paid or distributed out of a long-term care account which is not used to pay the long-term care expenses of the account beneficiary or the account beneficiary’s spouse shall be included in the gross income of such beneficiary. (C) Additional tax on distributions not used for long-term care expenses The tax imposed by this chapter on the account beneficiary for any