-CITE-
26 USC Subchapter B - Computation of Taxable Income 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
-HEAD-
SUBCHAPTER B - COMPUTATION OF TAXABLE INCOME
-MISC1-
Part
I. Definition of gross income, adjusted gross income,
taxable income, etc.
II. Items specifically included in gross income.
III. Items specifically excluded from gross income.
IV. Determination of marital status.(!1)
V. Deductions for personal exemptions.
VI. Itemized deductions for individuals and corporations.
VII. Additional itemized deductions for individuals.
VIII. Special deductions for corporations.
IX. Items not deductible.
X. Terminal railroad corporations and their shareholders.
XI. Special rules relating to corporate preference items.
AMENDMENTS
1982 - Pub. L. 97-248, title II, Sec. 204(c)(2), Sept. 3, 1982,
96 Stat. 427, added item for part XI.
1977 - Pub. L. 95-30, title I, Sec. 101(e)(3), May 23, 1977, 91
Stat. 135, substituted "Determination of marital status" for
"Standard deduction for individuals" in item for part IV.
1976 - Pub. L. 94-455, title XIX, Sec. 1901(b)(4)(C), Oct. 4,
1976, 90 Stat. 1793, substituted "taxable income, etc." for "and
taxable income." in item for part I.
1962 - Pub. L. 87-870, Sec. 1(b), Oct. 23, 1962, 76 Stat. 1160,
added item for part X.
-FOOTNOTE-
(!1) Part heading amended by Pub. L. 99-514 without corresponding
amendment of analysis.
-End-
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26 USC PART I - DEFINITION OF GROSS INCOME, ADJUSTED
GROSS INCOME, TAXABLE INCOME, ETC. 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-MISC1-
Sec.
61. Gross income defined.
62. Adjusted gross income defined.
63. Taxable income defined.
64. Ordinary income defined.
65. Ordinary loss defined.
66. Treatment of community income.
67. 2-percent floor on miscellaneous itemized deductions.
68. Overall limitation on itemized deductions.
AMENDMENTS
1990 - Pub. L. 101-508, title XI, Sec. 11103(d), Nov. 5, 1990,
104 Stat. 1388-407, added item 68.
1986 - Pub. L. 99-514, title I, Sec. 132(d), Oct. 22, 1986, 100
Stat. 2116, added item 67.
1984 - Pub. L. 98-369, div. A, title IV, Sec. 424(b)(2)(C), July
18, 1984, 98 Stat. 803, struck out "where spouses live apart" in
item 66.
1980 - Pub. L. 96-605, title I, Sec. 101(b), Dec. 28, 1980, 94
Stat. 3522, added item 66.
1976 - Pub. L. 94-455, title XIX, Sec. 1901(b)(4)(A), (B), Oct.
4, 1976, 90 Stat. 1793, substituted "TAXABLE INCOME, ETC." for "AND
TAXABLE INCOME" in part heading, and added items 64 and 65.
-End-
-CITE-
26 USC Sec. 61 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 61. Gross income defined
-STATUTE-
(a) General definition
Except as otherwise provided in this subtitle, gross income means
all income from whatever source derived, including (but not limited
to) the following items:
(1) Compensation for services, including fees, commissions,
fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.
(b) Cross references
For items specifically included in gross income, see part II
(sec. 71 and following). For items specifically excluded from
gross income, see part III (sec. 101 and following).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 17; Pub. L. 98-369, div. A,
title V, Sec. 531(c), July 18, 1984, 98 Stat. 884.)
-MISC1-
AMENDMENTS
1984 - Subsec. (a)(1). Pub. L. 98-369 inserted reference to
fringe benefits.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 effective Jan. 1, 1985, see section
531(h) of Pub. L. 98-369, set out as an Effective Date note under
section 132 of this title.
TERMINATION DATE OF 1978 AMENDMENT
Pub. L. 95-615, Sec. 210(a), Nov. 8, 1978, 92 Stat. 3109,
provided that: "Title I of this Act [probably means sections 1 to 8
of Pub. L. 95-615, see Short Title of 1978 Amendment note under
section 1 of this title] (other than sections 4 and 5 thereof)
[amending section 167 of this title, enacting provisions set out as
notes under this section and sections 61 and 62 of this title, and
amending provisions set out as notes under sections 117, 167, and
382 of this title] shall cease to have effect on the day after the
date of the enactment of this Act [Nov. 8, 1978]."
REGULATIONS
Pub. L. 95-427, Sec. 1, Oct. 7, 1978, 92 Stat. 996, as amended by
Pub. L. 96-167, Sec. 1, Dec. 29, 1979, 93 Stat. 1275; Pub. L.
97-34, title VIII, Sec. 801, Aug. 13, 1981, 95 Stat. 349; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(a) In General. - No fringe benefit regulation shall be issued -
"(1) in final form on or after May 1, 1978, and on or before
December 31, 1983, or
"(2) in proposed or final form on or after May 1, 1978, if such
regulation has an effective date on or before December 31, 1983.
"(b) Definition of Fringe Benefit Regulation. - For purposes of
subsection (a), the term 'fringe benefit regulation' means a
regulation providing for the inclusion of any fringe benefit in
gross income by reason of section 61 of the Internal Revenue Code
of 1986 [formerly I.R.C. 1954]."
Pub. L. 95-615, Sec. 3, Nov. 8, 1978, 92 Stat. 3097, as amended
by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided
that no regulations be issued in final form on or after Oct. 1,
1977, and before July 1, 1978, providing for inclusion of any
fringe benefit in gross income by reason of section 61 of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954], ceased to
have effect on the day after Nov. 8, 1978, pursuant to section
210(a) of that Act.
NO GAIN RECOGNIZED FROM NET GIFTS MADE BEFORE MARCH 4, 1981
Section 1026 of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(a) In General. - In the case of any transfer of property
subject to gift tax made before March 4, 1981, for purposes of
subtitle A of the Internal Revenue Code of 1986 [formerly I.R.C.
1954, 26 U.S.C. 1 et seq.], gross income of the donor shall not
include any amount attributable to the donee's payment of (or
agreement to pay) any gift tax imposed with respect to such gift.
"(b) Gift Tax Defined. - For purposes of subsection (a), the term
'gift tax' means -
"(1) the tax imposed by chapter 12 of such Code [26 U.S.C. 2501
et seq.], and
"(2) any tax imposed by a State (or the District of Columbia)
on transfers by gifts.
"(c) Statute of Limitations. - If refund or credit of any
overpayment of tax resulting from subsection (a) is prevented on
the date of the enactment of this Act [July 18, 1984] (or at any
time within 1 year after such date) by the operation of any law or
rule of law (including res judicata), refund or credit of such
overpayment (to the extent attributable to subsection (a)) may
nevertheless be made or allowed if claim therefor is filed within 1
year after the date of the enactment of this Act."
PAYMENT-IN-KIND TAX TREATMENT ACT OF 1983
Pub. L. 98-4, Mar. 11, 1983, 97 Stat. 7, as amended by Pub. L.
98-369, div. A, title X, Sec. 1061(a), July 18, 1984, 98 Stat.
1046; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095; Pub.
L. 100-647, title VI, Sec. 6252(a)(1), Nov. 10, 1988, 102 Stat.
3752, provided that:
"SECTION 1. SHORT TITLE.
"This Act may be cited as the 'Payment-in-Kind Tax Treatment Act
of 1983'.
"SEC. 2. INCOME TAX TREATMENT OF AGRICULTURAL COMMODITIES
RECEIVED UNDER A 1983 PAYMENT-IN-KIND PROGRAM.
"(a) Income Tax Deferral, Etc. - Except as otherwise provided in
this Act, for purposes of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] -
"(1) a qualified taxpayer shall not be treated as having
realized income when he receives a commodity under a 1983
payment-in-kind program,
"(2) such commodity shall be treated as if it were produced by
such taxpayer, and
"(3) the unadjusted basis of such commodity in the hands of
such taxpayer shall be zero.
"(b) Effective Date. - This section shall apply to taxable years
ending after December 31, 1982, but only with respect to
commodities received for the 1983 crop year.
"SEC. 3. LAND DIVERTED UNDER 1983 PAYMENT-IN-KIND PROGRAM TREATED
AS USED IN FARMING BUSINESS, ETC.
"(a) General Rule. - For purposes of the provisions specified in
subsection (b), in the case of any land diverted from the
production of an agricultural commodity under a 1983
payment-in-kind program -
"(1) such land shall be treated as used during the 1983 crop
year by the qualified taxpayer in the active conduct of the trade
or business of farming, and
"(2) any qualified taxpayer who materially participates in the
diversion and devotion to conservation uses required under a 1983
payment-in-kind program shall be treated as materially
participating in the operation of such land during such crop
year.
"(b) Provisions to Which Subsection (a) Applies. - The provisions
specified in this subsection are -
"(1) section 2032A of the Internal Revenue Code of 1986
(relating to valuation of certain farm, etc., real property),
"(2) section 6166 of such Code (relating to extension of time
for payment of estate tax where estate consists largely of
interest in closely held business),
"(3) chapter 2 of such Code (relating to tax on self-employment
income), and
"(4) title II of the Social Security Act [42 U.S.C. 401 et
seq.] (relating to Federal old-age, survivors, and disability
insurance benefits).
"SEC. 4. ANTIABUSE RULES.
"(a) General Rule. - In the case of any person, sections 2 and 3
of this Act shall not apply with respect to any land acquired by
such person after February 23, 1983, unless such land was acquired
in a qualified acquisition.
"(b) Qualified Acquisition. - For purposes of this section, the
term 'qualified acquisition' means any acquisition -
"(1) by reason of the death of a qualified transferor,
"(2) by reason of a gift from a qualified transferor, or
"(3) from a qualified transferor who is a member of the family
of the person acquiring the land.
"(c) Definitions and Special Rules. - For purposes of this
section -
"(1) Qualified transferor. - The term 'qualified transferor'
means any person -
"(A) who held the land on February 23, 1983, or
"(B) who acquired the land after February 23, 1983, in a
qualified acquisition.
"(2) Member of family. - The term 'member of the family' has
the meaning given such term by section 2032A(e)(2) of the
Internal Revenue Code of 1986.
"(3) Mere change in form of business. - Subsection (a) shall
not apply to any change in ownership by reason of a mere change
in the form of conducting the trade or business so long as the
land is retained in such trade or business and the person holding
the land before such change retains a direct or indirect
80-percent interest in such land.
"(4) Treatment of certain acquisitions of right to the crop. -
The acquisition of a direct or indirect interest in 80 percent or
more of the crop from any land shall be treated as an acquisition
of such land.
"SEC. 5. DEFINITIONS AND SPECIAL RULES.
"(a) General Rule. - For purposes of this Act -
"(1) 1983 payment-in-kind program. - The term '1983
payment-in-kind program' means any program for the 1983 crop year
-
"(A) under which the Secretary of Agriculture (or his
delegate) makes payments in kind of any agricultural commodity
to any person in return for -
"(i) the diversion of farm acreage from the production of
an agricultural commodity, and
"(ii) the devotion of such acreage to conservation uses,
and
"(B) which the Secretary of Agriculture certifies to the
Secretary of the Treasury as being described in subparagraph
(A).
"(2) Crop year. - The term '1983 crop year' means the crop year
for any crop the planting or harvesting period for which occurs
during 1983. The term '1984 crop year' means the crop year for
wheat the planting and harvesting period for which occurs during
1984.
"(3) Qualified taxpayer. - The term 'qualified taxpayer' means
any producer of agricultural commodities (within the meaning of
the 1983 payment-in-kind programs) who receives any agricultural
commodity in return for meeting the requirements of clauses (i)
and (ii) of paragraph (1)(A).
"(4) Receipt includes right to receive, etc. - A right to
receive (or other constructive receipt of) a commodity shall be
treated the same as actual receipt of such commodity.
"(5) Amounts received by the taxpayer as reimbursement for
storage. - A qualified taxpayer reporting on the cash receipts
and disbursements method of accounting shall not be treated as
being entitled to receive any amount as reimbursement for storage
of commodities received under a 1983 payment-in-kind program
until such amount is actually received by the taxpayer.
"(6) Commodity credit loans treated separately. - Subsection
(a) of section 2 shall apply to the receipt of any commodity
under a 1983 payment-in-kind program separately from, and without
taking into account, any related transaction or series of
transactions involving the satisfaction of loans from the
Commodity Credit Corporation.
"(b) Extension to Wheat Planted and Harvested in 1984. - In the
case of wheat -
"(1) any reference in this Act to the 1983 crop year shall
include a reference to the 1984 crop year, and
"(2) any reference to the 1983 payment-in-kind program shall
include a reference to any program for the 1984 year for wheat
which meets the requirements of subparagraphs (A) and (B) of
subsection (a)(1).
"(c) Regulations. - The Secretary of the Treasury or his delegate
(after consultation with the Secretary of Agriculture) shall
prescribe such regulations as may be necessary to carry out the
purposes of this Act, including (but not limited to) such
regulations as may be necessary to carry out the purposes of this
Act where the commodity is received by a cooperative on behalf of
the qualified taxpayer."
[Section 1061(b) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending Pub. L. 98-4 set out above] shall
apply with respect to commodities received for the 1984 crop year
(as defined in section 5(a)(2) of the Payment-in-Kind Tax Treatment
Act of 1983 [Pub. L. 98-4, set out above] as amended by subsection
(a))."]
CANCELLATION OF CERTAIN STUDENT LOANS
Pub. L. 94-455, title XXI, Sec. 2117, Oct. 4, 1976, 90 Stat.
1911, as amended by Pub. L. 95-600, title I, Sec. 162, Nov. 6,
1978, 92 Stat. 2810; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100
Stat. 2095, provided that no amount be included in gross income of
an individual for purposes of 26 U.S.C. 61 by reason of the
discharge made before Jan. 1, 1983 of the indebtedness of the
individual under a student loan if the discharge was pursuant to a
provision of the loan under which the indebtedness of the
individual would be discharged if the individual worked for a
certain period of time in certain geographical areas or for certain
classes of employers.
REGULATIONS RELATING TO TAX TREATMENT OF CERTAIN PREPUBLICATION
EXPENDITURES OF PUBLISHERS
Pub. L. 94-455, title XXI, Sec. 2119, Oct. 4, 1976, 90 Stat.
1912, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100
Stat. 2095, provided that:
"(a) General Rule. - With respect to taxable years beginning on
or before the date on which regulations dealing with prepublication
expenditures are issued after the date of the enactment of this Act
[Oct. 4, 1976], the application of sections 61 (as it relates to
cost of goods sold), 162, 174, 263, and 471 of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] to any prepublication
expenditure shall be administered -
"(1) without regard to Revenue Ruling 73-395, and
"(2) in the manner in which such sections were applied
consistently by the taxpayer to such expenditures before the date
of the issuance of such revenue ruling.
"(b) Regulations To Be Prospective Only. - Any regulations issued
after the date of the enactment of this Act [Oct. 4, 1976] which
deal with the application of sections 61 (as it relates to cost of
goods sold), 162, 174, 263, and 471 of the Internal Revenue Code of
1986 to prepublication expenditures shall apply only with respect
to taxable years beginning after the date on which such regulations
are issued.
"(c) Prepublication Expenditures Defined. - For purposes of this
section, the term 'prepublication expenditures' means expenditures
paid or incurred by the taxpayer (in connection with his trade or
business of publishing) for the writing, editing, compiling,
illustrating, designing, or other development or improvement of a
book, teaching aid, or similar product."
REIMBURSEMENT OF MOVING EXPENSES OF EMPLOYEES OF CERTAIN
CORPORATIONS EXCLUDED FROM GROSS INCOME; CLAIM FOR REFUND OR
CREDIT; LIMITATIONS; INTEREST
Pub. L. 86-780, Sec. 5, Sept. 14, 1960, 74 Stat. 1013, provided
for the exclusion from gross income of any amount received after
Dec. 31, 1949, and before Oct. 1, 1955, by employees of certain
corporations as reimbursement for moving expenses, and the refund
or credit of any overpayments.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 208A, 305, 351, 354, 355,
356, 408, 671, 707, 6103 of this title.
-End-
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26 USC Sec. 62 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 62. Adjusted gross income defined
-STATUTE-
(a) General rule
For purposes of this subtitle, the term "adjusted gross income"
means, in the case of an individual, gross income minus the
following deductions:
(1) Trade and business deductions
The deductions allowed by this chapter (other than by part VII
of this subchapter) which are attributable to a trade or business
carried on by the taxpayer, if such trade or business does not
consist of the performance of services by the taxpayer as an
employee.
(2) Certain trade and business deductions of employees
(A) Reimbursed expenses of employees
The deductions allowed by part VI (section 161 and following)
which consist of expenses paid or incurred by the taxpayer, in
connection with the performance by him of services as an
employee, under a reimbursement or other expense allowance
arrangement with his employer. The fact that the reimbursement
may be provided by a third party shall not be determinative of
whether or not the preceding sentence applies.
(B) Certain expenses of performing artists
The deductions allowed by section 162 which consist of
expenses paid or incurred by a qualified performing artist in
connection with the performances by him of services in the
performing arts as an employee.
(C) Certain expenses of officials
The deductions allowed by section 162 which consist of
expenses paid or incurred with respect to services performed by
an official as an employee of a State or a political
subdivision thereof in a position compensated in whole or in
part on a fee basis.
(D) Certain expenses of elementary and secondary school
teachers
In the case of taxable years beginning during 2002 or 2003,
the deductions allowed by section 162 which consist of
expenses, not in excess of $250, paid or incurred by an
eligible educator in connection with books, supplies (other
than nonathletic supplies for courses of instruction in health
or physical education), computer equipment (including related
software and services) and other equipment, and supplementary
materials used by the eligible educator in the classroom.
(E) Certain expenses of members of reserve components of the
Armed Forces of the United States
The deductions allowed by section 162 which consist of
expenses, determined at a rate not in excess of the rates for
travel expenses (including per diem in lieu of subsistence)
authorized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, paid or incurred by
the taxpayer in connection with the performance of services by
such taxpayer as a member of a reserve component of the Armed
Forces of the United States for any period during which such
individual is more than 100 miles away from home in connection
with such services.
(3) Losses from sale or exchange of property
The deductions allowed by part VI (sec. 161 and following) as
losses from the sale or exchange of property.
(4) Deductions attributable to rents and royalties
The deductions allowed by part VI (sec. 161 and following), by
section 212 (relating to expenses for production of income), and
by section 611 (relating to depletion) which are attributable to
property held for the production of rents or royalties.
(5) Certain deductions of life tenants and income beneficiaries
of property
In the case of a life tenant of property, or an income
beneficiary of property held in trust, or an heir, legatee, or
devisee of an estate, the deduction for depreciation allowed by
section 167 and the deduction allowed by section 611.
(6) Pension, profit-sharing, and annuity plans of self-employed
individuals
In the case of an individual who is an employee within the
meaning of section 401(c)(1), the deduction allowed by section
404.
(7) Retirement savings
The deduction allowed by section 219 (relating to deduction of
certain retirement savings).
[(8) Repealed. Pub. L. 104-188, title I, Sec. 1401(b)(4), Aug.
20, 1996, 110 Stat. 1788]
(9) Penalties forfeited because of premature withdrawal of funds
from time savings accounts or deposits
The deductions allowed by section 165 for losses incurred in
any transaction entered into for profit, though not connected
with a trade or business, to the extent that such losses include
amounts forfeited to a bank, mutual savings bank, savings and
loan association, building and loan association, cooperative bank
or homestead association as a penalty for premature withdrawal of
funds from a time savings account, certificate of deposit, or
similar class of deposit.
(10) Alimony
The deduction allowed by section 215.
(11) Reforestation expenses
The deduction allowed by section 194.
(12) Certain required repayments of supplemental unemployment
compensation benefits
The deduction allowed by section 165 for the repayment to a
trust described in paragraph (9) or (17) of section 501(c) of
supplemental unemployment compensation benefits received from
such trust if such repayment is required because of the receipt
of trade readjustment allowances under section 231 or 232 of the
Trade Act of 1974 (19 U.S.C. 2291 and 2292).
(13) Jury duty pay remitted to employer
Any deduction allowable under this chapter by reason of an
individual remitting any portion of any jury pay to such
individual's employer in exchange for payment by the employer of
compensation for the period such individual was performing jury
duty. For purposes of the preceding sentence, the term "jury pay"
means any payment received by the individual for the discharge of
jury duty.
(14) Deduction for clean-fuel vehicles and certain refueling
property
The deduction allowed by section 179A.
(15) Moving expenses
The deduction allowed by section 217.
(16) Archer MSAs
The deduction allowed by section 220.
(17) Interest on education loans
The deduction allowed by section 221.
(18) Higher education expenses
The deduction allowed by section 222.
Nothing in this section shall permit the same item to be deducted
more than once.
(19) Health savings accounts
The deduction allowed by section 223.
(b) Qualified performing artist
(1) In general
For purposes of subsection (a)(2)(B), the term "qualified
performing artist" means, with respect to any taxable year, any
individual if -
(A) such individual performed services in the performing arts
as an employee during the taxable year for at least 2
employers,
(B) the aggregate amount allowable as a deduction under
section 162 in connection with the performance of such services
exceeds 10 percent of such individual's gross income
attributable to the performance of such services, and
(C) the adjusted gross income of such individual for the
taxable year (determined without regard to subsection
(a)(2)(B)) does not exceed $16,000.
(2) Nominal employer not taken into account
An individual shall not be treated as performing services in
the performing arts as an employee for any employer during any
taxable year unless the amount received by such individual from
such employer for the performance of such services during the
taxable year equals or exceeds $200.
(3) Special rules for married couples
(A) In general
Except in the case of a husband and wife who lived apart at
all times during the taxable year, if the taxpayer is married
at the close of the taxable year, subsection (a)(2)(B) shall
apply only if the taxpayer and his spouse file a joint return
for the taxable year.
(B) Application of paragraph (1)
In the case of a joint return -
(i) paragraph (1) (other than subparagraph (C) thereof)
shall be applied separately with respect to each spouse, but
(ii) paragraph (1)(C) shall be applied with respect to
their combined adjusted gross income.
(C) Determination of marital status
For purposes of this subsection, marital status shall be
determined under section 7703(a).
(D) Joint return
For purposes of this subsection, the term "joint return"
means the joint return of a husband and wife made under section
6013.
(c) Certain arrangements not treated as reimbursement arrangements
For purposes of subsection (a)(2)(A), an arrangement shall in no
event be treated as a reimbursement or other expense allowance
arrangement if -
(1) such arrangement does not require the employee to
substantiate the expenses covered by the arrangement to the
person providing the reimbursement, or
(2) such arrangement provides the employee the right to retain
any amount in excess of the substantiated expenses covered under
the arrangement.
The substantiation requirements of the preceding sentence shall not
apply to any expense to the extent that substantiation is not
required under section 274(d) for such expense by reason of the
regulations prescribed under the 2nd sentence thereof.
(d) Definition; special rules
(1) Eligible educator
(A) In general
For purposes of subsection (a)(2)(D), the term "eligible
educator" means, with respect to any taxable year, an
individual who is a kindergarten through grade 12 teacher,
instructor, counselor, principal, or aide in a school for at
least 900 hours during a school year.
(B) School
The term "school" means any school which provides elementary
education or secondary education (kindergarten through grade
12), as determined under State law.
(2) Coordination with exclusions
A deduction shall be allowed under subsection (a)(2)(D) for
expenses only to the extent the amount of such expenses exceeds
the amount excludable under section 135, 529(c)(1), or 530(d)(2)
for the taxable year.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 17; Pub. L. 87-792, Sec. 7(b),
Oct. 10, 1962, 76 Stat. 828; Pub. L. 88-272, title II, Sec. 213(b),
Feb. 26, 1964, 78 Stat. 52; Pub. L. 91-172, title V, Sec. 531(b),
Dec. 30, 1969, 83 Stat. 655; Pub. L. 93-406, title II, Secs.
2002(a)(2), 2005(c)(9), Sept. 2, 1974, 88 Stat. 959, 992; Pub. L.
93-483, Sec. 6(a), Oct. 26, 1974, 88 Stat. 1458; Pub. L. 94-455,
title V, Sec. 502(a), title XV, Sec. 1501(b)(1), title XIX, Sec.
1901(a)(8), (9), Oct. 4, 1976, 90 Stat. 1559, 1735, 1765; Pub. L.
95-615, Sec. 203(b), Nov. 8, 1978, 92 Stat. 3106; Pub. L. 96-451,
title III, Sec. 301(b), Oct. 14, 1980, 94 Stat. 1990; Pub. L.
96-608, Sec. 3(a), Dec. 28, 1980, 94 Stat. 3551; Pub. L. 97-34,
title I, Secs. 103(b), 112(b)(2), title III, Sec. 311(h)(1), Aug.
13, 1981, 95 Stat. 187, 195, 282; Pub. L. 97-354, Sec. 5(a)(17),
Oct. 19, 1982, 96 Stat. 1693; Pub. L. 98-369, div. A, title IV,
Sec. 491(d)(2), July 18, 1984, 98 Stat. 849; Pub. L. 99-514, title
I, Secs. 131(b)(1), 132(b), (c), title III, Sec. 301(b)(1), title
XVIII, Sec. 1875(c)(3), Oct. 22, 1986, 100 Stat. 2113, 2115, 2116,
2217, 2894; Pub. L. 100-485, title VII, Sec. 702(a), Oct. 13, 1988,
102 Stat. 2426; Pub. L. 100-647, title I, Sec. 1001(b)(3)(A), title
VI, Sec. 6007(b), Nov. 10, 1988, 102 Stat. 3349, 3687; Pub. L.
101-508, title XI, Sec. 11802(e)(1), Nov. 5, 1990, 104 Stat.
1388-530; Pub. L. 102-318, title V, Sec. 521(b)(2), July 3, 1992,
106 Stat. 310; Pub. L. 102-486, title XIX, Sec. 1913(a)(2), Oct.
24, 1992, 106 Stat. 3019; Pub. L. 103-66, title XIII, Sec.
13213(c)(1), Aug. 10, 1993, 107 Stat. 474; Pub. L. 104-188, title
I, Sec. 1401(b)(4), Aug. 20, 1996, 110 Stat. 1788; Pub. L. 104-191,
title III, Sec. 301(b), Aug. 21, 1996, 110 Stat. 2048; Pub. L.
105-34, title II, Sec. 202(b), title IX, Sec. 975(a), Aug. 5, 1997,
111 Stat. 808, 898; Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec.
202(b)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-629; Pub. L.
107-16, title IV, Sec. 431(b), June 7, 2001, 115 Stat. 68; Pub. L.
107-147, title IV, Sec. 406(a), (b), Mar. 9, 2002, 116 Stat. 43;
Pub. L. 108-121, title I, Sec. 109(b), Nov. 11, 2003, 117 Stat.
1341; Pub. L. 108-173, title XII, Sec. 1201(b), Dec. 8, 2003, 117
Stat. 2476.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2003 - Subsec. (a)(2)(E). Pub. L. 108-121 added subpar. (E).
Subsec. (a)(19). Pub. L. 108-173 added par. (19).
2002 - Subsec. (a)(2)(D). Pub. L. 107-147, Sec. 406(a), added
subpar. (D).
Subsec. (d). Pub. L. 107-147, Sec. 406(b), added subsec. (d).
2001 - Subsec. (a)(18). Pub. L. 107-16, Secs. 431(b), 901,
temporarily added par. (18). See Effective and Termination Dates of
2001 Amendment note below.
2000 - Subsec. (a)(16). Pub. L. 106-554 amended heading and text
of par. (16) generally. Prior to amendment, text read as follows:
"The deduction allowed by section 220."
1997 - Subsec. (a)(2)(C). Pub. L. 105-34, Sec. 975(a), added
subpar. (C).
Subsec. (a)(17). Pub. L. 105-34, Sec. 202(b), added par. (17).
1996 - Subsec. (a)(8). Pub. L. 104-188 struck out par. (8) which
read as follows: "Certain portion of lump-sum distributions from
pension plans taxed under section 402(d). - The deduction allowed
by section 402(d)(3)."
Subsec. (a)(16). Pub. L. 104-191 added par. (16).
1993 - Subsec. (a)(15). Pub. L. 103-66 added par. (15).
1992 - Subsec. (a)(8). Pub. L. 102-318 substituted "402(d)" for
"402(e)" in heading and in text.
Subsec. (a)(14). Pub. L. 102-486 added par. (14).
1990 - Subsec. (a)(13). Pub. L. 101-508, Sec. 11802(e)(1),
amended par. (13) generally. Prior to amendment, par. (13) read as
follows: "The deduction allowed by section 220."
1988 - Subsec. (a)(2)(A). Pub. L. 100-647, Sec. 1001(b)(3)(A),
inserted at end "The fact that the reimbursement may be provided by
a third party shall not be determinative of whether or not the
preceding sentence applies."
Subsec. (a)(13). Pub. L. 100-647, Sec. 6007(b), added par. (13).
Subsec. (c). Pub. L. 100-485 added subsec. (c).
1986 - Subsec. (a). Pub. L. 99-514, Sec. 132(b)(2)(A), designated
existing provisions as subsec. (a) and added heading.
Subsec. (a)(2). Pub. L. 99-514, Sec. 132(b)(1), amended par. (2)
generally, substituting "Certain trade" for "Trade" in heading and
inserting "of employees" in subpar. (A) heading, substituting
provision relating to deduction of certain expenses of performing
artists for provision relating to deduction of expenses for travel
away from home in subpar. (B), and striking out subpar. (C)
relating to deduction of travel expenses and subpar. (D) relating
to deduction of expenses of outside salesmen.
Subsec. (a)(3) to (5). Pub. L. 99-514, Sec. 301(b)(1),
redesignated pars. (4) to (6) as (3) to (5), respectively, and
struck out former par. (3) which related to long-term capital gains
and read as follows: "The deduction allowed by section 1202."
Subsec. (a)(6). Pub. L. 99-514, Sec. 301(b)(1), redesignated par.
(7) as (6). Former par. (6) redesignated (5).
Pub. L. 99-514, Sec. 1875(c)(3), struck out "to the extent
attributable to contributions made on behalf of such individual"
after "section 404".
Subsec. (a)(7). Pub. L. 99-514, Sec. 301(b)(1), redesignated par.
(10) as (7). Former par. (7) redesignated (6).
Subsec. (a)(8). Pub. L. 99-514, Sec. 301(b)(1), redesignated par.
(11) as (8). Former par. (8) struck out.
Pub. L. 99-514, Sec. 132(c), struck out par. (8) which related to
moving expense deduction and read as follows: "The deduction
allowed by section 217."
Subsec. (a)(9) to (15). Pub. L. 99-514, Sec. 301(b)(1),
redesignated pars. (12) to (15) as (9) to (12), respectively.
Former pars. (10) and (11) redesignated (7) and (8), respectively.
Subsec. (a)(16). Pub. L. 99-514, Sec. 131(b)(1), struck out par.
(16) which related to deduction for two-earner married couples and
read as follows: "The deduction allowed by section 221."
Subsec. (b). Pub. L. 99-514, Sec. 132(b)(2)(B), added subsec.
(b).
1984 - Par. (7). Pub. L. 98-369, Sec. 491(d)(2), substituted "and
annuity" for "annuity, and bond purchase" in heading, and
substituted "the deduction allowed by section 404" for "the
deductions allowed by section 404 and section 405(c)" in text.
1983 - Par. (9). Pub. L. 97-354 repealed par. (9) relating to the
deduction allowed by section 1379(b)(3).
1981 - Par. (10). Pub. L. 97-34, Sec. 311(h)(1), struck out "and
the deduction allowed by section 220 (relating to retirement
savings for certain married individuals)" after "retirement
savings".
Par. (14). Pub. L. 97-34, Sec. 112(b)(2), redesignated par. (15)
as (14). Former par. (14), relating to deduction for certain
expenses of living abroad, was struck out.
Par. (15). Pub. L. 97-34, Sec. 112(b)(2), redesignated par. (16)
as (15). Former par. (15) redesignated (14).
Par. (16). Pub. L. 97-34, Secs. 103(b), 112(b)(2), added par.
(16). Former par. (16) redesignated (15).
1980 - Par. (15). Pub. L. 96-451 added par. (15).
Par. (16). Pub. L. 96-608 added par. (16).
1978 - Par. (14). Pub. L. 95-615 added par. (14).
1976 - Par. (10). Pub. L. 94-455, Sec. 1501(b)(1), inserted
reference to the deduction allowed by section 220 (relating to
retirement savings for certain married individuals).
Pars. (11), (12). Pub. L. 94-455, Sec. 1901(a)(8), (9),
redesignated par. (11) relating to penalties forfeited because of
premature withdrawal of funds from time savings accounts or
deposits, as par. (12), and substituted "trade or business, to the
extent" for "trade or business to the extent".
Par. (13). Pub. L. 94-455, Sec. 502(a), added par. (13).
1974 - Par. (10). Pub. L. 93-406, Sec. 2002(a)(2), added par.
(10).
Par. (11). Pub. L. 93-483 added par. (11) relating to penalties
forfeited because of premature withdrawal of funds from time
savings accounts or deposits. Another par. (11) relating to certain
portions of lump-sum distributions from pension plans taxed under
section 402(e) of this title, was added by Pub. L. 93-406, Sec.
2005(c)(9).
1969 - Par. (9). Pub. L. 91-172 added par. (9).
1964 - Par. (8). Pub. L. 88-272 added par. (8).
1962 - Par. (7). Pub. L. 87-792 added par. (7).
EFFECTIVE DATE OF 2003 AMENDMENTS
Pub. L. 108-173, title XII, Sec. 1201(k), Dec. 8, 2003, 117 Stat.
2479, provided that: "The amendments made by this section [enacting
sections 223 and 4980G of this title, amending this section and
sections 106, 125, 220, 848, 3231, 3306, 3401, 4973, 4975, 6051,
and 6693 of this title, and renumbering former section 223 of this
title as 224] shall apply to taxable years beginning after December
31, 2003."
Pub. L. 108-121, title I, Sec. 109(c), Nov. 11, 2003, 117 Stat.
1342, provided that: "The amendments made by this section [amending
this section and section 162 of this title] shall apply to amounts
paid or incurred in taxable years beginning after December 31,
2002."
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-147, title IV, Sec. 406(c), Mar. 9, 2002, 116 Stat.
44, provided that: "The amendments made by this section [amending
this section] shall apply to taxable years beginning after December
31, 2001."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title IV, Sec. 431(d), June 7, 2001, 115 Stat.
69, provided that: "The amendments made by this section [enacting
section 222 of this title, amending this section and sections 86,
135, 137, 219, 221, and 469 of this title, and renumbering former
section 222 of this title as 223] shall apply to payments made in
taxable years beginning after December 31, 2001."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 202(e) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting section 221 of this title, amending
this section and section 6050S of this title, and renumbering
former section 221 of this title as section 222 of this title]
shall apply to any qualified education loan (as defined in section
221(e)(1) of the Internal Revenue Code of 1986, as added by this
section) incurred on, before, or after the date of the enactment of
this Act [Aug. 5, 1997], but only with respect to -
"(1) any loan interest payment due and paid after December 31,
1997, and
"(2) the portion of the 60-month period referred to in section
221(d) of the Internal Revenue Code of 1986 (as added by this
section) after December 31, 1997."
Section 975(b) of Pub. L. 105-34 provided that: "The amendment
made by this section [amending this section] shall apply to
expenses paid or incurred in taxable years beginning after December
31, 1986."
EFFECTIVE DATE OF 1996 AMENDMENTS
Section 301(j) of Pub. L. 104-191 provided that: "The amendments
made by this section [enacting sections 220 and 4980E of this
title, amending this section and sections 106, 125, 848, 3231,
3306, 3401, 4973, 4975, 6051, and 6693 of this title, and
renumbering section 220 of this title as section 221] shall apply
to taxable years beginning after December 31, 1996."
Amendment by Pub. L. 104-188 applicable to taxable years
beginning after Dec. 31, 1999, with retention of certain transition
rules, see section 1401(c) of Pub. L. 104-188, set out as a note
under section 402 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13213(e) of Pub. L. 103-66 provided that: "The amendments
made by this section [amending this section and sections 67, 82,
132, 217, 1001, 1016, and 4977 of this title] shall apply to
expenses incurred after December 31, 1993; except that the
amendments made by subsection (d) [amending sections 82, 132, and
4977 of this title] shall apply to reimbursements or other payments
in respect of expenses incurred after such date."
EFFECTIVE DATE OF 1992 AMENDMENTS
Amendment by Pub. L. 102-486 applicable to property placed in
service after June 30, 1993, see section 1913(c) of Pub. L.
102-486, set out as an Effective Date note under section 30 of this
title.
Amendment by Pub. L. 102-318 applicable to distributions after
Dec. 31, 1992, see section 521(e) of Pub. L. 102-318, set out as a
note under section 402 of this title.
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by section 1001(b)(3)(A) of Pub. L. 100-647 effective,
except as otherwise provided, as if included in the provision of
the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 6007(d) of Pub. L. 100-647 provided that: "The amendments
made by this section [enacting section 220 of this title, amending
this section, and renumbering former section 220 of this title as
section 221 of this title] shall apply as if included in the
amendments made by section 132 of the Tax Reform Act of 1986 [Pub.
L. 99-514]."
Section 702(b) of Pub. L. 100-485 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1988."
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by sections 131(b)(1) and 132(b), (c) of Pub. L. 99-514
applicable to taxable years beginning after Dec. 31, 1986, see
section 151(a) of Pub. L. 99-514, set out as a note under section 1
of this title.
Section 301(c) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and sections 170, 172,
219, 220, 223, 642, 643, 691, 871, 1211, 1212, and 1402 of this
title and repealing section 1202 of this title] shall apply to
taxable years beginning after December 31, 1986."
Section 1875(c)(12) of Pub. L. 99-514 provided that: "The
amendments made by paragraphs (3), (4), and (6) [amending this
section and sections 219 and 408 of this title] shall take effect
as if included in the amendments made by section 238 of the Tax
Equity and Fiscal Responsibility Act of 1982 [section 238 of Pub.
L. 97-248, see section 241 of Pub. L. 97-248, set out as an
Effective Date note under section 416 of this title]."
EFFECTIVE DATE OF 1984 AMENDMENT
"Section 491(f)(1) of Pub. L. 98-369 provided that: "The
amendments and repeals made by subsections (a), (b), and (d)
[amending this section, sections 55, 72, 172, 219, 402, 403, 406,
407, 408, 412, 414, 415, 457, 2039, 2517, 3121, 3306, 3401, 4972,
4973, 4975, 6047, 6058, 6104, 6652, 7207, 7476, and 7701 of this
title, section 3107 of Title 31, Money and Finance, and section 409
of Title 42, The Public Health and Welfare, and repealing sections
405 and 409 of this title] shall apply to obligations issued after
December 31, 1983."
EFFECTIVE DATE OF 1983 AMENDMENT
Par. (9) as in effect before date of repeal by Pub. L. 97-354 to
remain in effect for years beginning before Jan. 1, 1984, see
section 6(b)(1) of Pub. L. 97-354, set out as an Effective Date
note under section 3761 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 103(d) of Pub. L. 97-34 provided that: "The amendments
made by this section [enacting section 219 of this title and
amending this section and sections 85 and 105 of this title] shall
apply to taxable years beginning after December 31, 1981."
Amendment by sections 112(b)(2) and 311(h)(1) of Pub. L. 97-34
applicable to taxable years beginning after Dec. 31, 1981, see
sections 115 and 311(i)(1) of Pub. L. 97-34, set out as notes under
sections 911 and 219, respectively, of this title.
EFFECTIVE DATE OF 1980 AMENDMENTS
Section 3(b) of Pub. L. 96-608 provided that: "The amendment made
by subsection (a) [amending this section] shall apply to repayments
made in taxable years beginning after the date of the enactment of
this Act [Dec. 28, 1980]."
Amendment by Pub. L. 96-451 applicable with respect to additions
to capital account made after Dec. 31, 1979, see section 301(d) of
Pub. L. 96-451, set out as an Effective Date note under section 194
of this title.
EFFECTIVE DATE OF 1978 AMENDMENT; ELECTION OF PRIOR LAW
Amendment by Pub. L. 95-615 applicable to taxable years beginning
after Dec. 31, 1977, with provision for election of prior law, see
section 209 of Pub. L. 95-615, set out as a note under section 911
of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 502(c) of Pub. L. 94-455 provided that: "The amendments
made by this section [amending this section and section 3402 of
this title] shall apply to taxable years beginning after December
31, 1976."
Section 1501(d) of Pub. L. 94-455 provided that: "The amendments
made by this section [enacting section 220 of this title, amending
this section and sections 219, 408, 409, 3401, 4973, and 6047 of
this title, and renumbering former section 220 as 221 of this
title], other than the amendment made by subsection (b)(3), shall
apply to taxable years beginning after December 31, 1976. The
amendment made by subsection (b)(3) [amending section 415 of this
title] shall apply to years beginning after December 31, 1976."
Amendment by section 1901(a)(8), (9) of Pub. L. 94-455 applicable
with respect to taxable years beginning after Dec. 31, 1976, see
section 1901(d) of Pub. L. 94-455, set out as a note under section
2 of this title.
EFFECTIVE DATE OF 1974 AMENDMENTS
Section 6(b) of Pub. L. 93-483 provided that: "The amendment made
by this section [amending this section] applies to taxable years
beginning after December 31, 1972."
Amendment by section 2002(a)(2) of Pub. L. 93-406 applicable to
taxable years beginning after Dec. 31, 1974, see section 2002(i)(1)
of Pub. L. 93-406, set out as an Effective Date note under section
219 of this title.
Amendment by section 2005(c)(9) of Pub. L. 93-406 applicable only
with respect to distributions or payments made after Dec. 31, 1973,
in taxable years beginning after Dec. 31, 1973, see section 2005(d)
of Pub. L. 93-406, set out as a note under section 402 of this
title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable with respect to taxable
years of electing small business corporations beginning after Dec.
31, 1970, see section 531(d) of Pub. L. 91-172, set out as an
Effective Date note under section 1379 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Section 213(d) of Pub. L. 88-272 provided that: "The amendments
made by subsections (a) [enacting section 217 and redesignating
former section 217 as 218] and (b) [amending this section] shall
apply to expenses incurred after December 31, 1963, in taxable
years ending after such date. The amendment made by subsection (c)
[amending section 3401 of this title] shall apply with respect to
remuneration paid after the seventh day following the date of the
enactment of this Act [Feb. 26, 1964]."
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994
For provisions directing that if any amendments made by subtitle
B [Secs. 521-523] of title V of Pub. L. 102-318 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1994, see section 523 of Pub. L. 102-318, set out as a note under
section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
COMMUTING EXPENSES
Pub. L. 95-427, Sec. 2, Oct. 7, 1978, 92 Stat. 996, as amended by
Pub. L. 96-167, Sec. 2, Dec. 29, 1979, 93 Stat. 1275, provided that
with respect to transportation costs paid or incurred after
December 31, 1976, and on or before May 31, 1981, the application
of sections 62, 162, and 262 and of chapters 21, 23, and 24 of the
Internal Revenue Code of 1954 [now 1986] to transportation expenses
in traveling between a taxpayer's residence and place of work be
determined without regard to Revenue Ruling 76-453 or any other
regulation, ruling, or decision reaching the same or similar
result, and with full regard to the rules in effect before that
Revenue Ruling.
Pub. L. 95-615, Sec. 2, Nov. 8, 1978, 92 Stat. 3097, provided
that with respect to transportation costs paid or incurred after
Dec. 31, 1976, and before Apr. 30, 1978, the application of
sections 62, 162, and 262 and chapters 21, 23, and 24 of the
Internal Revenue Code of 1954 [now 1986] to transportation expenses
in traveling between a taxpayer's residence and place of work be
determined without regard to Revenue Ruling 76-453 or any other
regulation, ruling or decision reaching the same or similar result,
and with full regard to the rules in effect before that Revenue
Ruling, and ceased to have effect on the day after Nov. 8, 1978
pursuant to section 210(a) of that Act.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 162, 3402 of this title;
title 19 section 2401e; title 20 section 1087e; title 21 section
849; title 42 sections 1395r, 1396o.
-End-
-CITE-
26 USC Sec. 63 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 63. Taxable income defined
-STATUTE-
(a) In general
Except as provided in subsection (b), for purposes of this
subtitle, the term "taxable income" means gross income minus the
deductions allowed by this chapter (other than the standard
deduction).
(b) Individuals who do not itemize their deductions
In the case of an individual who does not elect to itemize his
deductions for the taxable year, for purposes of this subtitle, the
term "taxable income" means adjusted gross income, minus -
(1) the standard deduction, and
(2) the deduction for personal exemptions provided in section
151.
(c) Standard deduction
For purposes of this subtitle -
(1) In general
Except as otherwise provided in this subsection, the term
"standard deduction" means the sum of -
(A) the basic standard deduction, and
(B) the additional standard deduction.
(2) Basic standard deduction
For purposes of paragraph (1), the basic standard deduction is
-
(A) the applicable percentage of the dollar amount in effect
under subparagraph (D) for the taxable year in the case of -
(i) a joint return, or
(ii) a surviving spouse (as defined in section 2(a)),
(B) $4,400 in the case of a head of household (as defined in
section 2(b)),
(C) one-half of the amount in effect under subparagraph (A)
in the case of a married individual filing a separate return,
or
(D) $3,000 in any other case.
If any amount determined under subparagraph (A) is not a multiple
of $50, such amount shall be rounded to the next lowest multiple
of $50.
(3) Additional standard deduction for aged and blind
For purposes of paragraph (1), the additional standard
deduction is the sum of each additional amount to which the
taxpayer is entitled under subsection (f).
(4) Adjustments for inflation
In the case of any taxable year beginning in a calendar year
after 1988, each dollar amount contained in paragraph (2)(B),
(2)(D), or (5) or subsection (f) shall be increased by an amount
equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
by substituting for "calendar year 1992" in subparagraph (B)
thereof -
(i) "calendar year 1987" in the case of the dollar amounts
contained in paragraph (2)(B), (2)(D), or (5)(A) or
subsection (f), and
(ii) "calendar year 1997" in the case of the dollar amount
contained in paragraph (5)(B).
(5) Limitation on basic standard deduction in the case of certain
dependents
In the case of an individual with respect to whom a deduction
under section 151 is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual's
taxable year begins, the basic standard deduction applicable to
such individual for such individual's taxable year shall not
exceed the greater of -
(A) $500, or
(B) the sum of $250 and such individual's earned income.
(6) Certain individuals, etc., not eligible for standard
deduction
In the case of -
(A) a married individual filing a separate return where
either spouse itemizes deductions,
(B) a nonresident alien individual,
(C) an individual making a return under section 443(a)(1) for
a period of less than 12 months on account of a change in his
annual accounting period, or
(D) an estate or trust, common trust fund, or partnership,
the standard deduction shall be zero.
(7) Applicable percentage
For purposes of paragraph (2), the applicable percentage shall
be determined in accordance with the following table:
For taxable years beginning The applicable
in calendar year - percentage is -
2003 and 2004 200
2005 174
2006 184
2007 187
2008 190
2009 and thereafter 200.
(d) Itemized deductions
For purposes of this subtitle, the term "itemized deductions"
means the deductions allowable under this chapter other than -
(1) the deductions allowable in arriving at adjusted gross
income, and
(2) the deduction for personal exemptions provided by section
151.
(e) Election to itemize
(1) In general
Unless an individual makes an election under this subsection
for the taxable year, no itemized deduction shall be allowed for
the taxable year. For purposes of this subtitle, the
determination of whether a deduction is allowable under this
chapter shall be made without regard to the preceding sentence.
(2) Time and manner of election
Any election under this subsection shall be made on the
taxpayer's return, and the Secretary shall prescribe the manner
of signifying such election on the return.
(3) Change of election
Under regulations prescribed by the Secretary, a change of
election with respect to itemized deductions for any taxable year
may be made after the filing of the return for such year. If the
spouse of the taxpayer filed a separate return for any taxable
year corresponding to the taxable year of the taxpayer, the
change shall not be allowed unless, in accordance with such
regulations -
(A) the spouse makes a change of election with respect to
itemized deductions, for the taxable year covered in such
separate return, consistent with the change of treatment sought
by the taxpayer, and
(B) the taxpayer and his spouse consent in writing to the
assessment (within such period as may be agreed on with the
Secretary) of any deficiency, to the extent attributable to
such change of election, even though at the time of the filing
of such consent the assessment of such deficiency would
otherwise be prevented by the operation of any law or rule of
law.
This paragraph shall not apply if the tax liability of the
taxpayer's spouse for the taxable year corresponding to the
taxable year of the taxpayer has been compromised under section
7122.
(f) Aged or blind additional amounts
(1) Additional amounts for the aged
The taxpayer shall be entitled to an additional amount of $600
-
(A) for himself if he has attained age 65 before the close of
his taxable year, and
(B) for the spouse of the taxpayer if the spouse has attained
age 65 before the close of the taxable year and an additional
exemption is allowable to the taxpayer for such spouse under
section 151(b).
(2) Additional amount for blind
The taxpayer shall be entitled to an additional amount of $600
-
(A) for himself if he is blind at the close of the taxable
year, and
(B) for the spouse of the taxpayer if the spouse is blind as
of the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse under section 151(b).
For purposes of subparagraph (B), if the spouse dies during the
taxable year the determination of whether such spouse is blind
shall be made as of the time of such death.
(3) Higher amount for certain unmarried individuals
In the case of an individual who is not married and is not a
surviving spouse, paragraphs (1) and (2) shall be applied by
substituting "$750" for "$600".
(4) Blindness defined
For purposes of this subsection, an individual is blind only if
his central visual acuity does not exceed 20/200 in the better
eye with correcting lenses, or if his visual acuity is greater
than 20/200 but is accompanied by a limitation in the fields of
vision such that the widest diameter of the visual field subtends
an angle no greater than 20 degrees.
(g) Marital status
For purposes of this section, marital status shall be determined
under section 7703.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 18; Pub. L. 95-30, title I, Sec.
102(a), May 23, 1977, 91 Stat. 135; Pub. L. 95-600, title I, Sec.
101(b), Nov. 6, 1978, 92 Stat. 2769; Pub. L. 97-34, title I, Secs.
104(b), 111(b)(4), 121(b), (c)(2), Aug. 13, 1981, 95 Stat. 189,
194, 196, 197; Pub. L. 99-514, title I, Sec. 102(a), title XII,
Sec. 1272(d)(6), Oct. 22, 1986, 100 Stat. 2099, 2594; Pub. L.
100-647, title I, Sec. 1001(b)(1), Nov. 10, 1988, 102 Stat. 3349;
Pub. L. 101-508, title XI, Secs. 11101(d)(1)(D), 11801(a)(4), Nov.
5, 1990, 104 Stat. 1388-405, 1388-520; Pub. L. 103-66, title XIII,
Sec. 13201(b)(3)(D), Aug. 10, 1993, 107 Stat. 459; Pub. L. 105-34,
title XII, Sec. 1201(a), Aug. 5, 1997, 111 Stat. 993; Pub. L.
107-16, title III, Sec. 301(a), (b), (c)(2), June 7, 2001, 115
Stat. 53, 54; Pub. L. 107-147, title IV, Sec. 411(e), Mar. 9, 2002,
116 Stat. 46; Pub. L. 108-27, title I, Sec. 103(a), May 28, 2003,
117 Stat. 754.)
-STATAMEND-
STANDARD DEDUCTION ADJUSTMENTS FOR TAXABLE YEARS BEGINNING IN 2004
For adjustment of standard deduction, limitation on standard
deduction, and additional amounts under subsections (c)(2), (5) and
(f) of this section for taxable years beginning in 2004, see
section 3.10 of Revenue Procedure 2003-85, set out as a note under
section 1 of this title.
AMENDMENT OF SECTION
For termination of amendment by section 107 of Pub. L. 108-27,
see Effective and Termination Dates of 2003 Amendment note below.
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
2003 - Subsec. (c)(7). Pub. L. 108-27, Secs. 103(a), 107,
temporarily inserted table item relating to years 2003 and 2004.
See Effective and Termination Dates of 2003 Amendment note below.
2002 - Subsec. (c)(2). Pub. L. 107-147, Sec. 411(e)(1)(E),
inserted "If any amount determined under subparagraph (A) is not a
multiple of $50, such amount shall be rounded to the next lowest
multiple of $50." at end.
Subsec. (c)(2)(A). Pub. L. 107-147, Sec. 411(e)(1)(A),
substituted "subparagraph (D)" for "subparagraph (C)".
Subsec. (c)(2)(B). Pub. L. 107-147, Sec. 411(e)(1)(B), struck out
"or" at end.
Subsec. (c)(2)(C), (D). Pub. L. 107-147, Sec. 411(e)(1)(C), (D),
added subpar. (C) and redesignated former subpar. (C) as (D).
Subsec. (c)(4). Pub. L. 107-147, Sec. 411(e)(2)(C), which
directed amendment by striking out the flush sentence at the end
added by section 301(c)(2) of Public Law 107-17, was executed by
striking out "The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).", which was inserted by section
301(c)(2) of Pub. L. 107-16, to reflect the probable intent of
Congress. See 2001 Amendment note below.
Pub. L. 107-147, Sec. 411(e)(2)(A), substituted "paragraph
(2)(B), (2)(D), or (5)" for "paragraph (2) or (5)" in introductory
provisions.
Subsec. (c)(4)(B)(i). Pub. L. 107-147, Sec. 411(e)(2)(B),
substituted "paragraph (2)(B), (2)(D)," for "paragraph (2)".
2001 - Subsec. (c)(2)(A). Pub. L. 107-16, Secs. 301(a)(1), 901,
temporarily substituted "the applicable percentage of the dollar
amount in effect under subparagraph (C) for the taxable year" for
"$5,000". See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (c)(2)(B). Pub. L. 107-16, Secs. 301(a)(2), 901,
temporarily inserted "or" at end. See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (c)(2)(C). Pub. L. 107-16, Secs. 301(a)(3), 901,
temporarily substituted "in any other case." for "in the case of an
individual who is not married and who is not a surviving spouse or
head of household, or". See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (c)(2)(D). Pub. L. 107-16, Secs. 301(a)(4), 901,
temporarily struck out subpar. (D) which read as follows: "$2,500
in the case of a married individual filing a separate return." See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(4). Pub. L. 107-16, Secs. 301(c)(2), 901, temporarily
inserted at end "The preceding sentence shall not apply to the
amount referred to in paragraph (2)(A)." See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (c)(7). Pub. L. 107-16, Secs. 301(b), 901, temporarily
added par. (7). See Effective and Termination Dates of 2001
Amendment note below.
1997 - Subsec. (c)(4). Pub. L. 105-34, Sec. 1201(a)(2), in
introductory provisions, substituted "(5)" for "(5)(A)" and, in
subpar. (B), substituted "by substituting for 'calendar year 1992'
in subparagraph (B) thereof - " for "by substituting 'calendar year
1987' for 'calendar year 1992' in subparagraph (B) thereof" and
added cls. (i) and (ii).
Subsec. (c)(5)(B). Pub. L. 105-34, Sec. 1201(a)(1), substituted
"the sum of $250 and such individual's earned income" for "such
individual's earned income".
1993 - Subsec. (c)(4)(B). Pub. L. 103-66 substituted "1992" for
"1989".
1990 - Subsec. (c)(4)(B). Pub. L. 101-508, Sec. 11101(d)(1)(D),
inserted before period at end ", by substituting 'calendar year
1987' for 'calendar year 1989' in subparagraph (B) thereof".
Subsec. (h). Pub. L. 101-508, Sec. 11801(a)(4), struck out
subsec. (h) "Transitional rule for taxable years beginning in 1987"
which read as follows: "In the case of any taxable year beginning
in 1987, paragraph (2) of subsection (c) shall be applied -
"(1) by substituting '$3,760' for '$5,000',
"(2) by substituting '$2,540' for '$4,400',
"(3) by substituting '$2,540' for '$3,000', and
"(4) by substituting '$1,880' for '$2,500'.
The preceding sentence shall not apply if the taxpayer is entitled
to an additional amount determined under subsection (f) (relating
to additional amount for aged and blind) for the taxable year."
1988 - Subsec. (c)(5). Pub. L. 100-647 substituted "basic
standard deduction" for "standard deduction" in heading and text.
1986 - Subsec. (a). Pub. L. 99-514, Sec. 102(a), substituted "In
general" for "Corporations" in heading and amended text generally.
Prior to amendment, text read as follows: "For purposes of this
subtitle, in the case of a corporation, the term 'taxable income'
means gross income minus the deductions allowed by this chapter."
Subsec. (b). Pub. L. 99-514, Sec. 102(a), substituted
"Individuals who do not itemize their deductions" for "Individuals"
in heading and amended text generally. Prior to amendment, text
read as follows: "For purposes of this subtitle, in the case of an
individual, the term 'taxable income' means adjusted gross income -
"(1) reduced by the sum of -
"(A) the excess itemized deductions,
"(B) the deductions for personal exemptions provided by
section 151, and
"(C) the direct charitable deduction, and
"(2) increased (in the case of an individual for whom an unused
zero bracket amount computation is provided by subsection (e)) by
the unused zero bracket amount (if any)."
Subsec. (c). Pub. L. 99-514, Sec. 102(a), substituted "Standard
deduction" for "Excess itemized deductions" in heading and amended
text generally. Prior to amendment, text read as follows: "For
purposes of this subtitle, the term 'excess itemized deductions'
means the excess (if any) of -
"(1) the itemized deductions, over
"(2) the zero bracket amount."
Subsec. (c)(6)(C) to (E). Pub. L. 99-514, Sec. 1272(d)(6),
redesignated subpars. (D) and (E) as (C) and (D), respectively, and
struck out former subpar. (C) which read as follows: "a citizen of
the United States entitled to the benefits of section 931 (relating
to income from sources within possessions of the United States),".
Subsec. (d). Pub. L. 99-514, Sec. 102(a), substituted "Itemized
deductions" for "Zero bracket amount" in heading and amended text
generally. Prior to amendment, subsec. (d) read as follows: "For
purposes of this subtitle, the term 'zero bracket amount' means -
"(1) in the case of an individual to whom subsection (a), (b),
(c), or (d) of section 1 applies, the maximum amount of taxable
income on which no tax is imposed by the applicable subsection of
section 1, or
"(2) zero in any other case."
Subsec. (e). Pub. L. 99-514, Sec. 102(a), substituted "Election
to itemize" for "Unused zero bracket amount" in heading.
Subsec. (e)(1). Pub. L. 99-514, Sec. 102(a), substituted "In
general" for "Individuals for whom computation must be made" in
heading and amended text generally. Prior to amendment, text read
as follows: "A computation for the taxable year shall be made under
this subsection for the following individuals:
"(A) a married individual filing a separate return where either
spouse itemized deductions,
"(B) a nonresident alien individual,
"(C) a citizen of the United States entitled to the benefits of
section 931 (relating to income from sources within possessions
of the United States), and
"(D) an individual with respect to whom a deduction under
section 151(e) is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual's
taxable year begins."
Subsec. (e)(2). Pub. L. 99-514, Sec. 102(a), substituted "Time
and manner of election" for "Computation" in heading and amended
text generally. Prior to amendment, text read as follows: "For
purposes of this subtitle, an individual's unused zero bracket
amount for the taxable year is an amount equal to the excess (if
any) of -
"(A) the zero bracket amount, over
"(B) the itemized deductions.
In the case of an individual referred to in paragraph (1)(D), if
such individual's earned income (as defined in section 911(d)(2))
exceeds the itemized deductions, such earned income shall be
substituted for the itemized deductions in subparagraph (B)."
Subsec. (e)(3). Pub. L. 99-514, Sec. 102(a), in amending subsec.
(e) generally, added par. (3).
Subsec. (f). Pub. L. 99-514, Sec. 102(a), substituted "Aged or
blind additional amounts" for "Itemized deductions" in heading and
amended text generally. Prior to amendment, text read as follows:
"For purposes of this subtitle, the term 'itemized deductions'
means the deductions allowable by this chapter other than -
"(1) the deductions allowable in arriving at adjusted gross
income,
"(2) the deductions for personal exemptions provided by section
151, and
"(3) the direct charitable deduction."
Subsec. (g). Pub. L. 99-514, Sec. 102(a), amended subsec. (g)
generally, substituting provision that marital status be determined
under section 7703 for provisions relating to election to itemize.
See subsec. (e).
Subsec. (h). Pub. L. 99-514, Sec. 102(a), substituted
"Transitional rule for taxable years beginning in 1987" for
"Marital status" in heading and amended text generally. Prior to
amendment, text read as follows: "For purposes of this section,
marital status shall be determined under section 143."
Subsec. (i). Pub. L. 99-514, Sec. 102(a), in amending section
generally, struck out subsec. (i), "Direct charitable deduction",
which read as follows: "For purposes of this section, the term
'direct charitable deduction' means that portion of the amount
allowable under section 170(a) which is taken as a direct
charitable deduction for the taxable year under section 170(i)."
1981 - Subsec. (b)(1)(C). Pub. L. 97-34, Sec. 121(b)(1), added
subpar. (C).
Subsec. (d). Pub. L. 97-34, Sec. 104(b), substituted a blanket
reference to individuals to whom subsection (a), (b), (c), or (d)
of section 1 applies and the maximum amount of taxable income on
which no tax is imposed by the applicable subsection of section 1
for provisions specifically referring to amounts of $3,400 in the
case of (A) a joint return under section 6013, or (B) a surviving
spouse (as defined in section 2(a)), $2,300 in the case of an
individual who is not married and who is not a surviving spouse (as
so defined), and $1,700 in the case of a married individual filing
a separate return.
Subsec. (e)(2). Pub. L. 97-34, Sec. 111(b)(4), substituted
"section 911(d)(2)" for "section 911(b)" in provisions following
subpar. (B).
Subsec. (f)(3). Pub. L. 97-34, Sec. 121(c)(2), added par. (3).
Subsec. (i). Pub. L. 97-34, Sec. 121(b)(2), added subsec. (i).
1978 - Pub. L. 95-600 substituted "$3,400" for "$3,200" in par.
(1), "$2,300" for "$2,200" in par. (2), and "$1,700" for "$1,600"
in par. (3).
1977 - Pub. L. 95-30 completely revised definition of taxable
income from one using the concept of a standard deduction and
consisting of subsecs. (a) and (b) entitled, respectively, "General
rule" and "Individuals electing standard deduction" to definition
using the concepts of zero bracket amounts and excess itemized
deductions and consisting of subsecs. (a) to (h) entitled,
respectively, "Corporations", "Individuals", "Excess itemized
deductions", "Zero bracket amount", "Unused zero bracket amount",
"Itemized deductions", "Election to itemize", and "Marital status".
EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT
Pub. L. 108-27, title I, Sec. 103(c), May 28, 2003, 117 Stat.
754, provided that: "The amendments made by this section [amending
this section and provisions set out as an Effective and Termination
Dates of 2001 Amendment note under section 1 of this title] shall
apply to taxable years beginning after December 31, 2002."
Amendments by title I of Pub. L. 108-27 subject to title IX of
the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub.
L. 107-16, Sec. 901, to the same extent and in the same manner as
the provisions of such Act to which such amendments relate, see
section 107 of Pub. L. 108-27, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107-147 effective as if included in the
provisions of the Economic Growth and Tax Relief Reconciliation Act
of 2001, Pub. L. 107-16, to which such amendment relates, see
section 411(x) of Pub. L. 107-147, set out as a note under section
25B of this title.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to taxable years beginning
after Dec. 31, 2002, see section 301(d) of Pub. L. 107-16, as
amended, set out as a note under section 1 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to taxable years beginning
after Dec. 31, 1997, see section 1201(c) of Pub. L. 105-34, set out
as a note under section 59 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to taxable years beginning
after Dec. 31, 1992, see section 13201(c) of Pub. L. 103-66, set
out as a note under section 1 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(1)(D) of Pub. L. 101-508 applicable
to taxable years beginning after Dec. 31, 1990, see section
11101(e) of Pub. L. 101-508, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 102(a) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1272(d)(6) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 104(b) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1984, see section 104(e) of
Pub. L. 97-34, set out as a note under section 1 of this title.
Amendment by section 111(b)(4) of Pub. L. 97-34 applicable with
respect to taxable years beginning after Dec. 31, 1981, see section
115 of Pub. L. 97-34, set out as a note under section 911 of this
title.
Amendment by section 121(b), (c)(2) of Pub. L. 97-34 applicable
to contributions made after Dec. 31, 1981, in taxable years
beginning after such date, see section 121(d) of Pub. L. 97-34, set
out as a note under section 170 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 effective with respect to taxable
years beginning after Dec. 31, 1978, see section 101(f)(1) of Pub.
L. 95-600, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801 of Pub.
L. 101-508 be construed to affect treatment of certain transactions
occurring, property acquired, or items of income, loss, deduction,
or credit taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 2, 3, 56, 161, 211,
1034, 1375, 3402, 6012, 6013, 6014, 6212, 6504 of this title.
-End-
-CITE-
26 USC Sec. 64 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 64. Ordinary income defined
-STATUTE-
For purposes of this subtitle, the term "ordinary income"
includes any gain from the sale or exchange of property which is
neither a capital asset nor property described in section 1231(b).
Any gain from the sale or exchange of property which is treated or
considered, under other provisions of this subtitle, as "ordinary
income" shall be treated as gain from the sale or exchange of
property which is neither a capital asset nor property described in
section 1231(b).
-SOURCE-
(Added Pub. L. 94-455, title XIX, Sec. 1901(a)(10), Oct. 4, 1976,
90 Stat. 1765.)
-End-
-CITE-
26 USC Sec. 65 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 65. Ordinary loss defined
-STATUTE-
For purposes of this subtitle, the term "ordinary loss" includes
any loss from the sale or exchange of property which is not a
capital asset. Any loss from the sale or exchange of property which
is treated or considered, under other provisions of this subtitle,
as "ordinary loss" shall be treated as loss from the sale or
exchange of property which is not a capital asset.
-SOURCE-
(Added Pub. L. 94-455, title XIX, Sec. 1901(a)(11), Oct. 4, 1976,
90 Stat. 1765.)
-End-
-CITE-
26 USC Sec. 66 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 66. Treatment of community income
-STATUTE-
(a) Treatment of community income where spouses live apart
If -
(1) 2 individuals are married to each other at any time during
a calendar year;
(2) such individuals -
(A) live apart at all times during the calendar year, and
(B) do not file a joint return under section 6013 with each
other for a taxable year beginning or ending in the calendar
year;
(3) one or both of such individuals have earned income for the
calendar year which is community income; and
(4) no portion of such earned income is transferred (directly
or indirectly) between such individuals before the close of the
calendar year,
then, for purposes of this title, any community income of such
individuals for the calendar year shall be treated in accordance
with the rules provided by section 879(a).
(b) Secretary may disregard community property laws where spouse
not notified of community income
The Secretary may disallow the benefits of any community property
law to any taxpayer with respect to any income if such taxpayer
acted as if solely entitled to such income and failed to notify the
taxpayer's spouse before the due date (including extensions) for
filing the return for the taxable year in which the income was
derived of the nature and amount of such income.
(c) Spouse relieved of liability in certain other cases
Under regulations prescribed by the Secretary, if -
(1) an individual does not file a joint return for any taxable
year,
(2) such individual does not include in gross income for such
taxable year an item of community income properly includible
therein which, in accordance with the rules contained in section
879(a), would be treated as the income of the other spouse,
(3) the individual establishes that he or she did not know of,
and had no reason to know of, such item of community income, and
(4) taking into account all facts and circumstances, it is
inequitable to include such item of community income in such
individual's gross income,
then, for purposes of this title, such item of community income
shall be included in the gross income of the other spouse (and not
in the gross income of the individual). Under procedures prescribed
by the Secretary, if, taking into account all the facts and
circumstances, it is inequitable to hold the individual liable for
any unpaid tax or any deficiency (or any portion of either)
attributable to any item for which relief is not available under
the preceding sentence, the Secretary may relieve such individual
of such liability.
(d) Definitions
For purposes of this section -
(1) Earned income
The term "earned income" has the meaning given to such term by
section 911(d)(2).
(2) Community income
The term "community income" means income which, under
applicable community property laws, is treated as community
income.
(3) Community property laws
The term "community property laws" means the community property
laws of a State, a foreign country, or a possession of the United
States.
-SOURCE-
(Added Pub. L. 96-605, title I, Sec. 101(a), Dec. 28, 1980, 94
Stat. 3521; amended Pub. L. 98-369, div. A, title IV, Sec.
424(b)(1)-(2)(B), July 18, 1984, 98 Stat. 802, 803; Pub. L.
101-239, title VII, Sec. 7841(d)(8), Dec. 19, 1989, 103 Stat. 2428;
Pub. L. 105-206, title III, Sec. 3201(b), July 22, 1998, 112 Stat.
739.)
-MISC1-
AMENDMENTS
1998 - Subsec. (c). Pub. L. 105-206 inserted at end "Under
procedures prescribed by the Secretary, if, taking into account all
the facts and circumstances, it is inequitable to hold the
individual liable for any unpaid tax or any deficiency (or any
portion of either) attributable to any item for which relief is not
available under the preceding sentence, the Secretary may relieve
such individual of such liability."
1989 - Subsec. (d)(1). Pub. L. 101-239 substituted "section
911(d)(2)" for "section 911(b)".
1984 - Pub. L. 98-369, Sec. 424(b)(2)(A), struck out "where
spouses live apart" in section catchline.
Subsec. (a). Pub. L. 98-369, Sec. 424(b)(2)(B), substituted
"Treatment of community income where spouses live apart" for
"General rule" in heading.
Subsecs. (b) to (d). Pub. L. 98-369, Sec. 424(b)(1), added
subsecs. (b) and (c) and redesignated former subsec. (b) as (d).
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 applicable to any liability for tax
arising after July 22, 1998, and any liability for tax arising on
or before such date but remaining unpaid as of such date, see
section 3201(g)(1) of Pub. L. 105-206, set out as a note under
section 6015 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to all taxable years to
which the Internal Revenue Code of 1986 [formerly I.R.C. 1954]
applies with corresponding provisions deemed to be included in the
Internal Revenue Code of 1939 and applicable to all taxable years
to which such Code applies, except subsection (b) of this section
is applicable to taxable years beginning after December 31, 1984,
see section 424(c) of Pub. L. 98-369, set out as a note under
section 6013 of this title.
EFFECTIVE DATE
Section 101(c) of Pub. L. 96-605 provided that: "The amendments
made by this section [enacting this section] shall apply to
calendar years beginning after December 31, 1980."
-End-
-CITE-
26 USC Sec. 67 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 67. 2-percent floor on miscellaneous itemized deductions
-STATUTE-
(a) General rule
In the case of an individual, the miscellaneous itemized
deductions for any taxable year shall be allowed only to the extent
that the aggregate of such deductions exceeds 2 percent of adjusted
gross income.
(b) Miscellaneous itemized deductions
For purposes of this section, the term "miscellaneous itemized
deductions" means the itemized deductions other than -
(1) the deduction under section 163 (relating to interest),
(2) the deduction under section 164 (relating to taxes),
(3) the deduction under section 165(a) for casualty or theft
losses described in paragraph (2) or (3) of section 165(c) or for
losses described in section 165(d),
(4) the deductions under section 170 (relating to charitable,
etc., contributions and gifts) and section 642(c) (relating to
deduction for amounts paid or permanently set aside for a
charitable purpose),
(5) the deduction under section 213 (relating to medical,
dental, etc., expenses),
(6) any deduction allowable for impairment-related work
expenses,
(7) the deduction under section 691(c) (relating to deduction
for estate tax in case of income in respect of the decedent),
(8) any deduction allowable in connection with personal
property used in a short sale,
(9) the deduction under section 1341 (relating to computation
of tax where taxpayer restores substantial amount held under
claim of right),
(10) the deduction under section 72(b)(3) (relating to
deduction where annuity payments cease before investment
recovered),
(11) the deduction under section 171 (relating to deduction for
amortizable bond premium), and
(12) the deduction under section 216 (relating to deductions in
connection with cooperative housing corporations).
(c) Disallowance of indirect deduction through pass-thru entity
(1) In general
The Secretary shall prescribe regulations which prohibit the
indirect deduction through pass-thru entities of amounts which
are not allowable as a deduction if paid or incurred directly by
an individual and which contain such reporting requirements as
may be necessary to carry out the purposes of this subsection.
(2) Treatment of publicly offered regulated investment companies
(A) In general
Paragraph (1) shall not apply with respect to any publicly
offered regulated investment company.
(B) Publicly offered regulated investment companies
For purposes of this subsection -
(i) In general
The term "publicly offered regulated investment company"
means a regulated investment company the shares of which are
-
(I) continuously offered pursuant to a public offering
(within the meaning of section 4 of the Securities Act of
1933, as amended (15 U.S.C. 77a to 77aa)),
(II) regularly traded on an established securities
market, or
(III) held by or for no fewer than 500 persons at all
times during the taxable year.
(ii) Secretary may reduce 500 person requirement
The Secretary may by regulation decrease the minimum
shareholder requirement of clause (i)(III) in the case of
regulated investment companies which experience a loss of
shareholders through net redemptions of their shares.
(3) Treatment of certain other entities
Paragraph (1) shall not apply -
(A) with respect to cooperatives and real estate investment
trusts, and
(B) except as provided in regulations, with respect to
estates and trusts.
(d) Impairment-related work expenses
For purposes of this section, the term "impairment-related work
expenses" means expenses -
(1) of a handicapped individual (as defined in section
190(b)(3)) for attendant care services at the individual's place
of employment and other expenses in connection with such place of
employment which are necessary for such individual to be able to
work, and
(2) with respect to which a deduction is allowable under
section 162 (determined without regard to this section).
(e) Determination of adjusted gross income in case of estates and
trusts
For purposes of this section, the adjusted gross income of an
estate or trust shall be computed in the same manner as in the case
of an individual, except that -
(1) the deductions for costs which are paid or incurred in
connection with the administration of the estate or trust and
which would not have been incurred if the property were not held
in such trust or estate, and
(2) the deductions allowable under sections 642(b), 651, and
661,
shall be treated as allowable in arriving at adjusted gross income.
Under regulations, appropriate adjustments shall be made in the
application of part I of subchapter J of this chapter to take into
account the provisions of this section.
(f) Coordination with other limitation
This section shall be applied before the application of the
dollar limitation of the second sentence of section 162(a)
(relating to trade or business expenses).
-SOURCE-
(Added Pub. L. 99-514, title I, Sec. 132(a), Oct. 22, 1986, 100
Stat. 2113; amended Pub. L. 100-647, title I, Sec. 1001(f), title
IV, Sec. 4011(a), Nov. 10, 1988, 102 Stat. 3351, 3655; Pub. L.
101-239, title VII, Sec. 7814(f), Dec. 19, 1989, 103 Stat. 2414;
Pub. L. 103-66, title XIII, Sec. 13213(c)(2), Aug. 10, 1993, 107
Stat. 474; Pub. L. 105-277, div. J, title IV, Sec. 4004(b)(1), Oct.
21, 1998, 112 Stat. 2681-910; Pub. L. 106-554, Sec. 1(a)(7) [title
III, Sec. 319(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A-646.)
-REFTEXT-
REFERENCES IN TEXT
Section 4 of the Securities Act of 1933, referred to in subsec.
(c)(2)(B)(i)(I), is classified to section 77d of Title 15, Commerce
and Trade.
-MISC1-
AMENDMENTS
2000 - Subsec. (f). Pub. L. 106-554 substituted "the second
sentence" for "the last sentence".
1998 - Subsec. (b)(3). Pub. L. 105-277 substituted "for casualty
or theft losses described in paragraph (2) or (3) of section 165(c)
or for losses described in section 165(d)" for "for losses
described in subsection (c)(3) or (d) of section 165".
1993 - Subsec. (b)(6) to (13). Pub. L. 103-66 redesignated pars.
(7) to (13) as (6) to (12), respectively, and struck out former
par. (6) which read as follows: "the deduction under section 217
(relating to moving expenses),".
1989 - Subsec. (c)(4). Pub. L. 101-239 struck out par. (4) which
read as follows: "Termination. - This subsection shall not apply to
any taxable year beginning after December 31, 1989."
1988 - Subsec. (b)(4). Pub. L. 100-647, Sec. 1001(f)(2),
substituted "deductions" for "deduction" and inserted before comma
at end "and section 642(c) (relating to deduction for amounts paid
or permanently set aside for a charitable purpose)".
Subsec. (c). Pub. L. 100-647, Sec. 4011(a), amended subsec. (c)
generally. Prior to amendment subsec. (c) read as follows: "The
Secretary shall prescribe regulations which prohibit the indirect
deduction through pass-thru entities of amounts which are not
allowable as a deduction if paid or incurred directly by an
individual and which contain such reporting requirements as may be
necessary to carry out the purposes of this subsection. The
preceding sentence shall not apply -
"(1) with respect to cooperatives and real estate investment
trusts, and
"(2) except as provided in regulations, with respect to estates
and trusts."
Pub. L. 100-647, Sec. 1001(f)(4), amended last sentence
generally. Prior to amendment, last sentence read as follows: "The
preceding sentence shall not apply with respect to estates, trusts,
cooperatives, and real estate investment trusts."
Subsec. (e). Pub. L. 100-647, Sec. 1001(f)(3), amended subsec.
(e) generally. Prior to amendment, subsec. (e) read as follows:
"For purposes of this section, the adjusted gross income of an
estate or trust shall be computed in the same manner as in the case
of an individual, except that the deductions for costs which are
paid or incurred in connection with the administration of the
estate or trust and would not have been incurred if the property
were not held in such trust or estate shall be treated as allowable
in arriving at adjusted gross income."
Subsec. (f). Pub. L. 100-647, Sec. 1001(f)(1), added subsec. (f).
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title IV, Sec. 4004(c)(2), Oct. 21,
1998, 112 Stat. 2681-911, provided that: "The amendment made by
subsection (b)(1) [amending this section] shall apply to taxable
years beginning after December 31, 1986."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to expenses incurred after
Dec. 31, 1993, see section 13213(e) of Pub. L. 103-66 set out as a
note under section 62 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1001(f) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 4011(b) of Pub. L. 100-647 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1987."
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, see section 151(a) of Pub. L. 99-514, set out as an Effective
Date of 1986 Amendment note under section 1 of this title.
1-YEAR DELAY IN TREATMENT OF PUBLICLY OFFERED REGULATED INVESTMENT
COMPANIES UNDER 2-PERCENT FLOOR
Pub. L. 100-203, title X, Sec. 10104(a), Dec. 22, 1987, 101 Stat.
1330-386, provided that:
"(1) General rule. - Section 67(c) of the Internal Revenue Code
of 1986 to the extent it relates to indirect deductions through a
publicly offered regulated investment company shall apply only to
taxable years beginning after December 31, 1987.
"(2) Publicly offered regulated investment company defined. - For
purposes of this subsection -
"(A) In general. - The term 'publicly offered regulated
investment company' means a regulated investment company the
shares of which are -
"(i) continuously offered pursuant to a public offering
(within the meaning of section 4 of the Securities Act of 1933,
as amended (15 U.S.C. 77a to 77aa) [15 U.S.C. 77d]),
"(ii) regularly traded on an established securities market,
or
"(iii) held by or for no fewer than 500 persons at all times
during the taxable year.
"(B) Secretary may reduce 500 person requirement. - The
Secretary of the Treasury or his delegate may by regulation
decrease the minimum shareholder requirement of subparagraph
(A)(iii) in the case of regulated investment companies which
experience a loss of shareholders through net redemptions of
their shares."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 56, 642, 772, 773, 6654
of this title.
-End-
-CITE-
26 USC Sec. 68 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
-HEAD-
Sec. 68. Overall limitation on itemized deductions
-STATUTE-
(a) General rule
In the case of an individual whose adjusted gross income exceeds
the applicable amount, the amount of the itemized deductions
otherwise allowable for the taxable year shall be reduced by the
lesser of -
(1) 3 percent of the excess of adjusted gross income over the
applicable amount, or
(2) 80 percent of the amount of the itemized deductions
otherwise allowable for such taxable year.
(b) Applicable amount
(1) In general
For purposes of this section, the term "applicable amount"
means $100,000 ($50,000 in the case of a separate return by a
married individual within the meaning of section 7703).
(2) Inflation adjustments
In the case of any taxable year beginning in a calendar year
after 1991, each dollar amount contained in paragraph (1) shall
be increased by an amount equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
by substituting "calendar year 1990" for "calendar year 1992"
in subparagraph (B) thereof.
(c) Exception for certain itemized deductions
For purposes of this section, the term "itemized deductions" does
not include -
(1) the deduction under section 213 (relating to medical, etc.
expenses),
(2) any deduction for investment interest (as defined in
section 163(d)), and
(3) the deduction under section 165(a) for casualty or theft
losses described in paragraph (2) or (3) of section 165(c) or for
losses described in section 165(d).
(d) Coordination with other limitations
This section shall be applied after the application of any other
limitation on the allowance of any itemized deduction.
(e) Exception for estates and trusts
This section shall not apply to any estate or trust.
-SOURCE-
(Added Pub. L. 101-508, title XI, Sec. 11103(a), Nov. 5, 1990, 104
Stat. 1388-406; amended Pub. L. 103-66, title XIII, Secs.
13201(b)(3)(E), 13204, Aug. 10, 1993, 107 Stat. 459, 462; Pub. L.
105-277, div. J, title IV, Sec. 4004(b)(2), Oct. 21, 1998, 112
Stat. 2681-911; Pub. L. 107-16, title I, Sec. 103(a), June 7, 2001,
115 Stat. 44.)
-STATAMEND-
ADJUSTMENT OF APPLICABLE AMOUNT UNDER THIS SECTION FOR TAXABLE
YEARS BEGINNING IN 2004
For adjustment of "applicable amount" for determining limitation
on itemized deductions under this section for taxable years
beginning in 2004, see section 3.11 of Revenue Procedure 2003-85,
set out as a note under section 1 of this title.
ENACTMENT OF SUBSECTIONS (F) AND (G)
Pub. L. 107-16, title I, Secs. 103, 901, June 7, 2001, 115 Stat.
44, 150, provided that, applicable to taxable years beginning after
Dec. 31, 2005, this section is temporarily amended by adding
subsections (f) and (g) to read as follows:
(f) Phaseout of limitation
(1) In general
In the case of taxable years beginning after December 31, 2005,
and before January 1, 2010, the reduction under subsection (a)
shall be equal to the applicable fraction of the amount which
would (but for this subsection) be the amount of such reduction.
(2) Applicable fraction
For purposes of paragraph (1), the applicable fraction shall be
determined in accordance with the following table:
For taxable years beginning 3The applicable
in calendar year - fraction is -
--------------------------------------------------------------------
2006 and 2007 (!2/3)
2008 and 2009 1/3 .
--------------------------------------------------------------------
(g) Termination
This section shall not apply to any taxable year beginning after
December 31, 2009.
See Effective and Termination Dates of 2001 Amendment note below.
-MISC1-
AMENDMENTS
1998 - Subsec. (c)(3). Pub. L. 105-277 substituted "for casualty
or theft losses described in paragraph (2) or (3) of section 165(c)
or for losses described in section 165(d)" for "for losses
described in subsection (c)(3) or (d) of section 165".
1993 - Subsec. (b)(2)(B). Pub. L. 103-66, Sec. 13201(b)(3)(E),
substituted "1992" for "1989".
Subsec. (f). Pub. L. 103-66, Sec. 13204, struck out heading and
text of subsec. (f). Text read as follows: "This section shall not
apply to any taxable year beginning after December 31, 1995."
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Pub. L. 107-16, title I, Sec. 103(b), June 7, 2001, 115 Stat. 45,
provided that: "The amendment made by this section [amending this
section] shall apply to taxable years beginning after December 31,
2005."
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title IV, Sec. 4004(c)(3), Oct. 21,
1998, 112 Stat. 2681-911, provided that: "The amendment made by
subsection (b)(2) [amending this section] shall apply to taxable
years beginning after December 31, 1990."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13201(b)(3)(E) of Pub. L. 103-66 applicable
to taxable years beginning after Dec. 31, 1992, see section
13201(c) of Pub. L. 103-66, set out as a note under section 1 of
this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1990, see section 11103(e) of Pub. L. 101-508, set out as an
Effective Date of 1990 Amendment note under section 1 of this
title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 56, 773 of this title.
-End-
-CITE-
26 USC PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS
INCOME 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-MISC1-
Sec.
71. Alimony and separate maintenance payments.
72. Annuities; certain proceeds of endowment and life
insurance contracts.
73. Services of child.
74. Prizes and awards.
75. Dealers in tax-exempt securities.
[76. Repealed.]
77. Commodity credit loans.
78. Dividends received from certain foreign corporations
by domestic corporations choosing foreign tax credit.
79. Group-term life insurance purchased for employees.
80. Restoration of value of certain securities.
[81. Repealed.]
82. Reimbursement of moving expenses.(!1)
83. Property transferred in connection with performance of
services.
84. Transfer of appreciated property to political
organizations.(!1)
85. Unemployment compensation.
86. Social security and tier 1 railroad retirement
benefits.
87. Alcohol fuel credit.
88. Certain amounts with respect to nuclear
decommissioning costs.
[89. Repealed.]
90. Illegal Federal irrigation subsidies.
AMENDMENTS
1989 - Pub. L. 101-239, title VII, Sec. 7822(c), Dec. 19, 1989,
103 Stat. 2425, substituted "Illegal Federal irrigation" for
"Federal irrigation" in item 90.
Pub. L. 101-140, title II, Sec. 202(b), Nov. 8, 1989, 103 Stat.
830, struck out item 89 "Benefits provided under certain employee
benefit plans".
1987 - Pub. L. 100-203, title X, Secs. 10201(b)(6), 10611(b),
Dec. 22, 1987, 101 Stat. 1330-387, 1330-452, struck out item 81
"Increase in vacation pay suspense account" and added item 90.
1986 - Pub. L. 99-514, title VIII, Sec. 805(c)(1)(B), title XI,
Sec. 1151(j)(1), Oct. 22, 1986, 100 Stat. 2362, 2508, substituted
"Increase in vacation pay suspense account" for "Certain increases
in suspense accounts" in item 81, and added item 89.
1984 - Pub. L. 98-369, div. A, title I, Sec. 91(f)(2), July 18,
1984, 98 Stat. 608, added item 88.
1983 - Pub. L. 98-21, title I, Sec. 121(f)(3), Apr. 20, 1983, 97
Stat. 84, added item 86 and redesignated former item 86 as 87.
1980 - Pub. L. 96-223, title II, Sec. 232(c)(3), Apr. 2, 1980, 94
Stat. 277, added item 86.
1978 - Pub. L. 95-600, title I, Sec. 112(c)(1), Nov. 6, 1978, 92
Stat. 2778, added item 85.
1976 - Pub. L. 94-455, title XIX, Sec. 1901(b)(5), Oct. 4, 1976,
90 Stat. 1793, struck out item 76 "Mortgages made or obligations
issued by joint-stock land banks".
1975 - Pub. L. 93-625, Secs. 4(c)(2), 13(a)(2), Jan. 3, 1975, 88
Stat. 2111, 2121, substituted "Certain increases in suspense
accounts" for "Increases in suspense account under section 166(g)"
in item 81, and added item 84.
1969 - Pub. L. 91-172, title II, Sec. 231(c)(1), title III, Sec.
321(c), Dec. 30, 1969, 83 Stat. 579, 591, added items 82, 83.
1966 - Pub. L. 89-722, Sec. 1(b)(2), Nov. 2, 1966, 80 Stat. 1152,
added item 81.
Pub. L. 89-384, Sec. 1(b)(2), Apr. 8, 1966, 80 Stat. 102, added
item 80.
1964 - Pub. L. 88-272, title II, Sec. 204(a)(2), Feb. 26, 1964,
78 Stat. 36, added item 79.
1962 - Pub. L. 87-834, Sec. 9(d)(1), Oct. 16, 1962, 76 Stat.
1001, added item 78.
-SECREF-
PART REFERRED TO IN OTHER SECTIONS
This part is referred to in section 61 of this title.
-FOOTNOTE-
(!1) So in original. Does not conform to section catchline.
-End-
-CITE-
26 USC Sec. 71 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 71. Alimony and separate maintenance payments
-STATUTE-
(a) General rule
Gross income includes amounts received as alimony or separate
maintenance payments.
(b) Alimony or separate maintenance payments defined
For purposes of this section -
(1) In general
The term "alimony or separate maintenance payment" means any
payment in cash if -
(A) such payment is received by (or on behalf of) a spouse
under a divorce or separation instrument,
(B) the divorce or separation instrument does not designate
such payment as a payment which is not includible in gross
income under this section and not allowable as a deduction
under section 215,
(C) in the case of an individual legally separated from his
spouse under a decree of divorce or of separate maintenance,
the payee spouse and the payor spouse are not members of the
same household at the time such payment is made, and
(D) there is no liability to make any such payment for any
period after the death of the payee spouse and there is no
liability to make any payment (in cash or property) as a
substitute for such payments after the death of the payee
spouse.
(2) Divorce or separation instrument
The term "divorce or separation instrument" means -
(A) a decree of divorce or separate maintenance or a written
instrument incident to such a decree,
(B) a written separation agreement, or
(C) a decree (not described in subparagraph (A)) requiring a
spouse to make payments for the support or maintenance of the
other spouse.
(c) Payments to support children
(1) In general
Subsection (a) shall not apply to that part of any payment
which the terms of the divorce or separation instrument fix (in
terms of an amount of money or a part of the payment) as a sum
which is payable for the support of children of the payor spouse.
(2) Treatment of certain reductions related to contingencies
involving child
For purposes of paragraph (1), if any amount specified in the
instrument will be reduced -
(A) on the happening of a contingency specified in the
instrument relating to a child (such as attaining a specified
age, marrying, dying, leaving school, or a similar
contingency), or
(B) at a time which can clearly be associated with a
contingency of a kind specified in subparagraph (A),
an amount equal to the amount of such reduction will be treated
as an amount fixed as payable for the support of children of the
payor spouse.
(3) Special rule where payment is less than amount specified in
instrument
For purposes of this subsection, if any payment is less than
the amount specified in the instrument, then so much of such
payment as does not exceed the sum payable for support shall be
considered a payment for such support.
(d) Spouse
For purposes of this section, the term "spouse" includes a former
spouse.
(e) Exception for joint returns
This section and section 215 shall not apply if the spouses make
a joint return with each other.
(f) Recomputation where excess front-loading of alimony payments
(1) In general
If there are excess alimony payments -
(A) the payor spouse shall include the amount of such excess
payments in gross income for the payor spouse's taxable year
beginning in the 3rd post-separation year, and
(B) the payee spouse shall be allowed a deduction in
computing adjusted gross income for the amount of such excess
payments for the payee's taxable year beginning in the 3rd
post-separation year.
(2) Excess alimony payments
For purposes of this subsection, the term "excess alimony
payments" mean the sum of -
(A) the excess payments for the 1st post-separation year, and
(B) the excess payments for the 2nd post-separation year.
(3) Excess payments for 1st post-separation year
For purposes of this subsection, the amount of the excess
payments for the 1st post-separation year is the excess (if any)
of -
(A) the amount of the alimony or separate maintenance
payments paid by the payor spouse during the 1st
post-separation year, over
(B) the sum of -
(i) the average of -
(I) the alimony or separate maintenance payments paid by
the payor spouse during the 2nd post-separation year,
reduced by the excess payments for the 2nd post-separation
year, and
(II) the alimony or separate maintenance payments paid by
the payor spouse during the 3rd post-separation year, plus
(ii) $15,000.
(4) Excess payments for 2nd post-separation year
For purposes of this subsection, the amount of the excess
payments for the 2nd post-separation year is the excess (if any)
of -
(A) the amount of the alimony or separate maintenance
payments paid by the payor spouse during the 2nd
post-separation year, over
(B) the sum of -
(i) the amount of the alimony or separate maintenance
payments paid by the payor spouse during the 3rd
post-separation year, plus
(ii) $15,000.
(5) Exceptions
(A) Where payment ceases by reason of death or remarriage
Paragraph (1) shall not apply if -
(i) either spouse dies before the close of the 3rd
post-separation year, or the payee spouse remarries before
the close of the 3rd post-separation year, and
(ii) the alimony or separate maintenance payments cease by
reason of such death or remarriage.
(B) Support payments
For purposes of this subsection, the term "alimony or
separate maintenance payment" shall not include any payment
received under a decree described in subsection (b)(2)(C).
(C) Fluctuating payments not within control of payor spouse
For purposes of this subsection, the term "alimony or
separate maintenance payment" shall not include any payment to
the extent it is made pursuant to a continuing liability (over
a period of not less than 3 years) to pay a fixed portion or
portions of the income from a business or property or from
compensation for employment or self-employment.
(6) Post-separation years
For purposes of this subsection, the term "1st post-separation
years" means the 1st calendar year in which the payor spouse paid
to the payee spouse alimony or separate maintenance payments to
which this section applies. The 2nd and 3rd post-separation years
shall be the 1st and 2nd succeeding calendar years, respectively.
(g) Cross references
(1) For deduction of alimony or separate maintenance
payments, see section 215.
(2) For taxable status of income of an estate or trust in the
case of divorce, etc., see section 682.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 19; Pub. L. 98-369, div. A,
title IV, Sec. 422(a), July 18, 1984, 98 Stat. 795; Pub. L. 99-514,
title XVIII, Sec. 1843(a)-(c)(1), (d), Oct. 22, 1986, 100 Stat.
2853, 2855.)
-MISC1-
AMENDMENTS
1986 - Subsec. (b)(1)(D). Pub. L. 99-514, Sec. 1843(b), struck
out "(and the divorce or separation instrument states that there is
no such liability)" after "for such payments after the death of the
payee spouse".
Subsec. (c)(2)(B). Pub. L. 99-514, Sec. 1843(d), substituted
"specified in subparagraph (A)" for "specified in paragraph (1)".
Subsec. (f). Pub. L. 99-514, Sec. 1843(c)(1), amended subsec. (f)
generally, substituting provisions for the recomputation of
liability where there has been excess front-loading of alimony
payments for provisions setting forth special rules to prevent
excess front-loading of alimony payments.
Subsec. (g). Pub. L. 99-514, Sec. 1843(a), added subsec. (g).
1984 - Pub. L. 98-369 amended section generally, substituting
present provisions for provisions which had declared in: subsec.
(a), a general rule as to decree of divorce or separate maintenance
in par. (1), written separation agreement in par. (2), and decree
for support in par. (3); subsec. (b), payments to support minor
children; subsec. (c), principal sum paid in installments, par. (1)
stating a general rule and par. (2) the rule where period for
payment is more than 10 years; subsec. (d), the rule for husband in
case of transferred property; and subsec. (e), cross references to
sections 7701(a)(17), 215, and 682.
EFFECTIVE DATE OF 1986 AMENDMENT; TRANSITIONAL RULE
Section 1843(c)(2), (3) of Pub. L. 99-514 provided that:
"(2) Effective dates. -
"(A) In general. - The amendment made by paragraph (1)
[amending this section] shall apply with respect to divorce or
separation instruments (as defined in section 71(b)(2)) of the
Internal Revenue Code of 1986 executed after December 31, 1986.
"(B) Modifications of instruments executed before january 1,
1987. - The amendments made by paragraph (1) [amending this
section] shall also apply to any divorce or separation instrument
(as so defined) executed before January 1, 1987, but modified on
or after such date if the modification expressly provides that
the amendments made by paragraph (1) shall apply to such
modification.
"(3) Transitional rule. - In the case of any instrument to which
the amendment made by paragraph (1) [amending this section] does
not apply, paragraph (2) of section 71(f) of the Internal Revenue
Code of 1954 [now 1986] (as in effect on the day before the date of
the enactment of this Act [Oct. 22, 1986]) shall apply only with
respect to the first 3 post-separation years."
EFFECTIVE DATE OF 1984 AMENDMENT
Section 422(e) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and sections 215, 219, 682, 6676, and 7701 of this title]
shall apply with respect to divorce or separation instruments (as
defined in section 71(b)(2) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954], as amended by this section) executed after
December 31, 1984.
"(2) Modifications of instruments executed before january 1,
1985. - The amendments made by this section shall also apply to any
divorce or separation instrument (as so defined) executed before
January 1, 1985, but modified on or after such date if the
modification expressly provides that the amendments made by this
section shall apply to such modification.
"(3) Requirement of identification number. - Section 215(c) of
the Internal Revenue Code of 1986 (as amended by subsection (b))
and the amendments made by subsection (c) [amending section 6676 of
this title] shall apply to payments made after December 31, 1984."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 121, 152, 215, 219, 220,
223, 382, 408 of this title.
-End-
-CITE-
26 USC Sec. 72 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 72. Annuities; certain proceeds of endowment and life
insurance contracts
-STATUTE-
(a) General rule for annuities
Except as otherwise provided in this chapter, gross income
includes any amount received as an annuity (whether for a period
certain or during one or more lives) under an annuity, endowment,
or life insurance contract.
(b) Exclusion ratio
(1) In general
Gross income does not include that part of any amount received
as an annuity under an annuity, endowment, or life insurance
contract which bears the same ratio to such amount as the
investment in the contract (as of the annuity starting date)
bears to the expected return under the contract (as of such
date).
(2) Exclusion limited to investment
The portion of any amount received as an annuity which is
excluded from gross income under paragraph (1) shall not exceed
the unrecovered investment in the contract immediately before the
receipt of such amount.
(3) Deduction where annuity payments cease before entire
investment recovered
(A) In general
If -
(i) after the annuity starting date, payments as an annuity
under the contract cease by reason of the death of an
annuitant, and
(ii) as of the date of such cessation, there is unrecovered
investment in the contract,
the amount of such unrecovered investment (in excess of any
amount specified in subsection (e)(5) which was not included in
gross income) shall be allowed as a deduction to the annuitant
for his last taxable year.
(B) Payments to other persons
In the case of any contract which provides for payments
meeting the requirements of subparagraphs (B) and (C) of
subsection (c)(2), the deduction under subparagraph (A) shall
be allowed to the person entitled to such payments for the
taxable year in which such payments are received.
(C) Net operating loss deductions provided
For purposes of section 172, a deduction allowed under this
paragraph shall be treated as if it were attributable to a
trade or business of the taxpayer.
(4) Unrecovered investment
For purposes of this subsection, the unrecovered investment in
the contract as of any date is -
(A) the investment in the contract (determined without regard
to subsection (c)(2)) as of the annuity starting date, reduced
by
(B) the aggregate amount received under the contract on or
after such annuity starting date and before the date as of
which the determination is being made, to the extent such
amount was excludable from gross income under this subtitle.
(c) Definitions
(1) Investment in the contract
For purposes of subsection (b), the investment in the contract
as of the annuity starting date is -
(A) the aggregate amount of premiums or other consideration
paid for the contract, minus
(B) the aggregate amount received under the contract before
such date, to the extent that such amount was excludable from
gross income under this subtitle or prior income tax laws.
(2) Adjustment in investment where there is refund feature
If -
(A) the expected return under the contract depends in whole
or in part on the life expectancy of one or more individuals;
(B) the contract provides for payments to be made to a
beneficiary (or to the estate of an annuitant) on or after the
death of the annuitant or annuitants; and
(C) such payments are in the nature of a refund of the
consideration paid,
then the value (computed without discount for interest) of such
payments on the annuity starting date shall be subtracted from
the amount determined under paragraph (1). Such value shall be
computed in accordance with actuarial tables prescribed by the
Secretary. For purposes of this paragraph and of subsection
(e)(2)(A), the term "refund of the consideration paid" includes
amounts payable after the death of an annuitant by reason of a
provision in the contract for a life annuity with minimum period
of payments certain, but (if part of the consideration was
contributed by an employer) does not include that part of any
payment to a beneficiary (or to the estate of the annuitant)
which is not attributable to the consideration paid by the
employee for the contract as determined under paragraph (1)(A).
(3) Expected return
For purposes of subsection (b), the expected return under the
contract shall be determined as follows:
(A) Life expectancy
If the expected return under the contract, for the period on
and after the annuity starting date, depends in whole or in
part on the life expectancy of one or more individuals, the
expected return shall be computed with reference to actuarial
tables prescribed by the Secretary.
(B) Installment payments
If subparagraph (A) does not apply, the expected return is
the aggregate of the amounts receivable under the contract as
an annuity.
(4) Annuity starting date
For purposes of this section, the annuity starting date in the
case of any contract is the first day of the first period for
which an amount is received as an annuity under the contract;
except that if such date was before January 1, 1954, then the
annuity starting date is January 1, 1954.
(d) Special rules for qualified employer retirement plans
(1) Simplified method of taxing annuity payments
(A) In general
In the case of any amount received as an annuity under a
qualified employer retirement plan -
(i) subsection (b) shall not apply, and
(ii) the investment in the contract shall be recovered as
provided in this paragraph.
(B) Method of recovering investment in contract
(i) In general
Gross income shall not include so much of any monthly
annuity payment under a qualified employer retirement plan as
does not exceed the amount obtained by dividing -
(I) the investment in the contract (as of the annuity
starting date), by
(II) the number of anticipated payments determined under
the table contained in clause (iii) (or, in the case of a
contract to which subsection (c)(3)(B) applies, the number
of monthly annuity payments under such contract).
(ii) Certain rules made applicable
Rules similar to the rules of paragraphs (2) and (3) of
subsection (b) shall apply for purposes of this paragraph.
(iii) Number of anticipated payments
If the annuity is payable over the life of a single
individual, the number of anticipated payments shall be
determined as follows:
If the age of the
annuitant on The number
the annuity starting of anticipated
date is: payments is:
Not more than 55 360
More than 55 but not more than 60 310
More than 60 but not more than 65 260
More than 65 but not more than 70 210
More than 70 160.
(iv) Number of anticipated payments where more than one life
If the annuity is payable over the lives of more than 1
individual, the number of anticipated payments shall be
determined as follows:
If the combined ages of
annuitants are: The number is:
Not more than 110 410
More than 110 but not more than 120 360
More than 120 but not more than 130 310
More than 130 but not more than 140 260
More than 140 210.
(C) Adjustment for refund feature not applicable
For purposes of this paragraph, investment in the contract
shall be determined under subsection (c)(1) without regard to
subsection (c)(2).
(D) Special rule where lump sum paid in connection with
commencement of annuity payments
If, in connection with the commencement of annuity payments
under any qualified employer retirement plan, the taxpayer
receives a lump-sum payment -
(i) such payment shall be taxable under subsection (e) as
if received before the annuity starting date, and
(ii) the investment in the contract for purposes of this
paragraph shall be determined as if such payment had been so
received.
(E) Exception
This paragraph shall not apply in any case where the primary
annuitant has attained age 75 on the annuity starting date
unless there are fewer than 5 years of guaranteed payments
under the annuity.
(F) Adjustment where annuity payments not on monthly basis
In any case where the annuity payments are not made on a
monthly basis, appropriate adjustments in the application of
this paragraph shall be made to take into account the period on
the basis of which such payments are made.
(G) Qualified employer retirement plan
For purposes of this paragraph, the term "qualified employer
retirement plan" means any plan or contract described in
paragraph (1), (2), or (3) of section 4974(c).
(2) Treatment of employee contributions under defined
contribution plans
For purposes of this section, employee contributions (and any
income allocable thereto) under a defined contribution plan may
be treated as a separate contract.
(e) Amounts not received as annuities
(1) Application of subsection
(A) In general
This subsection shall apply to any amount which -
(i) is received under an annuity, endowment, or life
insurance contract, and
(ii) is not received as an annuity,
if no provision of this subtitle (other than this subsection)
applies with respect to such amount.
(B) Dividends
For purposes of this section, any amount received which is in
the nature of a dividend or similar distribution shall be
treated as an amount not received as an annuity.
(2) General rule
Any amount to which this subsection applies -
(A) if received on or after the annuity starting date, shall
be included in gross income, or
(B) if received before the annuity starting date -
(i) shall be included in gross income to the extent
allocable to income on the contract, and
(ii) shall not be included in gross income to the extent
allocable to the investment in the contract.
(3) Allocation of amounts to income and investment
For purposes of paragraph (2)(B) -
(A) Allocation to income
Any amount to which this subsection applies shall be treated
as allocable to income on the contract to the extent that such
amount does not exceed the excess (if any) of -
(i) the cash value of the contract (determined without
regard to any surrender charge) immediately before the amount
is received, over
(ii) the investment in the contract at such time.
(B) Allocation to investment
Any amount to which this subsection applies shall be treated
as allocable to investment in the contract to the extent that
such amount is not allocated to income under subparagraph (A).
(4) Special rules for application of paragraph (2)(B)
For purposes of paragraph (2)(B) -
(A) Loans treated as distributions
If, during any taxable year, an individual -
(i) receives (directly or indirectly) any amount as a loan
under any contract to which this subsection applies, or
(ii) assigns or pledges (or agrees to assign or pledge) any
portion of the value of any such contract,
such amount or portion shall be treated as received under the
contract as an amount not received as an annuity. The preceding
sentence shall not apply for purposes of determining investment
in the contract, except that the investment in the contract
shall be increased by any amount included in gross income by
reason of the amount treated as received under the preceding
sentence.
(B) Treatment of policyholder dividends
Any amount described in paragraph (1)(B) shall not be
included in gross income under paragraph (2)(B)(i) to the
extent such amount is retained by the insurer as a premium or
other consideration paid for the contract.
(C) Treatment of transfers without adequate consideration
(i) In general
If an individual who holds an annuity contract transfers it
without full and adequate consideration, such individual
shall be treated as receiving an amount equal to the excess
of -
(I) the cash surrender value of such contract at the time
of transfer, over
(II) the investment in such contract at such time,
under the contract as an amount not received as an annuity.
(ii) Exception for certain transfers between spouses or
former spouses
Clause (i) shall not apply to any transfer to which section
1041(a) (relating to transfers of property between spouses or
incident to divorce) applies.
(iii) Adjustment to investment in contract of transferee
If under clause (i) an amount is included in the gross
income of the transferor of an annuity contract, the
investment in the contract of the transferee in such contract
shall be increased by the amount so included.
(5) Retention of existing rules in certain cases
(A) In general
In any case to which this paragraph applies -
(i) paragraphs (2)(B) and (4)(A) shall not apply, and
(ii) if paragraph (2)(A) does not apply,
the amount shall be included in gross income, but only to the
extent it exceeds the investment in the contract.
(B) Existing contracts
This paragraph shall apply to contracts entered into before
August 14, 1982. Any amount allocable to investment in the
contract after August 13, 1982, shall be treated as from a
contract entered into after such date.
(C) Certain life insurance and endowment contracts
Except as provided in paragraph (10) and except to the extent
prescribed by the Secretary by regulations, this paragraph
shall apply to any amount not received as an annuity which is
received under a life insurance or endowment contract.
(D) Contracts under qualified plans
Except as provided in paragraph (8), this paragraph shall
apply to any amount received -
(i) from a trust described in section 401(a) which is
exempt from tax under section 501(a),
(ii) from a contract -
(I) purchased by a trust described in clause (i),
(II) purchased as part of a plan described in section
403(a),
(III) described in section 403(b), or
(IV) provided for employees of a life insurance company
under a plan described in section 818(a)(3), or
(iii) from an individual retirement account or an
individual retirement annuity.
Any dividend described in section 404(k) which is received by a
participant or beneficiary shall, for purposes of this
subparagraph, be treated as paid under a separate contract to
which clause (ii)(I) applies.
(E) Full refunds, surrenders, redemptions, and maturities
This paragraph shall apply to -
(i) any amount received, whether in a single sum or
otherwise, under a contract in full discharge of the
obligation under the contract which is in the nature of a
refund of the consideration paid for the contract, and
(ii) any amount received under a contract on its complete
surrender, redemption, or maturity.
In the case of any amount to which the preceding sentence
applies, the rule of paragraph (2)(A) shall not apply.
(6) Investment in the contract
For purposes of this subsection, the investment in the contract
as of any date is -
(A) the aggregate amount of premiums or other consideration
paid for the contract before such date, minus
(B) the aggregate amount received under the contract before
such date, to the extent that such amount was excludable from
gross income under this subtitle or prior income tax laws.
[(7) Repealed. Pub. L. 100-647, title I, Sec. 1011A(b)(9)(A),
Nov. 10, 1988, 102 Stat. 3474]
(8) Extension of paragraph (2)(b) (!1) to qualified plans
(A) In general
Notwithstanding any other provision of this subsection, in
the case of any amount received before the annuity starting
date from a trust or contract described in paragraph (5)(D),
paragraph (2)(B) shall apply to such amounts.
(B) Allocation of amount received
For purposes of paragraph (2)(B), the amount allocated to the
investment in the contract shall be the portion of the amount
described in subparagraph (A) which bears the same ratio to
such amount as the investment in the contract bears to the
account balance. The determination under the preceding sentence
shall be made as of the time of the distribution or at such
other time as the Secretary may prescribe.
(C) Treatment of forfeitable rights
If an employee does not have a nonforfeitable right to any
amount under any trust or contract to which subparagraph (A)
applies, such amount shall not be treated as part of the
account balance.
(D) Investment in the contract before 1987
In the case of a plan which on May 5, 1986, permitted
withdrawal of any employee contributions before separation from
service, subparagraph (A) shall apply only to the extent that
amounts received before the annuity starting date (when
increased by amounts previously received under the contract
after December 31, 1986) exceed the investment in the contract
as of December 31, 1986.
(9) Extension of paragraph (2)(B) to qualified tuition programs
and Coverdell education savings accounts
Notwithstanding any other provision of this subsection,
paragraph (2)(B) shall apply to amounts received under a
qualified tuition program (as defined in section 529(b)) or under
a Coverdell education savings account (as defined in section
530(b)). The rule of paragraph (8)(B) shall apply for purposes of
this paragraph.
(10) Treatment of modified endowment contracts
(A) In general
Notwithstanding paragraph (5)(C), in the case of any modified
endowment contract (as defined in section 7702A) -
(i) paragraphs (2)(B) and (4)(A) shall apply, and
(ii) in applying paragraph (4)(A), "any person" shall be
substituted for "an individual".
(B) Treatment of certain burial contracts
Notwithstanding subparagraph (A), paragraph (4)(A) shall not
apply to any assignment (or pledge) of a modified endowment
contract if such assignment (or pledge) is solely to cover the
payment of expenses referred to in section 7702(e)(2)(C)(iii)
and if the maximum death benefit under such contract does not
exceed $25,000.
(11) Anti-abuse rules
(A) In general
For purposes of determining the amount includible in gross
income under this subsection -
(i) all modified endowment contracts issued by the same
company to the same policyholder during any calendar year
shall be treated as 1 modified endowment contract, and
(ii) all annuity contracts issued by the same company to
the same policyholder during any calendar year shall be
treated as 1 annuity contract.
The preceding sentence shall not apply to any contract
described in paragraph (5)(D).
(B) Regulatory authority
The Secretary may by regulations prescribe such additional
rules as may be necessary or appropriate to prevent avoidance
of the purposes of this subsection through serial purchases of
contracts or otherwise.
(f) Special rules for computing employees' contributions
In computing, for purposes of subsection (c)(1)(A), the aggregate
amount of premiums or other consideration paid for the contract,
and for purposes of subsection (e)(6), the aggregate premiums or
other consideration paid, amounts contributed by the employer shall
be included, but only to the extent that -
(1) such amounts were includible in the gross income of the
employee under this subtitle or prior income tax laws; or
(2) if such amounts had been paid directly to the employee at
the time they were contributed, they would not have been
includible in the gross income of the employee under the law
applicable at the time of such contribution.
Paragraph (2) shall not apply to amounts which were contributed by
the employer after December 31, 1962, and which would not have been
includible in the gross income of the employee by reason of the
application of section 911 if such amounts had been paid directly
to the employee at the time of contribution. The preceding sentence
shall not apply to amounts which were contributed by the employer,
as determined under regulations prescribed by the Secretary, to
provide pension or annuity credits, to the extent such credits are
attributable to services performed before January 1, 1963, and are
provided pursuant to pension or annuity plan provisions in
existence on March 12, 1962, and on that date applicable to such
services, or to the extent such credits are attributable to
services performed as a foreign missionary (within the meaning of
section 403(b)(2)(D)(iii), as in effect before the enactment of the
Economic Growth and Tax Relief Reconciliation Act of 2001.(!2)
(g) Rules for transferee where transfer was for value
Where any contract (or any interest therein) is transferred (by
assignment or otherwise) for a valuable consideration, to the
extent that the contract (or interest therein) does not, in the
hands of the transferee, have a basis which is determined by
reference to the basis in the hands of the transferor, then -
(1) for purposes of this section, only the actual value of such
consideration, plus the amount of the premiums and other
consideration paid by the transferee after the transfer, shall be
taken into account in computing the aggregate amount of the
premiums or other consideration paid for the contract;
(2) for purposes of subsection (c)(1)(B), there shall be taken
into account only the aggregate amount received under the
contract by the transferee before the annuity starting date, to
the extent that such amount was excludable from gross income
under this subtitle or prior income tax laws; and
(3) the annuity starting date is January 1, 1954, or the first
day of the first period for which the transferee received an
amount under the contract as an annuity, whichever is the later.
For purposes of this subsection, the term "transferee" includes a
beneficiary of, or the estate of, the transferee.
(h) Option to receive annuity in lieu of lump sum
If -
(1) a contract provides for payment of a lump sum in full
discharge of an obligation under the contract, subject to an
option to receive an annuity in lieu of such lump sum;
(2) the option is exercised within 60 days after the day on
which such lump sum first became payable; and
(3) part or all of such lump sum would (but for this
subsection) be includible in gross income by reason of subsection
(e)(1),
then, for purposes of this subtitle, no part of such lump sum shall
be considered as includible in gross income at the time such lump
sum first became payable.
[(i) Repealed. Pub. L. 94-455, title XIX, Sec. 1951(b)(1)(A), Oct.
4, 1976, 90 Stat. 1836]
(j) Interest
Notwithstanding any other provision of this section, if any
amount is held under an agreement to pay interest thereon, the
interest payments shall be included in gross income.
[(k) Repealed. Pub. L. 98-369, div. A, title IV, Sec. 421(b)(1),
July 18, 1984, 98 Stat. 794]
(l) Face-amount certificates
For purposes of this section, the term "endowment contract"
includes a face-amount certificate, as defined in section 2(a)(15)
of the Investment Company Act of 1940 (15 U.S.C., sec. 80a-2),
issued after December 31, 1954.
(m) Special rules applicable to employee annuities and
distributions under employee plans
[(1) Repealed. Pub. L. 93-406, title II, Sec. 2001(h)(2), Sept.
2, 1974, 88 Stat. 957]
(2) Computation of consideration paid by the employee
In computing -
(A) the aggregate amount of premiums or other consideration
paid for the contract for purposes of subsection (c)(1)(A)
(relating to the investment in the contract), and
(B) the aggregate premiums or other consideration paid for
purposes of subsection (e)(6) (relating to certain amounts not
received as an annuity),
any amount allowed as a deduction with respect to the contract
under section 404 which was paid while the employee was an
employee within the meaning of section 401(c)(1) shall be treated
as consideration contributed by the employer, and there shall not
be taken into account any portion of the premiums or other
consideration for the contract paid while the employee was an
owner-employee which is properly allocable (as determined under
regulations prescribed by the Secretary) to the cost of life,
accident, health, or other insurance.
(3) Life insurance contracts
(A) This paragraph shall apply to any life insurance contract
-
(i) purchased as a part of a plan described in section
403(a), or
(ii) purchased by a trust described in section 401(a) which
is exempt from tax under section 501(a) if the proceeds of
such contract are payable directly or indirectly to a
participant in such trust or to a beneficiary of such
participant.
(B) Any contribution to a plan described in subparagraph
(A)(i) or a trust described in subparagraph (A)(ii) which is
allowed as a deduction under section 404, and any income of a
trust described in subparagraph (A)(ii), which is determined in
accordance with regulations prescribed by the Secretary to have
been applied to purchase the life insurance protection under a
contract described in subparagraph (A), is includible in the
gross income of the participant for the taxable year when so
applied.
(C) In the case of the death of an individual insured under a
contract described in subparagraph (A), an amount equal to the
cash surrender value of the contract immediately before the
death of the insured shall be treated as a payment under such
plan or a distribution by such trust, and the excess of the
amount payable by reason of the death of the insured over such
cash surrender value shall not be includible in gross income
under this section and shall be treated as provided in section
101.
[(4) Repealed. Pub. L. 97-248, title II, Sec. 236(b)(1), Sept. 3,
1982, 96 Stat. 510]
(5) Penalties applicable to certain amounts received by 5-percent
owners
(A) This paragraph applies to amounts which are received from
a qualified trust described in section 401(a) or under a plan
described in section 403(a) at any time by an individual who
is, or has been, a 5-percent owner, or by a successor of such
an individual, but only to the extent such amounts are
determined, under regulations prescribed by the Secretary, to
exceed the benefits provided for such individual under the plan
formula.
(B) If a person receives an amount to which this paragraph
applies, his tax under this chapter for the taxable year in
which such amount is received shall be increased by an amount
equal to 10 percent of the portion of the amount so received
which is includible in his gross income for such taxable year.
(C) For purposes of this paragraph, the term "5-percent
owner" means any individual who, at any time during the 5 plan
years preceding the plan year ending in the taxable year in
which the amount is received, is a 5-percent owner (as defined
in section 416(i)(1)(B)).
(6) Owner-employee defined
For purposes of this subsection, the term "owner-employee" has
the meaning assigned to it by section 401(c)(3) and includes an
individual for whose benefit an individual retirement account or
annuity described in section 408(a) or (b) is maintained. For
purposes of the preceding sentence, the term "owner-employee"
shall include an employee within the meaning of section
401(c)(1).
(7) Meaning of disabled
For purposes of this section, an individual shall be considered
to be disabled if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
to be of long-continued and indefinite duration. An individual
shall not be considered to be disabled unless he furnishes proof
of the existence thereof in such form and manner as the Secretary
may require.
[(8) Repealed. Pub. L. 97-248, title II, Sec. 236(b)(1), Sept. 3,
1982, 96 Stat. 510]
[(9) Repealed. Pub. L. 98-369, div. A, title VII, Sec. 713(d)(1),
July 18, 1984, 98 Stat. 957]
(10) Determination of investment in the contract in the case of
qualified domestic relations orders
Under regulations prescribed by the Secretary, in the case of a
distribution or payment made to an alternate payee who is the
spouse or former spouse of the participant pursuant to a
qualified domestic relations order (as defined in section
414(p)), the investment in the contract as of the date prescribed
in such regulations shall be allocated on a pro rata basis
between the present value of such distribution or payment and the
present value of all other benefits payable with respect to the
participant to which such order relates.
(n) Annuities under retired serviceman's family protection plan or
survivor benefit plan
Subsection (b) shall not apply in the case of amounts received
after December 31, 1965, as an annuity under chapter 73 of title 10
of the United States Code, but all such amounts shall be excluded
from gross income until there has been so excluded (under section
122(b)(1) or this section, including amounts excluded before
January 1, 1966) an amount equal to the consideration for the
contract (as defined by section 122(b)(2)), plus any amount treated
pursuant to section 101(b)(2)(D) (as in effect on the day before
the date of the enactment of the Small Business Job Protection Act
of 1996) as additional consideration paid by the employee.
Thereafter all amounts so received shall be included in gross
income.
(o) Special rules for distributions from qualified plans to which
employee made deductible contributions
(1) Treatment of contributions
For purposes of this section and sections 402 and 403,
notwithstanding section 414(h), any deductible employee
contribution made to a qualified employer plan or government plan
shall be treated as an amount contributed by the employer which
is not includible in the gross income of the employee.
[(2) Repealed. Pub. L. 100-647, title I, Sec. 1011A(c)(8), Nov.
10, 1988, 102 Stat. 3476]
(3) Amounts constructively received
(A) In general
For purposes of this subsection, rules similar to the rules
provided by subsection (p) (other than the exception contained
in paragraph (2) thereof) shall apply.
(B) Purchase of life insurance
To the extent any amount of accumulated deductible employee
contributions of an employee are applied to the purchase of
life insurance contracts, such amount shall be treated as
distributed to the employee in the year so applied.
(4) Special rule for treatment of rollover amounts
For purposes of sections 402(c), 403(a)(4), and 403(b)(8),
408(d)(3), and 457(e)(16), the Secretary shall prescribe
regulations providing for such allocations of amounts
attributable to accumulated deductible employee contributions,
and for such other rules, as may be necessary to insure that such
accumulated deductible employee contributions do not become
eligible for additional tax benefits (or freed from limitations)
through the use of rollovers.
(5) Definitions and special rules
For purposes of this subsection -
(A) Deductible employee contributions
The term "deductible employee contributions" means any
qualified voluntary employee contribution (as defined in
section 219(e)(2)) made after December 31, 1981, in a taxable
year beginning after such date and made for a taxable year
beginning before January 1, 1987, and allowable as a deduction
under section 219(a) for such taxable year.
(B) Accumulated deductible employee contributions
The term "accumulated deductible employee contributions"
means the deductible employee contributions -
(i) increased by the amount of income and gain allocable to
such contributions, and
(ii) reduced by the sum of the amount of loss and expense
allocable to such contributions and the amounts distributed
with respect to the employee which are attributable to such
contributions (or income or gain allocable to such
contributions).
(C) Qualified employer plan
The term "qualified employer plan" has the meaning given to
such term by subsection (p)(3)(A)(i).
(D) Government plan
The term "government plan" has the meaning given such term by
subsection (p)(3)(B).
(6) Ordering rules
Unless the plan specifies otherwise, any distribution from such
plan shall not be treated as being made from the accumulated
deductible employee contributions, until all other amounts to the
credit of the employee have been distributed.
(p) Loans treated as distributions
For purposes of this section -
(1) Treatment as distributions
(A) Loans
If during any taxable year a participant or beneficiary
receives (directly or indirectly) any amount as a loan from a
qualified employer plan, such amount shall be treated as having
been received by such individual as a distribution under such
plan.
(B) Assignments or pledges
If during any taxable year a participant or beneficiary
assigns (or agrees to assign) or pledges (or agrees to pledge)
any portion of his interest in a qualified employer plan, such
portion shall be treated as having been received by such
individual as a loan from such plan.
(2) Exception for certain loans
(A) General rule
Paragraph (1) shall not apply to any loan to the extent that
such loan (when added to the outstanding balance of all other
loans from such plan whether made on, before, or after August
13, 1982), does not exceed the lesser of -
(i) $50,000, reduced by the excess (if any) of -
(I) the highest outstanding balance of loans from the
plan during the 1-year period ending on the day before the
date on which such loan was made, over
(II) the outstanding balance of loans from the plan on
the date on which such loan was made, or
(ii) the greater of (I) one-half of the present value of
the nonforfeitable accrued benefit of the employee under the
plan, or (II) $10,000.
For purposes of clause (ii), the present value of the
nonforfeitable accrued benefit shall be determined without
regard to any accumulated deductible employee contributions (as
defined in subsection (o)(5)(B)).
(B) Requirement that loan be repayable within 5 years
(i) In general
Subparagraph (A) shall not apply to any loan unless such
loan, by its terms, is required to be repaid within 5 years.
(ii) Exception for home loans
Clause (i) shall not apply to any loan used to acquire any
dwelling unit which within a reasonable time is to be used
(determined at the time the loan is made) as the principal
residence of the participant.
(C) Requirement of level amortization
Except as provided in regulations, this paragraph shall not
apply to any loan unless substantially level amortization of
such loan (with payments not less frequently than quarterly) is
required over the term of the loan.
(D) Related employers and related plans
For purposes of this paragraph -
(i) the rules of subsections (b), (c), and (m) of section
414 shall apply, and
(ii) all plans of an employer (determined after the
application of such subsections) shall be treated as 1 plan.
(3) Denial of interest deductions in certain cases
(A) In general
No deduction otherwise allowable under this chapter shall be
allowed under this chapter for any interest paid or accrued on
any loan to which paragraph (1) does not apply by reason of
paragraph (2) during the period described in subparagraph (B).
(B) Period to which subparagraph (A) applies
For purposes of subparagraph (A), the period described in
this subparagraph is the period -
(i) on or after the 1st day on which the individual to whom
the loan is made is a key employee (as defined in section
416(i)), or
(ii) such loan is secured by amounts attributable to
elective deferrals described in subparagraph (A) or (C) of
section 402(g)(3).
(4) Qualified employer plan, etc.
For purposes of this subsection -
(A) Qualified employer plan
(i) In general
The term "qualified employer plan" means -
(I) a plan described in section 401(a) which includes a
trust exempt from tax under section 501(a),
(II) an annuity plan described in section 403(a), and
(III) a plan under which amounts are contributed by an
individual's employer for an annuity contract described in
section 403(b).
(ii) Special rule
The term "qualified employer plan" shall include any plan
which was (or was determined to be) a qualified employer plan
or a government plan.
(B) Government plan
The term "government plan" means any plan, whether or not
qualified, established and maintained for its employees by the
United States, by a State or political subdivision thereof, or
by an agency or instrumentality of any of the foregoing.
(5) Special rules for loans, etc., from certain contracts
For purposes of this subsection, any amount received as a loan
under a contract purchased under a qualified employer plan (and
any assignment or pledge with respect to such a contract) shall
be treated as a loan under such employer plan.
(q) 10-percent penalty for premature distributions from annuity
contracts
(1) Imposition of penalty
If any taxpayer receives any amount under an annuity contract,
the taxpayer's tax under this chapter for the taxable year in
which such amount is received shall be increased by an amount
equal to 10 percent of the portion of such amount which is
includible in gross income.
(2) Subsection not to apply to certain distributions
Paragraph 1 shall not apply to any distribution -
(A) made on or after the date on which the taxpayer attains
age 59 1/2 ,
(B) made on or after the death of the holder (or, where the
holder is not an individual, the death of the primary annuitant
(as defined in subsection (s)(6)(B))),
(C) attributable to the taxpayer's becoming disabled within
the meaning of subsection (m)(7),
(D) which is a part of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the taxpayer or the joint
lives (or joint life expectancies) of such taxpayer and his
designated beneficiary,
(E) from a plan, contract, account, trust, or annuity
described in subsection (e)(5)(D),
(F) allocable to investment in the contract before August 14,
1982, or (!3)
(G) under a qualified funding asset (within the meaning of
section 130(d), but without regard to whether there is a
qualified assignment),
(H) to which subsection (t) applies (without regard to
paragraph (2) thereof),
(I) under an immediate annuity contract (within the meaning
of section 72(u)(4)), or
(J) which is purchased by an employer upon the termination of
a plan described in section 401(a) or 403(a) and which is held
by the employer until such time as the employee separates from
service.
(3) Change in substantially equal payments
If -
(A) paragraph (1) does not apply to a distribution by reason
of paragraph (2)(D), and
(B) the series of payments under such paragraph are
subsequently modified (other than by reason of death or
disability) -
(i) before the close of the 5-year period beginning on the
date of the first payment and after the taxpayer attains age
59 1/2 , or
(ii) before the taxpayer attains age 59 1/2 ,
the taxpayer's tax for the 1st taxable year in which such
modification occurs shall be increased by an amount, determined
under regulations, equal to the tax which (but for paragraph
(2)(D)) would have been imposed, plus interest for the deferral
period (within the meaning of subsection (t)(4)(B)).
(r) Certain railroad retirement benefits treated as received under
employer plans
(1) In general
Notwithstanding any other provision of law, any benefit
provided under the Railroad Retirement Act of 1974 (other than a
tier 1 railroad retirement benefit) shall be treated for purposes
of this title as a benefit provided under an employer plan which
meets the requirements of section 401(a).
(2) Tier 2 taxes treated as contributions
(A) In general
For purposes of paragraph (1) -
(i) the tier 2 portion of the tax imposed by section 3201
(relating to tax on employees) shall be treated as an
employee contribution,
(ii) the tier 2 portion of the tax imposed by section 3211
(relating to tax on employee representatives) shall be
treated as an employee contribution, and
(iii) the tier 2 portion of the tax imposed by section 3221
(relating to tax on employers) shall be treated as an
employer contribution.
(B) Tier 2 portion
For purposes of subparagraph (A) -
(i) After 1984
With respect to compensation paid after 1984, the tier 2
portion shall be the taxes imposed by sections 3201(b),
3211(b), and 3221(b).
(ii) After September 30, 1981, and before 1985
With respect to compensation paid before 1985 for services
rendered after September 30, 1981, the tier 2 portion shall
be -
(I) so much of the tax imposed by section 3201 as is
determined at the 2 percent rate, and
(II) so much of the taxes imposed by sections 3211 and
3221 as is determined at the 11.75 percent rate.
With respect to compensation paid for services rendered after
December 31, 1983, and before 1985, subclause (I) shall be
applied by substituting "2.75 percent" for "2 percent", and
subclause (II) shall be applied by substituting "12.75
percent" for "11.75 percent".
(iii) Before October 1, 1981
With respect to compensation paid for services rendered
during any period before October 1, 1981, the tier 2 portion
shall be the excess (if any) of -
(I) the tax imposed for such period by section 3201,
3211, or 3221, as the case may be (other than any tax
imposed with respect to man-hours), over
(II) the tax which would have been imposed by such
section for such period had the rates of the comparable
taxes imposed by chapter 21 for such period applied under
such section.
(C) Contributions not allocable to supplemental annuity or
windfall benefits
For purposes of paragraph (1), no amount treated as an
employee contribution under this paragraph shall be allocated
to -
(i) any supplemental annuity paid under section 2(b) of the
Railroad Retirement Act of 1974, or
(ii) any benefit paid under section 3(h), 4(e), or 4(h) of
such Act.
(3) Tier 1 railroad retirement benefit
For purposes of paragraph (1), the term "tier 1 railroad
retirement benefit" has the meaning given such term by section
86(d)(4).
(s) Required distributions where holder dies before entire interest
is distributed
(1) In general
A contract shall not be treated as an annuity contract for
purposes of this title unless it provides that -
(A) if any holder of such contract dies on or after the
annuity starting date and before the entire interest in such
contract has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the
method of distributions being used as of the date of his death,
and
(B) if any holder of such contract dies before the annuity
starting date, the entire interest in such contract will be
distributed within 5 years after the death of such holder.
(2) Exception for certain amounts payable over life of
beneficiary
If -
(A) any portion of the holder's interest is payable to (or
for the benefit of) a designated beneficiary,
(B) such portion will be distributed (in accordance with
regulations) over the life of such designated beneficiary (or
over a period not extending beyond the life expectancy of such
beneficiary), and
(C) such distributions begin not later than 1 year after the
date of the holder's death or such later date as the Secretary
may by regulations prescribe,
then for purposes of paragraph (1), the portion referred to in
subparagraph (A) shall be treated as distributed on the day on
which such distributions begin.
(3) Special rule where surviving spouse beneficiary
If the designated beneficiary referred to in paragraph (2)(A)
is the surviving spouse of the holder of the contract, paragraphs
(1) and (2) shall be applied by treating such spouse as the
holder of such contract.
(4) Designated beneficiary
For purposes of this subsection, the term "designated
beneficiary" means any individual designated a beneficiary by the
holder of the contract.
(5) Exception for certain annuity contracts
This subsection shall not apply to any annuity contract -
(A) which is provided -
(i) under a plan described in section 401(a) which includes
a trust exempt from tax under section 501, or
(ii) under a plan described in section 403(a),
(B) which is described in section 403(b),
(C) which is an individual retirement annuity or provided
under an individual retirement account or annuity, or
(D) which is a qualified funding asset (as defined in section
130(d), but without regard to whether there is a qualified
assignment).
(6) Special rule where holder is corporation or other
non-individual
(A) In general
For purposes of this subsection, if the holder of the
contract is not an individual, the primary annuitant shall be
treated as the holder of the contract.
(B) Primary annuitant
For purposes of subparagraph (A), the term "primary
annuitant" means the individual, the events in the life of whom
are of primary importance in affecting the timing or amount of
the payout under the contract.
(7) Treatment of changes in primary annuitant where holder of
contract is not an individual
For purposes of this subsection, in the case of a holder of an
annuity contract which is not an individual, if there is a change
in a primary annuitant (as defined in paragraph (6)(B)), such
change shall be treated as the death of the holder.
(t) 10-percent additional tax on early distributions from qualified
retirement plans
(1) Imposition of additional tax
If any taxpayer receives any amount from a qualified retirement
plan (as defined in section 4974(c)), the taxpayer's tax under
this chapter for the taxable year in which such amount is
received shall be increased by an amount equal to 10 percent of
the portion of such amount which is includible in gross income.
(2) Subsection not to apply to certain distributions
Except as provided in paragraphs (3) and (4), paragraph (1)
shall not apply to any of the following distributions:
(A) In general
Distributions which are -
(i) made on or after the date on which the employee attains
age 59 1/2 ,
(ii) made to a beneficiary (or to the estate of the
employee) on or after the death of the employee,
(iii) attributable to the employee's being disabled within
the meaning of subsection (m)(7),
(iv) part of a series of substantially equal periodic
payments (not less frequently than annually) made for the
life (or life expectancy) of the employee or the joint lives
(or joint life expectancies) of such employee and his
designated beneficiary,
(v) made to an employee after separation from service after
attainment of age 55,
(vi) dividends paid with respect to stock of a corporation
which are described in section 404(k), or
(vii) made on account of a levy under section 6331 on the
qualified retirement plan.
(B) Medical expenses
Distributions made to the employee (other than distributions
described in subparagraph (A), (C), or (D)) to the extent such
distributions do not exceed the amount allowable as a deduction
under section 213 to the employee for amounts paid during the
taxable year for medical care (determined without regard to
whether the employee itemizes deductions for such taxable
year).
(C) Payments to alternate payees pursuant to qualified domestic
relations orders
Any distribution to an alternate payee pursuant to a
qualified domestic relations order (within the meaning of
section 414(p)(1)).
(D) Distributions to unemployed individuals for health
insurance premiums
(i) In general
Distributions from an individual retirement plan to an
individual after separation from employment -
(I) if such individual has received unemployment
compensation for 12 consecutive weeks under any Federal or
State unemployment compensation law by reason of such
separation,
(II) if such distributions are made during any taxable
year during which such unemployment compensation is paid or
the succeeding taxable year, and
(III) to the extent such distributions do not exceed the
amount paid during the taxable year for insurance described
in section 213(d)(1)(D) with respect to the individual and
the individual's spouse and dependents (as defined in
section 152).
(ii) Distributions after reemployment
Clause (i) shall not apply to any distribution made after
the individual has been employed for at least 60 days after
the separation from employment to which clause (i) applies.
(iii) Self-employed individuals
To the extent provided in regulations, a self-employed
individual shall be treated as meeting the requirements of
clause (i)(I) if, under Federal or State law, the individual
would have received unemployment compensation but for the
fact the individual was self-employed.
(E) Distributions from individual retirement plans for higher
education expenses
Distributions to an individual from an individual retirement
plan to the extent such distributions do not exceed the
qualified higher education expenses (as defined in paragraph
(7)) of the taxpayer for the taxable year. Distributions shall
not be taken into account under the preceding sentence if such
distributions are described in subparagraph (A), (C), or (D) or
to the extent paragraph (1) does not apply to such
distributions by reason of subparagraph (B).
(F) Distributions from certain plans for first home purchases
Distributions to an individual from an individual retirement
plan which are qualified first-time homebuyer distributions (as
defined in paragraph (8)). Distributions shall not be taken
into account under the preceding sentence if such distributions
are described in subparagraph (A), (C), (D), or (E) or to the
extent paragraph (1) does not apply to such distributions by
reason of subparagraph (B).
(3) Limitations
(A) Certain exceptions not to apply to individual retirement
plans
Subparagraphs (A)(v) and (C) of paragraph (2) shall not apply
to distributions from an individual retirement plan.
(B) Periodic payments under qualified plans must begin after
separation
Paragraph (2)(A)(iv) shall not apply to any amount paid from
a trust described in section 401(a) which is exempt from tax
under section 501(a) or from a contract described in section
72(e)(5)(D)(ii) unless the series of payments begins after the
employee separates from service.
(4) Change in substantially equal payments
(A) In general
If -
(i) paragraph (1) does not apply to a distribution by
reason of paragraph (2)(A)(iv), and
(ii) the series of payments under such paragraph are
subsequently modified (other than by reason of death or
disability) -
(I) before the close of the 5-year period beginning with
the date of the first payment and after the employee
attains age 59 1/2 , or
(II) before the employee attains age 59 1/2 ,
the taxpayer's tax for the 1st taxable year in which such
modification occurs shall be increased by an amount, determined
under regulations, equal to the tax which (but for paragraph
(2)(A)(iv)) would have been imposed, plus interest for the
deferral period.
(B) Deferral period
For purposes of this paragraph, the term "deferral period"
means the period beginning with the taxable year in which
(without regard to paragraph (2)(A)(iv)) the distribution would
have been includible in gross income and ending with the
taxable year in which the modification described in
subparagraph (A) occurs.
(5) Employee
For purposes of this subsection, the term "employee" includes
any participant, and in the case of an individual retirement
plan, the individual for whose benefit such plan was established.
(6) Special rules for simple retirement accounts
In the case of any amount received from a simple retirement
account (within the meaning of section 408(p)) during the 2-year
period beginning on the date such individual first participated
in any qualified salary reduction arrangement maintained by the
individual's employer under section 408(p)(2), paragraph (1)
shall be applied by substituting "25 percent" for "10 percent".
(7) Qualified higher education expenses
For purposes of paragraph (2)(E) -
(A) In general
The term "qualified higher education expenses" means
qualified higher education expenses (as defined in section
529(e)(3)) for education furnished to -
(i) the taxpayer,
(ii) the taxpayer's spouse, or
(iii) any child (as defined in section 151(c)(3)) or
grandchild of the taxpayer or the taxpayer's spouse,
at an eligible educational institution (as defined in section
529(e)(5)).
(B) Coordination with other benefits
The amount of qualified higher education expenses for any
taxable year shall be reduced as provided in section 25A(g)(2).
(8) Qualified first-time homebuyer distributions
For purposes of paragraph (2)(F) -
(A) In general
The term "qualified first-time homebuyer distribution" means
any payment or distribution received by an individual to the
extent such payment or distribution is used by the individual
before the close of the 120th day after the day on which such
payment or distribution is received to pay qualified
acquisition costs with respect to a principal residence of a
first-time homebuyer who is such individual, the spouse of such
individual, or any child, grandchild, or ancestor of such
individual or the individual's spouse.
(B) Lifetime dollar limitation
The aggregate amount of payments or distributions received by
an individual which may be treated as qualified first-time
homebuyer distributions for any taxable year shall not exceed
the excess (if any) of -
(i) $10,000, over
(ii) the aggregate amounts treated as qualified first-time
homebuyer distributions with respect to such individual for
all prior taxable years.
(C) Qualified acquisition costs
For purposes of this paragraph, the term "qualified
acquisition costs" means the costs of acquiring, constructing,
or reconstructing a residence. Such term includes any usual or
reasonable settlement, financing, or other closing costs.
(D) First-time homebuyer; other definitions
For purposes of this paragraph -
(i) First-time homebuyer
The term "first-time homebuyer" means any individual if -
(I) such individual (and if married, such individual's
spouse) had no present ownership interest in a principal
residence during the 2-year period ending on the date of
acquisition of the principal residence to which this
paragraph applies, and
(II) subsection (h) or (k) of section 1034 (!4) (as in
effect on the day before the date of the enactment of this
paragraph) did not suspend the running of any period of
time specified in section 1034 (!4) (as so in effect) with
respect to such individual on the day before the date the
distribution is applied pursuant to subparagraph (A).
(ii) Principal residence
The term "principal residence" has the same meaning as when
used in section 121.
(iii) Date of acquisition
The term "date of acquisition" means the date -
(I) on which a binding contract to acquire the principal
residence to which subparagraph (A) applies is entered
into, or
(II) on which construction or reconstruction of such a
principal residence is commenced.
(E) Special rule where delay in acquisition
If any distribution from any individual retirement plan fails
to meet the requirements of subparagraph (A) solely by reason
of a delay or cancellation of the purchase or construction of
the residence, the amount of the distribution may be
contributed to an individual retirement plan as provided in
section 408(d)(3)(A)(i) (determined by substituting "120th day"
for "60th day" in such section), except that -
(i) section 408(d)(3)(B) shall not be applied to such
contribution, and
(ii) such amount shall not be taken into account in
determining whether section 408(d)(3)(B) applies to any other
amount.
(9) Special rule for rollovers to section 457 plans
For purposes of this subsection, a distribution from an
eligible deferred compensation plan (as defined in section
457(b)) of an eligible employer described in section 457(e)(1)(A)
shall be treated as a distribution from a qualified retirement
plan described in 4974(c)(1) to the extent that such distribution
is attributable to an amount transferred to an eligible deferred
compensation plan from a qualified retirement plan (as defined in
section 4974(c)).
(u) Treatment of annuity contracts not held by natural persons
(1) In general
If any annuity contract is held by a person who is not a
natural person -
(A) such contract shall not be treated as an annuity contract
for purposes of this subtitle (other than subchapter L), and
(B) the income on the contract for any taxable year of the
policyholder shall be treated as ordinary income received or
accrued by the owner during such taxable year.
For purposes of this paragraph, holding by a trust or other
entity as an agent for a natural person shall not be taken into
account.
(2) Income on the contract
(A) In general
For purposes of paragraph (1), the term "income on the
contract" means, with respect to any taxable year of the
policyholder, the excess of -
(i) the sum of the net surrender value of the contract as
of the close of the taxable year plus all distributions under
the contract received during the taxable year or any prior
taxable year, reduced by
(ii) the sum of the amount of net premiums under the
contract for the taxable year and prior taxable years and
amounts includible in gross income for prior taxable years
with respect to such contract under this subsection.
Where necessary to prevent the avoidance of this subsection,
the Secretary may substitute "fair market value of the
contract" for "net surrender value of the contract" each place
it appears in the preceding sentence.
(B) Net premiums
For purposes of this paragraph, the term "net premiums" means
the amount of premiums paid under the contract reduced by any
policyholder dividends.
(3) Exceptions
This subsection shall not apply to any annuity contract which -
(A) is acquired by the estate of a decedent by reason of the
death of the decedent,
(B) is held under a plan described in section 401(a) or
403(a), under a program described in section 403(b), or under
an individual retirement plan,
(C) is a qualified funding asset (as defined in section
130(d), but without regard to whether there is a qualified
assignment),
(D) is purchased by an employer upon the termination of a
plan described in section 401(a) or 403(a) and is held by the
employer until all amounts under such contract are distributed
to the employee for whom such contract was purchased or the
employee's beneficiary, or
(E) is an immediate annuity.
(4) Immediate annuity
For purposes of this subsection, the term "immediate annuity"
means an annuity -
(A) which is purchased with a single premium or annuity
consideration,
(B) the annuity starting date (as defined in subsection
(c)(4)) of which commences no later than 1 year from the date
of the purchase of the annuity, and
(C) which provides for a series of substantially equal
periodic payments (to be made not less frequently than
annually) during the annuity period.
(v) 10-percent additional tax for taxable distributions from
modified endowment contracts
(1) Imposition of additional tax
If any taxpayer receives any amount under a modified endowment
contract (as defined in section 7702A), the taxpayer's tax under
this chapter for the taxable year in which such amount is
received shall be increased by an amount equal to 10 percent of
the portion of such amount which is includible in gross income.
(2) Subsection not to apply to certain distributions
Paragraph (1) shall not apply to any distribution -
(A) made on or after the date on which the taxpayer attains
age 59 1/2 ,
(B) which is attributable to the taxpayer's becoming disabled
(within the meaning of subsection (m)(7)), or
(C) which is part of a series of substantially equal periodic
payments (not less frequently than annually) made for the life
(or life expectancy) of the taxpayer or the joint lives (or
joint life expectancies) of such taxpayer and his beneficiary.
(w) Cross reference
For limitation on adjustments to basis of annuity contracts
sold, see section 1021.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 20; Pub. L. 87-792, Sec. 4(a),
(b), Oct. 10, 1962, 76 Stat. 821; Pub. L. 87-834, Sec. 11(b), Oct.
16, 1962, 76 Stat. 1005; Pub. L. 88-272, title II, Sec. 232(b),
Feb. 26, 1964, 78 Stat. 110; Pub. L. 89-44, title VIII, Sec.
809(d)(2), June 21, 1965, 79 Stat. 167; Pub. L. 89-97, title I,
Sec. 106(d)(2), July 30, 1965, 79 Stat. 337; Pub. L. 89-365, Sec.
1(b), Mar. 8, 1966, 80 Stat. 32; Pub. L. 91-172, title V, Sec.
515(b), Dec. 30, 1969, 83 Stat. 644; Pub. L. 93-406, title II,
Secs. 2001(e)(5), (g)(1), (2)(A), (h)(2), (3), 2002(g)(10),
2005(c)(3), 2007(b)(2), Sept. 2, 1974, 88 Stat. 955, 957, 970, 991,
994; Pub. L. 94-455, title XIX, Secs. 1901(a)(12), (13),
1906(b)(13)(A), 1951(b)(1)(A), Oct. 4, 1976, 90 Stat. 1765, 1834,
1836; Pub. L. 97-34, title III, Secs. 311(b)(1), 312(d), (e)(1),
Aug. 13, 1981, 95 Stat. 278, 284; Pub. L. 97-248, title II, Secs.
236(a), (b), 237(d), 265(a), (b)(1), Sept. 3, 1982, 96 Stat.
509-511, 544-546; Pub. L. 97-448, title I, Sec. 103(c)(3)(B)(i),
(6), Jan. 12, 1983, 96 Stat. 2376; Pub. L. 98-76, title II, Sec.
224(a), Aug. 12, 1983, 97 Stat. 421; Pub. L. 98-369, div. A, title
II, Secs. 211(b)(1), 222(a), (b), title IV, Secs. 421(b)(1),
491(d)(3), (4), title V, Secs. 521(d), 523(a), (b), title VII, Sec.
713(b)(1)-(c)(1)(B), (d)(1), July 18, 1984, 98 Stat. 754, 774, 794,
849, 868, 871, 872, 956, 957; Pub. L. 98-397, title II, Sec.
204(c)(2), Aug. 23, 1984, 98 Stat. 1448; Pub. L. 99-514, title XI,
Secs. 1101(b)(2)(B), (C), 1122(c), 1123(a), (b), (d)(1),
1134(a)-(d), 1135(a), title XVIII, Secs. 1826(a), (b)(1)-(3), (c),
(d), 1852(a)(2), (c)(1)-(4), 1854(b)(1), 1898(c)(1)(B), Oct. 22,
1986, 100 Stat. 2413, 2414, 2467, 2472, 2474, 2475, 2483, 2484,
2848-2850, 2864, 2867, 2878, 2951; Pub. L. 100-647, title I, Secs.
1011A(b)(1)(A), (B), (2), (9), (c)(1)-(8), (h), (i), 1018(k),
(t)(1)(A), (B), (u)(8), title V, Sec. 5012(a), (b)(1), (d), Nov.
10, 1988, 102 Stat. 3472, 3474-3476, 3482, 3583, 3587, 3590, 3661,
3662, 3664; Pub. L. 101-239, title VII, Secs. 7811(m)(4),
7815(a)(3), (5), Dec. 19, 1989, 103 Stat. 2412, 2414; Pub. L.
101-508, title XI, Sec. 11802(a), Nov. 5, 1990, 104 Stat. 1388-529;
Pub. L. 102-318, title V, Sec. 521(b)(3), July 3, 1992, 106 Stat.
310; Pub. L. 104-188, title I, Secs. 1403(a), 1421(b)(4)(A),
1463(a), 1704(l)(1), (t)(2), (77), Aug. 20, 1996, 110 Stat. 1790,
1796, 1824, 1882, 1887, 1891; Pub. L. 104-191, title III, Sec.
361(a)-(c), Aug. 21, 1996, 110 Stat. 2071, 2072; Pub. L. 105-34,
title II, Sec. 203(a), (b), title III, Sec. 303(a), (b), title X,
Sec. 1075(a), (b), Aug. 5, 1997, 111 Stat. 809, 829, 949; Pub. L.
105-206, title III, Sec. 3436(a), title VI, Secs. 6004(d)(3)(B),
6005(c)(1), 6023(3), (4), July 22, 1998, 112 Stat. 761, 794, 800,
824; Pub. L. 107-16, title IV, Sec. 402(a)(4)(A), (B), title VI,
Secs. 632(a)(3)(A), 641(a)(2)(C), (e)(1), June 7, 2001, 115 Stat.
60, 61, 113, 120; Pub. L. 107-22, Sec. 1(b)(1)(A), (3)(A), July 26,
2001, 115 Stat. 196, 197; Pub. L. 107-90, title II, Sec. 204(e)(2),
Dec. 21, 2001, 115 Stat. 893.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The enactment of the Economic Growth and Tax Relief
Reconciliation Act of 2001, referred to in subsec. (f), means the
enactment of Pub. L. 107-16, which was approved June 7, 2001.
The date of the enactment of the Small Business Job Protection
Act of 1996, referred to in subsec. (n), is the date of enactment
of Pub. L. 104-188, which was approved Aug. 20, 1996.
The Railroad Retirement Act of 1974, referred to in subsec.
(r)(1), (2)(C)(i), (ii), is act Aug. 29, 1935, ch. 812, as amended
generally by Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88
Stat. 1305, which is classified generally to subchapter IV (Sec.
231 et seq.) of chapter 9 of Title 45, Railroads. Sections 2(b),
3(h), and 4(e) and (h) of the Act are classified to sections
231a(b), 231b(h), and 231c(e) and (h), respectively, of Title 45.
For further details and complete classification of this Act to the
Code, see Codification note set out preceding section 231 of Title
45, section 231t of Title 45, and Tables.
Section 1034 (as in effect on the day before the date of the
enactment of this paragraph), referred to in subsec.
(t)(8)(D)(i)(II), means section 1034 of this title as in effect on
the day before Aug. 5, 1997. Section 1034 was repealed by Pub. L.
105-34, title III, Sec. 312(b), Aug. 5, 1997, 111 Stat. 839.
-MISC1-
AMENDMENTS
2001 - Subsec. (e)(9). Pub. L. 107-22, Sec. 1(b)(3)(A), which
directed amendment of par. (9) by substituting "Coverdell education
savings" for "education individual retirement" in heading, was
executed by making the substitution for "educational individual
retirement", to reflect the probable intent of Congress.
Pub. L. 107-22, Sec. 1(b)(1)(A), substituted "a Coverdell
education savings" for "an education individual retirement".
Pub. L. 107-16, Secs. 402(a)(4)(A), (B), 901, temporarily
substituted "qualified tuition" for "qualified State tuition" in
heading and text. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (f). Pub. L. 107-16, Secs. 632(a)(3)(A), 901, temporarily
substituted "section 403(b)(2)(D)(iii), as in effect before the
enactment of the Economic Growth and Tax Relief Reconciliation Act
of 2001" for "section 403(b)(2)(D)(iii))" in concluding provisions.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (o)(4). Pub. L. 107-16, Secs. 641(e)(1), 901, temporarily
substituted "403(b)(8), 408(d)(3), and 457(e)(16)" for "and
408(d)(3)". See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (r)(2)(B)(i). Pub. L. 107-90 substituted "3211(b)" for
"3211(a)(2)".
Subsec. (t)(9). Pub. L. 107-16, Secs. 641(a)(2)(C), 901,
temporarily added par. (9). See Effective and Termination Dates of
2001 Amendments note below.
1998 - Subsec. (e)(9). Pub. L. 105-206, Sec. 6004(d)(3)(B), added
par. (9).
Subsec. (n). Pub. L. 105-206, Sec. 6023(3), inserted "(as in
effect on the day before the date of the enactment of the Small
Business Job Protection Act of 1996)" after "section 101(b)(2)(D)".
Subsec. (t)(2)(A)(iv). Pub. L. 105-206, Sec. 3436(a), which
directed amendment of cl. (iv) by striking out "or" at end, could
not be executed because the word "or" did not appear at end.
Subsec. (t)(2)(A)(vii). Pub. L. 105-206, Sec. 3436(a), added cl.
(vii).
Subsec. (t)(3)(A). Pub. L. 105-206, Sec. 6023(4), substituted
"(A)(v)" for "(A)(v),".
Subsec. (t)(8)(E). Pub. L. 105-206, Sec. 6005(c)(1), in
introductory provisions, substituted "120th day" for "120 days" and
"60th day" for "60 days".
1997 - Subsec. (d)(1)(B)(iii). Pub. L. 105-34, Sec. 1075(b),
inserted "If the annuity is payable over the life of a single
individual, the number of anticipated payments shall be determined
as follows:" before table and struck out "primary" after "If the
age of the" in table.
Subsec. (d)(1)(B)(iv). Pub. L. 105-34, Sec. 1075(a), added cl.
(iv).
Subsec. (t)(2)(E). Pub. L. 105-34, Sec. 203(a), added subpar.
(E).
Subsec. (t)(2)(F). Pub. L. 105-34, Sec. 303(a), added subpar.
(F).
Subsec. (t)(7). Pub. L. 105-34, Sec. 203(b), added par. (7).
Subsec. (t)(8). Pub. L. 105-34, Sec. 303(b), added par. (8).
1996 - Subsec. (b)(4)(A). Pub. L. 104-188, Sec. 1704(l)(1),
inserted "(determined without regard to subsection (c)(2))" after
"contract".
Subsec. (d). Pub. L. 104-188, Sec. 1403(a), amended subsec. (d)
generally. Prior to amendment, subsec. (d) read as follows:
"Treatment of Employee Contributions Under Defined Contribution
Plans as Separate Contracts. - For purposes of this section,
employee contributions (and any income allocable thereto) under a
defined contribution plan may be treated as a separate contract."
Subsec. (f). Pub. L. 104-188, Sec. 1463(a), in closing
provisions, inserted before period at end ", or to the extent such
credits are attributable to services performed as a foreign
missionary (within the meaning of section 403(b)(2)(D)(iii))".
Subsec. (m)(2)(A) to (C). Pub. L. 104-188, Sec. 1704(t)(2),
inserted "and" at end of subpar. (A), redesignated subpar. (C) as
(B), and struck out former subpar. (B) which read as follows: "the
consideration for the contract contributed by the employee for
purposes of subsection (d)(1) (relating to employee's contributions
recoverable in 3 years) and subsection (e)(7) (relating to plans
where substantially all contributions are employee contributions),
and".
Subsec. (p)(4)(A)(ii). Pub. L. 104-188, Sec. 1704(t)(77), amended
cl. (ii) generally. Prior to amendment, cl. (ii) read as follows:
"Special rules. - The term 'qualified employer plan' -
"(I) shall include any plan which was (or was determined to be)
a qualified employer plan or a government plan, but
"(II) shall not include a plan described in subsection (e)(7)."
Subsec. (t)(2)(B). Pub. L. 104-191, Sec. 361(c), substituted ",
(C), or (D)" for "or (C)".
Subsec. (t)(2)(D). Pub. L. 104-191, Sec. 361(b), added subpar.
(D).
Subsec. (t)(3)(A). Pub. L. 104-191, Sec. 361(a), struck out
"(B)," after "Subparagraphs (A)(v),".
Subsec. (t)(6). Pub. L. 104-188, Sec. 1421(b)(4)(A), added par.
(6).
1992 - Subsec. (o)(4). Pub. L. 102-318 substituted "402(c)" for
"402(a)(5), 402(a)(7)".
1990 - Subsec. (t)(2)(C), (D). Pub. L. 101-508, Sec. 11802(a)(1),
(2), redesignated subpar. (D) as (C) and struck out former subpar.
(C) "Exceptions for distributions from employee stock ownership
plans" which read as follows: "Any distribution made before January
1, 1990, to an employee from an employee stock ownership plan (as
defined in section 4975(e)(7)) or a tax credit employee stock
ownership plan (as defined in section 409) if -
"(i) such distribution is attributable to assets which have
been invested in employer securities (within the meaning of
section 409(l)) at all times during the 5-plan-year period
preceding the plan year in which the distribution is made, and
"(ii) at all times during such period the requirements of
sections 401(a)(28) and 409 (as in effect at such times) are met
with respect to such employer securities."
Subsec. (t)(3)(A). Pub. L. 101-508, Sec. 11802(a)(3), substituted
"and (C)" for "(C), and (D)".
1989 - Subsec. (e)(11)(A). Pub. L. 101-239, Sec. 7815(a)(3), (5),
substituted "calendar year" for "12-month period" in cls. (i) and
(ii), and inserted at end "The preceding sentence shall not apply
to any contract described in paragraph (5)(D)."
Subsec. (q)(2)(B). Pub. L. 101-239, Sec. 7811(m)(4), inserted an
additional closing parenthesis after "subsection (s)(6)(B))".
1988 - Subsec. (d). Pub. L. 100-647, Sec. 1011A(b)(2)(A), added
subsec. (d).
Subsec. (e)(4)(A). Pub. L. 100-647, Sec. 5012(d)(1), inserted at
end "The preceding sentence shall not apply for purposes of
determining investment in the contract, except that the investment
in the contract shall be increased by any amount included in gross
income by reason of the amount treated as received under the
preceding sentence."
Subsec. (e)(5)(C). Pub. L. 100-647, Sec. 5012(a)(2), substituted
"Except as provided in paragraph (10) and except to the extent" for
"Except to the extent".
Subsec. (e)(5)(D). Pub. L. 100-647, Sec. 1011A(b)(9)(B),
substituted "paragraph (8)" for "paragraphs (7) and (8)".
Subsec. (e)(7). Pub. L. 100-647, Sec. 1011A(b)(9)(A), struck out
par. (7) which related to special rules for plans where
substantially all contributions are employee contributions.
Subsec. (e)(8)(A). Pub. L. 100-647, Sec. 1011A(b)(9)(C), struck
out "(other than paragraph (7))" after "this subsection".
Subsec. (e)(9). Pub. L. 100-647, Sec. 1011A(b)(2)(B), struck out
par. (9) which related to treatment of employee contributions as
separate contract.
Subsec. (e)(10). Pub. L. 100-647, Sec. 5012(a)(1), added par.
(10).
Subsec. (e)(11). Pub. L. 100-647, Sec. 5012(d)(2), added par.
(11).
Subsec. (f). Pub. L. 100-647, Sec. 1011A(b)(1)(A), struck out
"for purposes of subsections (d)(1) and (e)(7), the consideration
for the contract contributed by the employee," after "contract," in
introductory provisions.
Subsec. (n). Pub. L. 100-647, Sec. 1011A(b)(1)(B), substituted
"Subsection (b)" for "Subsections (b) and (d)".
Subsec. (o)(2). Pub. L. 100-647, Sec. 1011A(c)(8), struck out
par. (2) which related to additional tax if amount received before
age 59 1/2 .
Subsec. (p)(3)(A). Pub. L. 100-647, Sec. 1011A(h)(1), inserted
"to which paragraph (1) does not apply by reason of paragraph (2)
during the period" after "loan".
Subsec. (p)(3)(B). Pub. L. 100-647, Sec. 1011A(h)(2), substituted
"Period" for "Loans" in heading and amended text generally. Prior
to amendment, text read as follows: "For purposes of subparagraph
(A), a loan is described in this subparagraph -
"(i) if paragraph (1) does not apply to such loan by reason of
paragraph (2), and
"(ii) if -
"(I) such loan is made to a key employee (as defined in
section 416(i)), or
"(II) such loan is secured by amounts attributable to
elective 401(k) or 403(b) deferrals (as defined in section
402(g)(3))."
Subsec. (q)(2)(B). Pub. L. 100-647, Sec. 1018(t)(1)(B),
substituted "subsection (s)(6)(B))" for "subsection (s)(6)(B)))".
Subsec. (q)(2)(D). Pub. L. 100-647, Sec. 1011A(c)(7), inserted
"designated" before "beneficiary".
Pub. L. 100-647, Secs. 1011A(c)(4), 1018(u)(8), amended subpar.
(D) identically, substituting a comma for period at end.
Subsec. (q)(2)(E). Pub. L. 100-647, Sec. 1011A(b)(9)(D), struck
out "(determined without regard to subsection (e)(7))" after
"subsection (e)(5)(D)".
Subsec. (q)(2)(G). Pub. L. 100-647, Sec. 1011A(c)(4), substituted
a comma for period at end.
Subsec. (q)(2)(H). Pub. L. 100-647, Sec. 1011A(c)(6), added
subpar. (H).
Subsec. (q)(3)(B). Pub. L. 100-647, Sec. 1011A(c)(5), substituted
"taxpayer" for "employee" in cls. (i) and (ii).
Subsec. (s)(5). Pub. L. 100-647, Sec. 1018(k)(2), substituted
"certain annuity contracts" for "annuity contracts which are part
of qualified plans" in heading.
Subsec. (s)(5)(D). Pub. L. 100-647, Sec. 1018(k)(1), added
subpar. (D).
Subsec. (s)(7). Pub. L. 100-647, Sec. 1018(t)(1)(A), substituted
"primary annuitant" for "primary annuity".
Subsec. (t)(2)(A)(iv). Pub. L. 100-647, Sec. 1011A(c)(7),
inserted "designated" before "beneficiary".
Subsec. (t)(2)(A)(v). Pub. L. 100-647, Sec. 1011A(c)(1), struck
out "on account of early retirement under the plan" after
"separation from service".
Subsec. (t)(2)(C). Pub. L. 100-647, Sec. 1011A(c)(2), substituted
"Exceptions for distributions from employee stock ownership plans"
for "Certain plans" in heading and amended text generally. Prior to
amendment, text read as follows:
"(i) In general. - Except as provided in clause (ii), any
distribution made before January 1, 1990, to an employee from an
employee stock ownership plan defined in section 4975(e)(7) to the
extent that, on average, a majority of assets in the plan have been
invested in employer securities (as defined in section 409(l)) for
the 5-plan-year period preceding the plan year in which the
distribution is made.
"(ii) Benefits distributed must be invested in employer
securities for 5 years. - Clause (i) shall not apply to any
distribution which is attributable to assets which have not been
invested in employer securities at all times during the period
referred to in clause (i)."
Subsec. (t)(3)(A). Pub. L. 100-647, Sec. 1011A(c)(3), substituted
"(C), and (D)" for "and (C)".
Subsec. (u)(1)(A). Pub. L. 100-647, Sec. 1011A(i)(1), inserted
"(other than subchapter L)" after "subtitle".
Subsec. (u)(3)(D). Pub. L. 100-647, Sec. 1011A(i)(3), substituted
"is purchased" for "which is purchased" and "is held" for "which is
held".
Pub. L. 100-647, Sec. 1011A(i)(2), substituted "until all amounts
under such contract are distributed to the employee for whom such
contract was purchased or the employee's beneficiary" for "until
such time as the employee separates from service".
Subsec. (u)(3)(E). Pub. L. 100-647, Sec. 1011A(i)(3), substituted
"is" for "which is".
Subsec. (u)(4)(C). Pub. L. 100-647, Sec. 1011A(i)(4), added
subpar. (C).
Subsecs. (v), (w). Pub. L. 100-647, Sec. 5012(b)(1), added
subsec. (v) and redesignated former subsec. (v) as (w).
1986 - Subsec. (b). Pub. L. 99-514, Sec. 1122(c)(2), amended
subsec. (b) generally. Prior to amendment, subsec. (b) read as
follows: "Gross income does not include that part of any amount
received as an annuity under an annuity, endowment, or life
insurance contract which bears the same ratio to such amount as the
investment in the contract (as of the annuity starting date) bears
to the expected return under the contract (as of such date). This
subsection shall not apply to any amount to which subsection (d)(1)
(relating to certain employee annuities) applies."
Subsec. (d). Pub. L. 99-514, Sec. 1122(c)(1), struck out subsec.
(d) which related to employee's annuities where the employee's
contributions were recoverable in 3 years.
Subsec. (e)(4)(C). Pub. L. 99-514, Sec. 1826(b)(3), added subpar.
(C).
Subsec. (e)(5)(D). Pub. L. 99-514, Sec. 1122(c)(3)(B),
substituted "paragraphs (7) and (8)" for "paragraph (7)" in
introductory provisions.
Pub. L. 99-514, Sec. 1854(b)(1), inserted closing provisions
which read as follows: "Any dividend described in section 404(k)
which is received by a participant or beneficiary shall, for
purposes of this subparagraph, be treated as paid under a separate
contract to which clause (ii)(I) applies."
Subsec. (e)(7)(B). Pub. L. 99-514, Sec. 1852(c)(1), in
introductory provisions substituted "any plan or contract" for "any
trust or contract", in cl. (ii) substituted "85 percent or more of"
for "85 percent of", and inserted closing provision: "For purposes
of clause (ii), deductible employee contributions (as defined in
subsection (o)(5)(A)) shall not be taken into account."
Subsec. (e)(8), (9). Pub. L. 99-514, Sec. 1122(c)(3)(A), added
pars. (8) and (9).
Subsec. (f). Pub. L. 99-514, Sec. 1852(c)(3), in introductory
provisions, substituted "subsections (d)(1) and (e)(7)" for
"subsection (d)(1)" and "subsection (e)(6)" for "subsection
(e)(1)(B)".
Subsec. (m)(2)(B). Pub. L. 99-514, Sec. 1852(c)(4)(A), inserted
"and subsection (e)(7) (relating to plans where substantially all
contributions are employee contributions)".
Subsec. (m)(2)(C). Pub. L. 99-514, Sec. 1852(c)(4)(B),
substituted "subsection (e)(6)" for "subsection (e)(1)(B)".
Subsec. (m)(5). Pub. L. 99-514, Sec. 1852(a)(2)(C), which
directed that par. (5) be amended by substituting "5-percent
owners" for "owner-employees" in heading, was executed by
substituting "5-percent owners" for "key employees", to reflect the
probable intent of Congress and intervening amendment by section
713(c)(1)(B) of Pub. L. 98-369.
Subsec. (m)(5)(A). Pub. L. 99-514, Sec. 1123(d)(1), amended
subpar. (A) generally. Prior to amendment, subpar. (A) read as
follows: "This subparagraph shall apply -
"(i) to amounts which -
"(I) are received from a qualified trust described in section
401(a) or under a plan described in section 403(a), and
"(II) are received by a 5-percent owner before such owner
attains the age of 59 1/2 years, for any reason other than
such owner becoming disabled (within the meaning of paragraph
(7) of this section), and
"(ii) to amounts which are received from a qualified trust
described in section 401(a) or under a plan described in section
403(a) at any time by a 5-percent owner, or by the successor of
such owner, but only to the extent that such amounts are
determined (under regulations prescribed by the Secretary) to
exceed the benefits provided for such individual under the plan
formula.
Clause (i) shall not apply to any amount received by an individual
in his capacity as a policyholder of an annuity, endowment, or life
insurance contract which is in the nature of a dividend or similar
distribution and clause (i) shall not apply to amounts attributable
to benefits accrued before January 1, 1985."
Pub. L. 99-514, Sec. 1852(a)(2)(A), amended subpar. (A)
generally. Prior to amendment, subpar. (A) read as follows: "This
paragraph shall apply -
"(i) to amounts (other than any amount received by an
individual in his capacity as a policyholder of an annuity,
endowment, or life insurance contract which is in the nature of a
dividend or similar distribution) which are received from a
qualified trust described in section 401(a) or under a plan
described in section 403(a) and which are received by an
individual, who is, or has been, a 5-percent owner, before such
individual attains the age of 59 1/2 years, for any reason other
than the individual's becoming disabled (within the meaning of
paragraph (7) of this subsection), but only to the extent that
such amounts are attributable to contributions paid on behalf of
such individual (other than contributions made by him as a
5-percent owner) while he was a 5-percent owner, and
"(ii) to amounts which are received from a qualified trust
described in section 401(a) or under a plan described in section
403(a) at any time by an individual who is, or has been, a
5-percent owner or by the successor of such individual, but only
to the extent that such amounts are determined, under regulations
prescribed by the Secretary, to exceed the benefits provided for
such individual under the plan formula."
Subsec. (m)(5)(C). Pub. L. 99-514, Sec. 1852(a)(2)(B), amended
subpar. (C) generally. Prior to amendment, subpar. (C) read as
follows: "For purposes of this paragraph, the term '5 percent
owner' have the same meanings as when used in section 416."
Subsec. (m)(10). Pub. L. 99-514, Sec. 1898(c)(1)(B), inserted
"who is the spouse or former spouse of the participant".
Subsec. (o)(5). Pub. L. 99-514, Sec. 1101(b)(2)(C), inserted "and
made for a taxable year beginning before January 1, 1987," in
subpar. (A), substituted "subsection (p)(3)(A)(i)" for "section
219(e)(3)" in subpar. (C), and substituted "subsection (p)(3)(B)"
for "section 219(e)(4)" in subpar. (D).
Subsec. (p)(2)(A)(i). Pub. L. 99-514, Sec. 1134(a), amended cl.
(i) generally. Prior to amendment, cl. (i) read as follows:
"$50,000, or".
Subsec. (p)(2)(B)(ii). Pub. L. 99-514, Sec. 1134(d), amended cl.
(ii) generally. Prior to amendment, cl. (ii) read as follows:
"Clause (i) shall not apply to any loan used to acquire, construct,
reconstruct, or substantially rehabilitate any dwelling unit which
within a reasonable time is to be used (determined at the time the
loan is made) as a principal residence of the participant or a
member of the family (within the meaning of section 267(c)(4)) of
the participant."
Subsec. (p)(2)(C), (D). Pub. L. 99-514, Sec. 1134(b), added
subpar. (C) and redesignated former subpar. (C) as (D).
Subsec. (p)(3). Pub. L. 99-514, Sec. 1134(c), added par. (3) and
redesignated former par. (3) as (4).
Pub. L. 99-514, Sec. 1101(b)(2)(B), amended par. (3) generally.
Prior to amendment, par. (3) read as follows: "For purposes of this
subsection, the term 'qualified employer plan' means any plan which
was (or was determined to be) a qualified employer plan (as defined
in section 219(e)(3) other than a plan described in subsection
(e)(7)). For purposes of this subsection, such term includes any
government plan (as defined in section 219(e)(4))."
Subsec. (p)(4), (5). Pub. L. 99-514, Sec. 1134(c), redesignated
former pars. (3) and (4) as (4) and 5, respectively.
Subsec. (q). Pub. L. 99-514, Sec. 1123(b)(1)(B), substituted
"10-percent" for "5-percent" in heading.
Subsec. (q)(1). Pub. L. 99-514, Sec. 1123(b)(1)(A), substituted
"10 percent" for "5 percent".
Subsec. (q)(2). Pub. L. 99-514, Sec. 1123(b)(3), substituted
"Paragraph (1)" for "This subsection" in introductory provisions.
Subsec. (q)(2)(B). Pub. L. 99-514, Sec. 1826(c), amended subpar.
(B) generally. Prior to amendment, subpar. (B) read as follows:
"made to a beneficiary (or to the estate of an annuitant) on or
after the death of an annuitant,".
Subsec. (q)(2)(D). Pub. L. 99-514, Sec. 1123(b)(2), amended
subpar. (D) generally. Prior to amendment, subpar. (D) read as
follows: "which is one of a series of substantially equal periodic
payments made for the life of a taxpayer or over a period extending
for at least 60 months after the annuity starting date,".
Subsec. (q)(2)(E). Pub. L. 99-514, Sec. 1852(c)(2), inserted
"(determined without regard to subsection (e)(7))".
Subsec. (q)(2)(G). Pub. L. 99-514, Sec. 1826(d), added subpar.
(G).
Subsec. (q)(2)(I), (J). Pub. L. 99-514, Sec. 1123(b)(4), which
added subpars. (I) and (J) directed the amendment of subpar. (G) by
striking out "or" at the end thereof, and of subpar. (H) by
striking out the period at the end thereof, could not be executed
to subpars. (G) and (H) because subpar. (G) does not contain "or",
and no subpar. (H) was enacted.
Subsec. (q)(3). Pub. L. 99-514, Sec. 1123(b)(3), added par. (3).
Subsec. (s)(1). Pub. L. 99-514, Sec. 1826(b)(2), substituted "any
holder of such contract" for "the holder of such contract" in
subpars. (A) and (B).
Subsec. (s)(5). Pub. L. 99-514, Sec. 1826(a), added par. (5).
Subsec. (s)(6), (7). Pub. L. 99-514, Sec. 1826(b)(1), added pars.
(6) and (7).
Subsec. (t). Pub. L. 99-514, Sec. 1123(a), added subsec. (t) and
redesignated former subsec. (t) as (u).
Subsecs. (u), (v). Pub. L. 99-514, Sec. 1135(a), added subsec.
(u) and redesignated former subsec. (u) as (v).
1984 - Subsec. (e)(5)(D). Pub. L. 98-369, Sec. 523(b)(1),
substituted "Except as provided in paragraph (7), this" for "This".
Subsec. (e)(5)(D)(ii)(IV). Pub. L. 98-369, Sec. 211(b)(1), which
directed substitution of "section 818(a)(3)" for "805(d)(3)" in
subpar. (D)(i)(IV), was executed to subpar. (D)(ii)(IV) to reflect
the probable intent of Congress.
Subsec. (e)(7). Pub. L. 98-369, Sec. 523(a), added par. (7).
Subsec. (k). Pub. L. 98-369, Sec. 421(b)(1), repealed subsec. (k)
relating to payments in discharge of alimony.
Subsec. (m)(5). Pub. L. 98-369, Sec. 713(c)(1)(B), substituted
"key employees" for "owner-employees" in heading.
Subsec. (m)(5)(A). Pub. L. 98-369, Sec. 521(d)(1), (2),
substituted "5-percent owner" for "key employee" wherever appearing
and struck out "in a top-heavy plan" at end of cl. (i).
Pub. L. 98-369, Sec. 713(c)(1)(A), substituted "as a key
employee" for "as an owner-employee" in cl. (i).
Subsec. (m)(5)(C). Pub. L. 98-369, Sec. 521(d)(3), substituted
"the term '5 percent owner' " for "the terms 'key employee' and
'top-heavy plan' ".
Subsec. (m)(9). Pub. L. 98-369, Sec. 713(d)(1), repealed par. (9)
relating to return of excess contributions before due date of
return.
Subsec. (m)(10). Pub. L. 98-397 added par. (10).
Subsec. (o)(1). Pub. L. 98-369, Sec. 491(d)(3), substituted "402
and 403" for "402, 403, and 405".
Subsec. (o)(3)(A). Pub. L. 98-369, Sec. 713(b)(1)(A), inserted
"(other than the exception contained in paragraph (2) thereof)".
Subsec. (o)(4). Pub. L. 98-369, Sec. 491(d)(4), substituted "and
408(d)(3)" for "408(d)(3), and 409(b)(3)(C)".
Subsec. (p)(2)(A). Pub. L. 98-369, Sec. 713(b)(1)(B), inserted at
end "For purposes of clause (ii), the present value of the
nonforfeitable accrued benefit shall be determined without regard
to any accumulated deductible employee contributions (as defined in
subsection (o)(5)(B))."
Subsec. (p)(2)(A)(ii). Pub. L. 98-369, Sec. 713(b)(4),
substituted as cl. (ii) "the greater of (I) one-half of the present
value of the nonforfeitable accrued benefit of the employee under
the plan, or (II) $10,000" for " 1/2 of the present value of the
nonforfeitable accrued benefit of the employee under the plan (but
not less than $10,000)".
Subsec. (p)(3). Pub. L. 98-369, Sec. 523(b)(2), inserted "other
than a plan described in subsection (e)(7)".
Subsec. (q)(1). Pub. L. 98-369, Sec. 222(a), amended par. (1)
generally, striking out designation "(A) In general. - " preceding
text, substituting "which is includible in gross income" for
"includible in gross income which is properly allocable to any
investment in the annuity contract made during the 10-year period
ending on the date such amount was received by the taxpayer", and
striking out former subpar. (B), which had provided that for
purposes of subpar. (A), the amount includible in gross income
would be allocated to the earliest investment in the contract with
respect to which amounts had not been previously fully allocated
under this par.
Subsecs. (s), (t). Pub. L. 98-369, Sec. 222(b), added subsec. (s)
and redesignated former subsec. (s) as (t).
1983 - Subsec. (o)(2)(A). Pub. L. 97-448, Sec. 103(c)(6), struck
out "to which the employee made one or more deductible employee
contributions" after "from a qualified employer plan or government
plan".
Subsec. (p)(3). Pub. L. 97-448, Sec. 103(c)(3)(B)(i), struck out
"without regard to subparagraph (D) thereof" after "as defined in
section 219(e)(3)".
Subsecs. (r), (s). Pub. L. 98-76 added subsec. (r) and
redesignated former subsec. (r) as (s).
1982 - Subsec. (e). Pub. L. 97-248, Sec. 265(a), in par. (1)
substituted provisions relating to the application of this
subsection to amounts received under annuity, endowment, or life
insurance contracts which are not received as annuities and to
amounts received as dividends for provisions which stated a general
rule relating to the includability as gross income of amounts that
were received under annuity, endowment, or life insurance contracts
which were not received as annuities and also stated that for the
purposes of this section amounts which were received as dividends
would be treated as amounts not received as an annuity, in par. (2)
substituted provisions stating a general rule as to the
includability as gross income of amounts received before or after
the annuity starting date for provisions which set out those
amounts which would be treated as amounts not received as an
annuity, and added pars. (3) to (6).
Subsec. (m)(4). Pub. L. 97-248, Sec. 236(b)(1), struck out par.
(4) which related to amounts constructively received with respect
to assignments or pledges, and loans on contracts.
Subsec. (m)(5). Pub. L. 97-248, Sec. 237(d)(1), (2), in subpar.
(A) substituted applicability to key employees for applicability to
owner-employees and added subpar. (C).
Subsec. (m)(6). Pub. L. 97-248, Sec. 237(d)(3), struck out
"except in applying paragraph (5)," after "shall".
Subsec. (m)(8). Pub. L. 97-248, Sec. 236(b)(1), struck out par.
(8) which related to loans to owner-employees.
Subsec. (o)(3)(A). Pub. L. 97-248, Sec. 236(b)(2), substituted
reference to subsec. (p) of this section for references to subsec.
(m)(4) and (8) of this section.
Subsec. (p). Pub. L. 97-248, Sec. 236(a), added subsec. (p).
Former subsec. (p) redesignated (q).
Subsec. (q). Pub. L. 97-248, Sec. 265(b)(1), added subsec. (q).
Former subsec. (q) redesignated (r).
Pub. L. 97-248, Sec. 236(a), redesignated former subsec. (p) as
(q).
Subsec. (r). Pub. L. 97-248, Secs. 236(a), 265(b)(1),
redesignated former subsec. (p) as (r).
1981 - Subsec. (m)(6). Pub. L. 97-34, Sec. 312(d)(1), expanded
definition of "owner-employee" to include an employee within the
meaning of section 401(c)(1) except in applying paragraph (5).
Subsec. (m)(8). Pub. L. 97-34, Sec. 312(d)(2), added par. (8).
Subsec. (m)(9). Pub. L. 97-34, Sec. 312(e)(1), added par. (9).
Subsecs. (o), (p). Pub. L. 97-34, Sec. 311(b)(1), added subsec.
(o) and redesignated former subsec. (o) as (p).
1976 - Subsec. (c)(2), (3)(A). Pub. L. 94-455, Sec.
1906(b)(13)(A), struck out "or his delegate" after "Secretary".
Subsec. (d)(1). Pub. L. 94-455, Sec. 1901(a)(12), struck out in
subpar. (B) "(whether or not before January 1, 1954)" after
"beginning on the date", and in provisions following subpar. (B)
struck out "(under this paragraph and prior income tax laws)" after
"until there has been so excluded".
Subsec. (f). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out "or
his delegate" after "Secretary".
Subsec. (i). Pub. L. 94-455, Sec. 1951(b)(1)(A), struck out
subsec. (i) which related to joint annuities where first annuitant
died in 1951, 1952, or 1953.
Subsec. (m)(2), (3). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out "or his delegate" after "Secretary".
Subsec. (m)(4)(A). Pub. L. 94-455, Sec. 1901(a)(13), substituted
"an individual retirement account" for "an individual retirement
amount".
Subsec. (m)(5)(A)(ii), (7). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
1974 - Subsec. (m)(1). Pub. L. 93-406, Sec. 2001(h)(2), struck
out par. (1) which related to certain amounts received before
annuity starting date.
Subsec. (m)(4)(A). Pub. L. 93-406, Sec. 2002(g)(10)(A), inserted
references to an individual retirement amount described in section
408(a) and an individual retirement annuity described in section
408(b).
Subsec. (m)(5)(A). Pub. L. 93-406, Sec. 2001(e)(5), (h)(3),
substituted "(other than contributions made by him as an
owner-employee)" for "(whether or not paid by him)" in cl. (i), and
struck out cl. (iii) which had made reference to amounts which were
received, by an individual who was or had been, an owner-employee,
by reason of the distribution under the provisions of section
401(e)(2)(E) of his entire interest in all qualified trusts
described in section 401(a) and in all plans described in section
403(a).
Subsec. (m)(5)(B). Pub. L. 93-406, Sec. 2001(g)(1), substituted
provisions that if a person receives an amount to which subsec.
(m)(5) applies, his tax under this chapter for the taxable year in
which such amount is received shall be increased by an amount equal
to 10 percent of the portion of the amount so received which is
includible in his gross income for such taxable year for provisions
that if the aggregate amounts to which subsec. (m)(5) applied
received by any person in his taxable year equalled or exceeded
$2,500, the increase in his tax for the taxable year in which such
amounts were received and attributable to such amounts could not be
less than 110 percent of the aggregate increase in taxes, for the
taxable year and the 4 immediately preceding taxable years, which
would have resulted if such amounts had been included in such
person's gross income ratably over such taxable years, with
provision for alternate computation if deductions had been allowed
under section 404 for contributions paid for a number of prior
taxable years less than 4.
Subsec. (m)(5)(C) to (E). Pub. L. 93-406, Sec. 2001(g)(2)(A),
struck out subpars. (C) to (E) which contained special rules for
the application of subsec. (m)(5).
Subsec. (m)(6). Pub. L. 93-406, Sec. 2002(g)(10)(B), inserted
reference to an individual for whose benefit an individual
retirement account or annuity described in section 408(a) or (b) is
maintained.
Subsec. (n). Pub. L. 93-406, Secs. 2005(c)(3), 2007(b)(2),
redesignated former subsec. (o) as (n) and in heading of subsec.
(n) as so redesignated inserted reference to survivor benefit plan.
Former subsec. (n), which set out provisions covering the treatment
to be accorded total distributions, was struck out.
Subsec. (o). Pub. L. 93-406, Sec. 2005(c)(3), redesignated former
subsec. (p) as (o). Former subsec. (o) redesignated (n) and
amended.
Subsec. (p). Pub. L. 93-406, Sec. 2005(c)(3), redesignated
subsec. (p) as (o).
1969 - Subsec. (n)(1). Pub. L. 91-172, Sec. 515(b)(1), altered
section to accommodate the insertion into sections 402 and 403 of
provisions under which employer contributions to qualified pension,
profit sharing, stock bonus, and annuity plans for plan years
beginning after 1969 are to be treated as ordinary income when
received in a lump sum distribution, but with such amounts to be
eligible for a special averaging procedure.
Subsec. (n)(4). Pub. L. 91-172, Sec. 515(b)(2), added par. (4).
1966 - Subsecs. (o), (p). Pub. L. 89-365 added subsec. (o) and
redesignated former subsec. (o) as (p).
1965 - Subsec. (m)(5)(A)(i). Pub. L. 89-97, Sec. 106(d)(2)(A),
substituted "paragraph (7) of this subsection" for "section
213(g)(3)".
Subsec. (m)(7). Pub. L. 89-97, Sec. 106(d)(2)(B), added par. (7).
Subsec. (n)(1). Pub. L. 89-97, Sec. 106(d)(2)(C), substituted in
subpars. (A)(iii) and (B)(iii) "subsection (m)(7)" for "section
213(g)(3)".
Subsec. (n)(3). Pub. L. 89-44 substituted "sections 31 and 39"
for "section 31" in sentence following subpar. (B).
1964 - Subsec. (e)(3). Pub. L. 88-272 struck out par. (3) which
provided for a limit on the tax attributable to the receipt of a
lump sum.
1962 - Subsec. (d)(2). Pub. L. 87-792, Sec. 4(a), designated
existing provisions as cl. (A) and added cl. (B).
Subsec. (f). Pub. L. 87-834 inserted sentence providing that par.
(2) shall not apply to amounts which were contributed by the
employer after Dec. 31, 1962, and which would not have been
includible in the gross income of the employee by reason of the
application of Section 911 if such amounts had been paid directly
to the employee at the time of contribution, and making such
sentence inapplicable to amounts which were contributed by the
employer, as determined under regulations, to provide pension or
annuity credits, to the extent such credits are attributable to
services performed before Jan. 1, 1963, and are provided pursuant
to pension or annuity plan provisions in existence on Mar. 12,
1962, and on that date applicable to such services.
Subsecs. (m) to (o). Pub. L. 87-792, Sec. 4(b), added subsecs.
(m) and (n) and redesignated former subsec. (m) as (o).
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS
Amendment by Pub. L. 107-90 applicable to calendar years
beginning after Dec. 31, 2001, see section 204(f) of Pub. L.
107-90, set out as a note under section 24 of this title.
Amendment by Pub. L. 107-22 effective July 26, 2001, see section
1(c) of Pub. L. 107-22, set out as a note under section 26 of this
title.
Pub. L. 107-16, title IV, Sec. 402(h), June 7, 2001, 115 Stat.
63, provided that: "The amendments made by this section [amending
this section and sections 135, 221, 529, 530, 4973, and 6693 of
this title] shall apply to taxable years beginning after December
31, 2001."
Pub. L. 107-16, title VI, Sec. 632(a)(4), June 7, 2001, 115 Stat.
115, provided that: "The amendments made by this subsection
[amending this section and sections 402, 403, 404, 415, and 664 of
this title] shall apply to years beginning after December 31,
2001."
Amendment by section 641(a)(2)(C), (e)(1) of Pub. L. 107-16
applicable to distributions after Dec. 31, 2001, see section
641(f)(1) of Pub. L. 107-16, set out as a note under section 402 of
this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-206, title III, Sec. 3436(b), July 22, 1998, 112
Stat. 761, provided that: "The amendments made by this section
[amending this section] shall apply to distributions after December
31, 1999."
Amendment by section 6023(3), (4) of Pub. L. 105-206 effective
July 22, 1998, see section 6023(32) of Pub. L. 105-206, set out as
a note under section 34 of this title.
Amendment by sections 6004(d)(3)(B) and 6005(c)(1) of Pub. L.
105-206 effective, except as otherwise provided, as if included in
the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105-34,
to which such amendment relates, see section 6024 of Pub. L.
105-206, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 203(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to
distributions after December 31, 1997, with respect to expenses
paid after such date (in taxable years ending after such date), for
education furnished in academic periods beginning after such date."
Section 303(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to
payments and distributions in taxable years beginning after
December 31, 1997."
Section 1075(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply with
respect to annuity starting dates beginning after December 31,
1997."
EFFECTIVE DATE OF 1996 AMENDMENTS
Section 361(d) of Pub. L. 104-191 provided that: "The amendments
made by this section [amending this section] shall apply to
distributions after December 31, 1996."
Section 1403(b) of Pub. L. 104-188 provided that: "The amendment
made by this section [amending this section] shall apply in cases
where the annuity starting date is after the 90th day after the
date of the enactment of this Act [Aug. 20, 1996]."
Section 1421(e) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section, sections 219, 280G,
402, 404, 408, 414, 416, 457, 3121, 3306, 3401, 4972, and 6693 of
this title, sections 1021 and 1104 of Title 29, Labor, and section
409 of Title 42, The Public Health and Welfare] shall apply to
taxable years beginning after December 31, 1996."
Section 1463(b) of Pub. L. 104-188 provided that: "The amendment
made by this section [amending this section] shall apply to taxable
years beginning after December 31, 1996."
Section 1704(l)(2) of Pub. L. 104-188 provided that: "The
amendment made by paragraph (1) [amending this section] shall take
effect as if included in the amendments made by section 1122(c) of
the Tax Reform Act of 1986 [Pub. L. 99-514]."
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-318 applicable to distributions after
Dec. 31, 1992, see section 521(e) of Pub. L. 102-318, set out as a
note under section 402 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by sections 1011A(b)(1)(A), (B), (2), (9), (c)(1)-(8),
(h), (i), and 1018(k), (t)(1)(A), (B), and (u)(8) of Pub. L.
100-647 effective, except as otherwise provided, as if included in
the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to
which such amendment relates, see section 1019(a) of Pub. L.
100-647, set out as a note under section 1 of this title.
Amendment by section 5012(a), (b)(1), (d) of Pub. L. 100-647
applicable to contracts entered into on or after June 21, 1988,
with special rule where death benefit increases by more than
$150,000, certain other material changes taken into account,
certain exchanges permitted, and special rule in the case of
annuity contracts, see section 5012(e) of Pub. L. 100-647, set out
as an Effective Date note under section 7702A of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1101(c) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and section 219 of this
title] shall apply to contributions for taxable years beginning
after December 31, 1986."
Amendment by section 1122(c)(1) of Pub. L. 99-514 applicable to
individuals whose annuity starting date is after July 1, 1986,
amendment by section 1122(c)(2) of Pub. L. 99-514 applicable to
individuals whose annuity starting date is after Dec. 31, 1986, and
amendment by section 1122(c)(3) of Pub. L. 99-514 applicable to
amounts received after July 1, 1986, in the case of any plan not
described in section 72(e)(8)(D) of this title, see section
1122(h)(2) of Pub. L. 99-514, set out as a note under section 402
of this title.
Section 1123(e) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1011A(c)(11), (12), Nov. 10, 1988, 102 Stat. 3476,
provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and sections 403 and 408 of this title] shall apply to
taxable years beginning after December 31, 1986.
"(2) Subsection (c). - The amendments made by subsection (c)
[amending section 403 of this title] shall apply to years beginning
after December 31, 1988, but only with respect to distributions
from contracts described in section 403(b) of the Internal Revenue
Code of 1986 which are attributable to assets other than assets
held as of the close of the last year beginning before January 1,
1989.
"(3) Exception where distribution commences. - The amendments
made by this section shall not apply to distributions to any
employee from a plan maintained by any employer if -
"(A) as of March 1, 1986, the employee separated from service
with the employer,
"(B) as of March 1, 1986, the accrued benefit of the employee
was in pay status pursuant to a written election providing a
specific schedule for the distribution of the entire accrued
benefit of the employee, and
"(C) such distribution is made pursuant to such written
election.
"(4) Transition rule. - The amendments made by this section shall
not apply with respect to any benefits with respect to which a
designation is in effect under section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act of 1982 [section 242(b)(2) of Pub. L.
97-248, formerly set out as an Effective Date of 1982 Amendment
note under section 401 of this title].
"(5) Special rule for distributions under an annuity contract. -
The amendments made by paragraphs (1), (2), and (3) of subsection
(b) [amending this section] shall not apply to any distribution
under an annuity contract if -
"(A) as of March 1, 1986, payments were being made under such
contract pursuant to a written election providing a specific
schedule for the distribution of the taxpayer's interest in such
contract, and
"(B) such distribution is made pursuant to such written
election."
Section 1134(e) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section] shall apply to loans
made, renewed, renegotiated, modified, or extended after December
31, 1986."
Section 1135(b) of Pub. L. 99-514 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
contributions to annuity contracts after February 28, 1986."
Amendment by sections 1826(a), (d), 1852(a)(2), (c)(1)-(4), and
1854(b)(1) of Pub. L. 99-514 effective, except as otherwise
provided, as if included in the provisions of the Tax Reform Act of
1984, Pub. L. 98-369, div. A, to which such amendment relates, see
section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Section 1826(b)(4) of Pub. L. 99-514 provided that: "The
amendments made by this subsection [amending this section] shall
apply to contracts issued after the date which is 6 months after
the date of the enactment of this Act [Oct. 22, 1986] in taxable
years ending after such date."
Section 1826(c) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1018(t)(1)(D), Nov. 10, 1988, 102 Stat. 3587,
provided that the amendment made by section 1826(c) of Pub. L.
99-514 is effective with respect to distributions commencing after
the date 6 months after Oct. 22, 1986.
Section 1854(b)(6) of Pub. L. 99-514 provided that: "The
amendments made by paragraphs (1) and (2) [amending this section
and section 404 of this title] shall not apply to dividends paid
before January 1, 1986, if the taxpayer treated such dividends in a
manner inconsistent with such amendments on a return filed with the
Secretary before the date of the enactment of this Act [Oct. 22,
1986]."
Section 1898(c)(1)(C) of Pub. L. 99-514 provided that: "The
amendments made by this paragraph [amending this section and
section 402 of this title] shall apply to payments made after the
date of the enactment of this Act [Oct. 22, 1986]."
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by Pub. L. 98-397 effective Jan. 1, 1985, except as
otherwise provided, see section 303(d) of Pub. L. 98-397, set out
as a note under section 1001 of Title 29, Labor.
Amendment by section 211(b)(1) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, see section 215 of
Pub. L. 98-369, set out as an Effective Date note under section 801
of this title.
Section 222(c) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided:
"(1) In general. - The amendments made by this section [amending
this section] shall apply to contracts issued after the day which
is 6 months after the date of the enactment of this Act [July 18,
1984] in taxable years ending after such date.
"(2) Transitional rules for contracts issued before effective
date. - In the case of any contract (other than a single premium
contract) which is issued on or before the day which is 6 months
after the date of the enactment of this Act, for purposes of
section 72(q)(1)(A) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954] (as in effect on the day before the date of the
enactment of this Act), any investment in such contract which is
made during any calendar year shall be treated as having been made
on January 1 of such calendar year."
Amendment by section 421(b)(1) of Pub. L. 98-369 applicable to
transfers after July 18, 1984, in taxable years ending after such
date, subject to election to have repeal apply to transfers after
1983 or to transfers pursuant to existing decrees, see section
421(d) of Pub. L. 98-369, set out as an Effective Date note under
section 1041 of this title.
Amendment by section 491(d)(3), (4) of Pub. L. 98-369 applicable
to obligations issued after Dec. 31, 1983, see section 491(f)(1) of
Pub. L. 98-369, set out as a note under section 62 of this title.
Amendment by section 521(d) of Pub. L. 98-369 applicable to years
beginning after Dec. 31, 1984, see section 521(e) of Pub. L.
98-369, set out as a note under section 401 of this title.
Section 523(c) of Pub. L. 98-369 provided that: "The amendments
made by this section [amending this section] shall apply to any
amount received or loan made after the 90th day after the date of
enactment of this Act [July 18, 1984]."
Amendment by section 713(b)(1), (4), (c)(1)(A), (B) of Pub. L.
98-369 effective as if included in the provision of the Tax Equity
and Fiscal Responsibility Act of 1982, Pub. L. 97-248, to which
such amendment relates, see section 715 of Pub. L. 98-369, set out
as a note under section 31 of this title.
Section 713(d)(1) of Pub. L. 98-369, as amended by Pub. L.
99-514, title XVIII, Sec. 1875(c)(5), Oct. 22, 1986, 100 Stat.
2895, provided that the amendment made by section 713(d)(1) of Pub.
L. 98-369 is effective with respect to contributions made in
taxable years beginning after Dec. 31, 1983.
EFFECTIVE DATE OF 1983 AMENDMENTS
Section 227(b) of Pub. L. 98-76, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by section 224 [enacting section 6050G of this
title, amending this section and section 86 of this title, and
enacting provisions set out as a note under section 231n of Title
45, Railroads] shall apply to benefits received after December 31,
1983, in taxable years ending after such date.
"(2) Treatment of certain lump-sum payments received after
december 31, 1983. - The amendments made by section 224 shall not
apply to any portion of a lump-sum payment received after December
31, 1983, if the generally applicable payment date for such portion
was before January 1, 1984.
"(3) No fresh start. - For purposes of determining whether any
benefit received after December 31, 1983, is includible in gross
income by reason of section 72(r) of the Internal Revenue Code of
1986 [formerly I.R.C. 1954], as added by this Act, the amendments
made by section 224 be treated as having been in effect during all
periods before 1984."
Section 103(c)(3)(B)(ii) of Pub. L. 97-448 provided that: "The
amendment made by clause (i) [amending this section] shall take
effect as if the matter struck out had never been included in such
paragraph."
Amendment by title I of Pub. L. 97-448 effective, except as
otherwise provided, as if it had been included in the provision of
the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 236(c) of Pub. L. 97-248, as amended by Pub. L. 97-448,
title III, Sec. 306(a)(11), Jan. 12, 1983, 96 Stat. 2404; Pub. L.
98-369, div. A, title V, Sec. 554, title VII, Sec. 713(b)(2), July
18, 1984, 98 Stat. 897, 957; Pub. L. 99-514, Sec. 2, Oct. 22, 1986,
100 Stat. 2095, provided that:
"(1) In general. - The amendments made by this section [amending
this section] shall apply to loans, assignments, and pledges made
after August 13, 1982. For purposes of the preceding sentence, the
outstanding balance of any loan which is renegotiated, extended,
renewed, or revised after such date shall be treated as an amount
received as a loan on the date of such renegotiation, extension,
renewal, or revision.
"(2) Exception for certain loans used to repay outstanding
obligations. -
"(A) In general. - Any qualified refunding loan shall not be
treated as a distribution by reason of the amendments made by
this section to the extent such loan is repaid before August 14,
1983.
"(B) Qualified refunding loan. - For purposes of subparagraph
(A), the term 'qualified refunding loan' means any loan made
after August 13, 1982, and before August 14, 1983, to the extent
such loan is used to make a required principal payment.
"(C) Required principal payment. - For purposes of subparagraph
(B), the term 'required principal payment' means any principal
repayment on a loan made under the plan which was outstanding on
August 13, 1982, if such repayment is required to be made after
August 13, 1982, and before August 14, 1983 or if such loan was
payable on demand.
"(D) Special rule for non-key employees. - In the case of a
non-key employee (within the meaning of section 416(i)(2) of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954]), this
paragraph shall be applied by substituting 'January 1, 1985' for
'August 14, 1983' each place it appears.
"(3) Treatment of certain renegotiations. - If -
"(A) the taxpayer after August 13, 1982, and before September
4, 1982, borrows money from a government plan (as defined in
section 219(e)(4) of the Internal Revenue Code of 1986),
"(B) under the applicable State law, such loan requires the
renegotiation of all outstanding prior loans made to the taxpayer
under such plan, and
"(C) the renegotiation described in subparagraph (B) does not
change the interest rate on, or extend the duration of, any such
outstanding prior loan,
then the renegotiation described in subparagraph (B) shall not be
treated as a renegotiation, extension, renewal, or revision for
purposes of paragraph (1). If the renegotiation described in
subparagraph (B) does not meet the requirements of subparagraph (C)
solely because it extends the duration of any such outstanding
prior loan, the requirements of subparagraph (C) shall be treated
as met with respect to such renegotiation if, before April 1, 1983,
such extension is eliminated."
Section 265(c) of Pub. L. 97-248 provided that:
"(1) Subsection (a). - The amendments made by subsection (a)
[amending this section] shall take effect on August 13, 1982.
"(2) Subsection (b). - The amendments made by subsection (b)
[amending this section and sections 46, 50A, 53, 901, 1302, and
1304 of this title] shall apply to distributions after December 31,
1982."
Amendment by section 237(d) of Pub. L. 97-248 applicable to years
beginning after Dec. 31, 1983, see section 241 of Pub. L. 97-248,
set out as an Effective Date note under section 416 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 312(f) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 103(d)(3), 96 Stat. 2378, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
219, 401, 404, 408, 1379, and 4972 of this title] shall apply to
taxable years beginning after December 31, 1981.
"(2) Transitional rule. - The amendments made by subsection (d)
[amending this section] shall not apply to any loan from a plan to
a self-employed individual who is an employee within the meaning of
section 401(c)(1) which is outstanding on December 31, 1981. For
purposes of the preceding sentence, any loan which is renegotiated,
extended, renewed, or revised after such date shall be treated as a
new loan."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(12), (13) of Pub. L. 94-455
applicable with respect to taxable years beginning after Dec. 31,
1976, see section 1901(d) of Pub. L. 94-455, set out as a note
under section 2 of this title.
Section 1951(d) of Pub. L. 94-455 provided that: "Except as
otherwise expressly provided, the amendments made by this section
[see Tables for classification of section 1951 of Pub. L. 94-455]
shall apply with respect to taxable years beginning after December
31, 1976."
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by section 2001(e)(5) of Pub. L. 93-406 applicable to
contributions made in taxable years beginning after Dec. 31, 1975,
see section 2001(i)(4) of Pub. L. 93-406, set out as a note under
section 401 of this title.
Section 2001(i)(5), (6) of Pub. L. 93-406 provided that:
"(5) The amendments made by subsection (g) [amending this
section and sections 46, 50A, 56, 404, and 901 of this title]
apply to distributions made in taxable years beginning after
December 31, 1975.
"(6) The amendments made by subsection (h) [amending this
section and section 401 of this title] apply to taxable years
ending after the date of enactment of this Act [Sept. 2, 1974]."
Amendment by section 2002(g)(10) of Pub. L. 93-406 effective on
Jan. 1, 1975, see section 2002(i)(2) of Pub. L. 93-406, set out as
an Effective Date note under section 4973 of this title.
Amendment by section 2005(c)(3) of Pub. L. 93-406, applicable
only with respect to distributions or payments made after Dec. 31,
1973, in taxable years beginning after Dec. 31, 1973, see section
2005(d) of Pub. L. 93-406, set out as a note under section 402 of
this title.
Amendment by section 2007(b)(2) of Pub. L. 93-406 applicable to
taxable years ending on or after Sept. 21, 1972, see section
2007(c) of Pub. L. 93-406, set out as a note under section 122 of
this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years ending
after Dec. 31, 1969, see section 515(d) of Pub. L. 91-172, set out
as a note under section 402 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-365 applicable with respect to taxable
years ending after Dec. 31, 1965, see section 1(d) of Pub. L.
89-365, set out as an Effective Date note under section 122 of this
title.
EFFECTIVE DATE OF 1965 AMENDMENTS
Amendment by Pub. L. 89-97 applicable to taxable years beginning
after Dec. 31, 1966, see section 106(e) of Pub. L. 89-97, set out
as a note under section 213 of this title.
Amendment by Pub. L. 89-44 applicable to taxable years beginning
on or after July 1, 1965, see section 809(f) of Pub. L. 89-44, set
out as a note under section 6420 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years beginning
after Dec. 31, 1963, see section 232(g) of Pub. L. 88-272, set out
as a note under section 5 of this title.
EFFECTIVE DATE OF 1962 AMENDMENTS
Section 11(c)(2) of Pub. L. 87-834 provided that: "The amendment
made by subsection (b) [amending this section] shall apply to
taxable years ending after December 31, 1962."
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
Section 1951(b)(1)(B) of Pub. L. 94-455 provided that:
"Notwithstanding subparagraph (A) [repealing subsec. (i) of this
section], if the provisions of section 72(i) applied to amounts
received in taxable years beginning before January 1, 1977, under
an annuity contract, then amounts received under such contract on
or after such date shall be treated as if such provisions were not
repealed."
APPLICABILITY OF SUBSECTION (T)
Section 1011A(c)(13) of Pub. L. 100-647 provided that: "Section
72(t) of the 1986 Code shall apply to any distribution without
regard to whether such distribution is made without the consent of
the participant pursuant to section 411(a)(11) or section 417(e) of
the 1986 Code."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994
For provisions directing that if any amendments made by subtitle
B [Secs. 521-523] of title V of Pub. L. 102-318 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1994, see section 523 of Pub. L. 102-318, set out as a note under
section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 22, 25B, 26, 67, 79, 101,
122, 135, 138, 220, 221, 223, 264, 401, 402, 402A, 403, 406, 407,
408, 408A, 414, 457, 529, 530, 691, 805, 817, 817A, 953, 1014,
1275, 4973, 4978, 5891, 6050G, 7702, 7702A, 7702B of this title;
title 5 section 8433; title 12 sections 24a, 1813; title 15 section
6712; title 29 sections 1002, 1345; title 45 section 726.
-FOOTNOTE-
(!1) So in original. Probably should be paragraph "(2)(B)".
(!2) So in original. The period probably should be preceded by a
closing parenthesis.
(!3) So in original. The word "or" probably should not appear.
(!4) See References in Text note below.
-End-
-CITE-
26 USC Sec. 73 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 73. Services of child
-STATUTE-
(a) Treatment of amounts received
Amounts received in respect of the services of a child shall be
included in his gross income and not in the gross income of the
parent, even though such amounts are not received by the child.
(b) Treatment of expenditures
All expenditures by the parent or the child attributable to
amounts which are includible in the gross income of the child (and
not of the parent) solely by reason of subsection (a) shall be
treated as paid or incurred by the child.
(c) Parent defined
For purposes of this section, the term "parent" includes an
individual who is entitled to the services of a child by reason of
having parental rights and duties in respect of the child.
(d) Cross reference
For assessment of tax against parent in certain cases, see
section 6201(c).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 24.)
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 6201 of this title.
-End-
-CITE-
26 USC Sec. 74 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 74. Prizes and awards
-STATUTE-
(a) General rule
Except as otherwise provided in this section or in section 117
(relating to qualified scholarships), gross income includes amounts
received as prizes and awards.
(b) Exception for certain prizes and awards transferred to
charities
Gross income does not include amounts received as prizes and
awards made primarily in recognition of religious, charitable,
scientific, educational, artistic, literary, or civic achievement,
but only if -
(1) the recipient was selected without any action on his part
to enter the contest or proceeding;
(2) the recipient is not required to render substantial future
services as a condition to receiving the prize or award; and
(3) the prize or award is transferred by the payor to a
governmental unit or organization described in paragraph (1) or
(2) of section 170(c) pursuant to a designation made by the
recipient.
(c) Exception for certain employee achievement awards
(1) In general
Gross income shall not include the value of an employee
achievement award (as defined in section 274(j)) received by the
taxpayer if the cost to the employer of the employee achievement
award does not exceed the amount allowable as a deduction to the
employer for the cost of the employee achievement award.
(2) Excess deduction award
If the cost to the employer of the employee achievement award
received by the taxpayer exceeds the amount allowable as a
deduction to the employer, then gross income includes the greater
of -
(A) an amount equal to the portion of the cost to the
employer of the award that is not allowable as a deduction to
the employer (but not in excess of the value of the award), or
(B) the amount by which the value of the award exceeds the
amount allowable as a deduction to the employer.
The remaining portion of the value of such award shall not be
included in the gross income of the recipient.
(3) Treatment of tax-exempt employers
In the case of an employer exempt from taxation under this
subtitle, any reference in this subsection to the amount
allowable as a deduction to the employer shall be treated as a
reference to the amount which would be allowable as a deduction
to the employer if the employer were not exempt from taxation
under this subtitle.
(4) Cross reference
For provisions excluding certain de minimis fringes from
gross income, see section 132(e).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 24; Pub. L. 99-514, title I,
Secs. 122(a)(1), 123(b)(1), Oct. 22, 1986, 100 Stat. 2109, 2113.)
-MISC1-
AMENDMENTS
1986 - Subsec. (a). Pub. L. 99-514, Sec. 123(b)(1), which
directed that subsec. (a) be amended by substituting "(relating to
qualified scholarships)" for "(relating to scholarship and
fellowship grants)", was executed by making the substitution for
"(relating to scholarships and fellowship grants)" to reflect the
probable intent of Congress.
Pub. L. 99-514, Sec. 122(a)(1)(A), substituted "Except as
otherwise provided in this section or" for "Except as provided in
subsection (b) and".
Subsec. (b). Pub. L. 99-514, Sec. 122(a)(1)(B), (C), inserted
"for certain prizes and awards transferred to charities" in heading
and added par. (3).
Subsec. (c). Pub. L. 99-514, Sec. 122(a)(1)(D), added subsec.
(c).
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 122(a)(1) of Pub. L. 99-514 applicable to
prizes and awards granted after Dec. 31, 1986, see section 151(c)
of Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 123(b)(1) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, but only in the case
of scholarships and fellowships granted after Aug. 16, 1986, see
section 151(d) of Pub. L. 99-514, set out as a note under section 1
of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN
RELATION TO TREATY OBLIGATIONS OF UNITED STATES
For nonapplication of amendment by section 123(b)(1) of Pub. L.
99-514 to the extent application of such amendment would be
contrary to any treaty obligation of the United States in effect on
Oct. 22, 1986, see section 1012(aa)(3) of Pub. L. 100-647, set out
as a note under section 861 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 102, 274, 3121, 3231,
3306, 3401, 4941, 4945 of this title; title 42 section 409.
-End-
-CITE-
26 USC Sec. 75 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 75. Dealers in tax-exempt securities
-STATUTE-
(a) Adjustment for bond premium
In computing the gross income of a taxpayer who holds during the
taxable year a short-term municipal bond (as defined in subsection
(b)(1) primarily for sale to customers in the ordinary course of
his trade or business -
(1) if the gross income of the taxpayer from such trade or
business is computed by the use of inventories and his
inventories are valued on any basis other than cost, the cost of
securities sold (as defined in subsection (b)(2) during such year
shall be reduced by an amount equal to the amortizable bond
premium which would be disallowed as a deduction for such year by
section 171(a)(2) (relating to deduction for amortizable bond
premium) if the definition in section 171(d) of the term "bond"
did not exclude such municipal bond; or
(2) if the gross income of the taxpayer from such trade or
business is computed without the use of inventories, or by use of
inventories valued at cost, and the municipal bond is sold or
otherwise disposed of during such year, the adjusted basis
(computed without regard to this paragraph) of the municipal bond
shall be reduced by the amount of the adjustment which would be
required under section 1016(a)(5) (relating to adjustment to
basis for amortizable bond premium) if the definition in section
171(d) of the term "bond" did not exclude such municipal bond.
Notwithstanding the provisions of paragraph (1), no reduction to
the cost of securities sold during the taxable year shall be made
in respect of any obligation described in subsection (b)(1)(A)(ii)
which is held by the taxpayer at the close of the taxable year; but
in the taxable year in which any such obligation is sold or
otherwise disposed of, if such obligation is a municipal bond (as
defined in subsection (b)(1)), the cost of securities sold during
such year shall be reduced by an amount equal to the adjustment
described in paragraph (2), without regard to the fact that the
taxpayer values his inventories on any basis other than cost.
(b) Definitions
For purposes of subsection (a) -
(1) The term "municipal bond" means any obligation issued by a
government or political subdivision thereof if the interest on
such obligation is excludable from gross income; but such term
does not include such an obligation if -
(A)(i) it is sold or otherwise disposed of by the taxpayer
within 30 days after the date of its acquisition by him, or
(ii) its earliest maturity or call date is a date more than 5
years from the date on which it was acquired by the taxpayer;
and
(B) when it is sold or otherwise disposed of by the taxpayer
-
(i) in the case of a sale, the amount realized, or
(ii) in the case of any other disposition, its fair market
value at the time of such disposition,
is higher than its adjusted basis (computed without regard to
this section and section 1016(a)(6)).
Determinations under subparagraph (B) shall be exclusive of
interest.
(2) The term "cost of securities sold" means the amount
ascertained by subtracting the inventory value of the closing
inventory of a taxable year from the sum of -
(A) the inventory value of the opening inventory for such
year, and
(B) the cost of securities and other property purchased
during such year which would properly be included in the
inventory of the taxpayer if on hand at the close of the
taxable year.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 25; Pub. L. 85-866, title I,
Sec. 2(a), Sept. 2, 1958, 72 Stat. 1606.)
-MISC1-
AMENDMENTS
1958 - Subsec. (a). Pub. L. 85-866, Sec. 2(a)(2), (3), struck out
"short-term" each place it appeared, and inserted sentence to
provide that no reduction to cost of securities sold during taxable
year shall be made in respect of subsec. (b)(1)(A)(ii) obligations
held at close of year, and to permit reduction in cost of
securities sold in taxable year sold if obligation is municipal
bond.
Subsec. (b)(1). Pub. L. 85-866, Sec. 2(a)(1), substituted
"municipal bond" for "short-term municipal bond", designated former
subpars. (A) and (B) as (A)(i) and (ii), respectively, and added
subpar. (B).
EFFECTIVE DATE OF 1958 AMENDMENT
Section 2(c) of Pub. L. 85-866 provided that: "The amendments
made by subsections (a) and (b) [amending this section and section
1016 of this title] shall apply with respect to taxable years
ending after December 31, 1957, but only with respect to
obligations acquired after such date."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 1016 of this title.
-End-
-CITE-
26 USC Sec. 76 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
[Sec. 76. Repealed. Pub. L. 94-455, title XIX, Sec. 1901(a)(14),
Oct. 4, 1976, 90 Stat. 1765]
-MISC1-
Section, act Aug. 16, 1954, ch. 736, 68A Stat. 25, related to
inclusion in gross of all income derived from mortgages made, or
obligations issued, by a joint-stock land bank.
-End-
-CITE-
26 USC Sec. 77 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 77. Commodity credit loans
-STATUTE-
(a) Election to include loans in income
Amounts received as loans from the Commodity Credit Corporation
shall, at the election of the taxpayer, be considered as income and
shall be included in gross income for the taxable year in which
received.
(b) Effect of election on adjustments for subsequent years
If a taxpayer exercises the election provided for in subsection
(a) for any taxable year, then the method of computing income so
adopted shall be adhered to with respect to all subsequent taxable
years unless with the approval of the Secretary a change to a
different method is authorized.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 25; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
-MISC1-
AMENDMENTS
1976 - Subsec. (b). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1016, 3402 of this title.
-End-
-CITE-
26 USC Sec. 78 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 78. Dividends received from certain foreign corporations by
domestic corporations choosing foreign tax credit
-STATUTE-
If a domestic corporation chooses to have the benefits of subpart
A of part III of subchapter N (relating to foreign tax credit) for
any taxable year, an amount equal to the taxes deemed to be paid by
such corporation under section 902(a) (relating to credit for
corporate stockholder in foreign corporation) or under section
960(a)(1) (relating to taxes paid by foreign corporation) for such
taxable year shall be treated for purposes of this title (other
than section 245) as a dividend received by such domestic
corporation from the foreign corporation.
-SOURCE-
(Added Pub. L. 87-834, Sec. 9(b), Oct. 16, 1962, 76 Stat. 1001;
amended Pub. L. 94-455, title X, Sec. 1033(b)(1), Oct. 4, 1976, 90
Stat. 1628.)
-MISC1-
AMENDMENTS
1976 - Pub. L. 94-455 substituted "section 902(a)" for "section
902(a)(1)" and "section 960(a)(1)" for "section 960(a)(1)(C)".
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable on different dates
depending on the date the distributions were received, see section
1033(c) of Pub. L. 94-455, set out as a note under section 902 of
this title.
EFFECTIVE DATE
Section applicable in respect of any distribution received by a
domestic corporation after Dec. 31, 1964, and in respect of any
distribution received by a domestic corporation before Jan. 1,
1965, in a taxable year of such corporation beginning after Dec.
31, 1962, but only to the extent that such distribution is made out
of the accumulated profits of a foreign corporation for a taxable
year (of such foreign corporation) beginning after Dec. 31, 1962,
see section 9(e) of Pub. L. 87-834, set out as an Effective Date of
1962 Amendment note under section 902 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 814, 901, 902, 904, 906,
908, 1291 of this title.
-End-
-CITE-
26 USC Sec. 79 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 79. Group-term life insurance purchased for employees
-STATUTE-
(a) General rule
There shall be included in the gross income of an employee for
the taxable year an amount equal to the cost of group-term life
insurance on his life provided for part or all of such year under a
policy (or policies) carried directly or indirectly by his employer
(or employers); but only to the extent that such cost exceeds the
sum of -
(1) the cost of $50,000 of such insurance, and
(2) the amount (if any) paid by the employee toward the
purchase of such insurance.
(b) Exceptions
Subsection (a) shall not apply to -
(1) the cost of group-term life insurance on the life of an
individual which is provided under a policy carried directly or
indirectly by an employer after such individual has terminated
his employment with such employer and is disabled (within the
meaning of section 72(m)(7)),
(2) the cost of any portion of the group-term life insurance on
the life of an employee provided during part or all of the
taxable year of the employee under which -
(A) the employer is directly or indirectly the beneficiary,
or
(B) a person described in section 170(c) is the sole
beneficiary,
for the entire period during such taxable year for which the
employee receives such insurance, and
(3) the cost of any group-term life insurance which is provided
under a contract to which section 72(m)(3) applies.
(c) Determination of cost of insurance
For purposes of this section and section 6052, the cost of
group-term insurance on the life of an employee provided during any
period shall be determined on the basis of uniform premiums
(computed on the basis of 5-year age brackets) prescribed by
regulations by the Secretary.
(d) Nondiscrimination requirements
(1) In general
In the case of a discriminatory group-term life insurance plan
-
(A) subsection (a)(1) shall not apply with respect to any key
employee, and
(B) the cost of group-term life insurance on the life of any
key employee shall be the greater of -
(i) such cost determined without regard to subsection (c),
or
(ii) such cost determined with regard to subsection (c).
(2) Discriminatory group-term life insurance plan
For purposes of this subsection, the term "discriminatory
group-term life insurance plan" means any plan of an employer for
providing group-term life insurance unless -
(A) the plan does not discriminate in favor of key employees
as to eligibility to participate, and
(B) the type and amount of benefits available under the plan
do not discriminate in favor of participants who are key
employees.
(3) Nondiscriminatory eligibility classification
(A) In general
A plan does not meet requirements of subparagraph (A) of
paragraph (2) unless -
(i) such plan benefits 70 percent or more of all employees
of the employer,
(ii) at least 85 percent of all employees who are
participants under the plan are not key employees,
(iii) such plan benefits such employees as qualify under a
classification set up by the employer and found by the
Secretary not to be discriminatory in favor of key employees,
or
(iv) in the case of a plan which is part of a cafeteria
plan, the requirements of section 125 are met.
(B) Exclusion of certain employees
For purposes of subparagraph (A), there may be excluded from
consideration -
(i) employees who have not completed 3 years of service;
(ii) part-time or seasonal employees;
(iii) employees not included in the plan who are included
in a unit of employees covered by an agreement between
employee representatives and one or more employers which the
Secretary finds to be a collective bargaining agreement, if
the benefits provided under the plan were the subject of good
faith bargaining between such employee representatives and
such employer or employers; and
(iv) employees who are nonresident aliens and who receive
no earned income (within the meaning of section 911(d)(2))
from the employer which constitutes income from sources
within the United States (within the meaning of section
861(a)(3)).
(4) Nondiscriminatory benefits
A plan does not meet the requirements of paragraph (2)(B)
unless all benefits available to participants who are key
employees are available to all other participants.
(5) Special rule
A plan shall not fail to meet the requirements of paragraph
(2)(B) merely because the amount of life insurance on behalf of
the employees under the plan bears a uniform relationship to the
total compensation or the basic or regular rate of compensation
of such employees.
(6) Key employee defined
For purposes of this subsection, the term "key employee" has
the meaning given to such term by paragraph (1) of section
416(i). Such term also includes any former employee if such
employee when he retired or separated from service was a key
employee.
(7) Exemption for church plans
(A) In general
This subsection shall not apply to a church plan maintained
for church employees.
(B) Definitions
For purposes of subparagraph (A), the terms "church plan" and
"church employee" have the meaning given such terms by
paragraphs (1) and (3)(B) of section 414(e), respectively,
except that -
(i) section 414(e) shall be applied by substituting
"section 501(c)(3)" for "section 501" each place it appears,
and
(ii) the term "church employee" shall not include an
employee of -
(I) an organization described in section 170(b)(1)(A)(ii)
above the secondary school level (other than a school for
religious training),
(II) an organization described in section
170(b)(1)(A)(iii), and
(III) an organization described in section 501(c)(3), the
basis of the exemption for which is substantially similar
to the basis for exemption of an organization described in
subclause (II).
(8) Treatment of former employees
To the extent provided in regulations, this subsection shall be
applied separately with respect to former employees.
(e) Employee includes former employee
For purposes of this section, the term "employee" includes a
former employee.
-SOURCE-
(Added Pub. L. 88-272, title II, Sec. 204(a)(1), Feb. 26, 1964, 78
Stat. 36; amended Pub. L. 89-97, title I, Sec. 106(d)(3), July 30,
1965, 79 Stat. 337; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-248, title II, Sec. 244(a),
Sept. 3, 1982, 96 Stat. 523; Pub. L. 98-369, div. A, title II, Sec.
223(a), (b), July 18, 1984, 98 Stat. 775; Pub. L. 99-514, title XI,
Sec. 1151(c)(1), title XVIII, Sec. 1827(a)(1), (c), (d), Oct. 22,
1986, 100 Stat. 2503, 2850, 2851; Pub. L. 100-647, title V, Sec.
5013(a), Nov. 10, 1988, 102 Stat. 3666; Pub. L. 101-140, title II,
Sec. 203(a)(1), (b)(1)(A), Nov. 8, 1989, 103 Stat. 830, 831; Pub.
L. 101-508, title XI, Sec. 11703(e)(1), Nov. 5, 1990, 104 Stat.
1388-517.)
-MISC1-
AMENDMENTS
1990 - Subsec. (d)(6). Pub. L. 101-508 substituted "any former
employee" for "any retired employee".
1989 - Subsec. (d). Pub. L. 101-140, Sec. 203(a)(1), amended
subsec. (d) to read as if amendments by Pub. L. 99-514, Sec.
1151(c)(1), had not been enacted, see 1986 Amendment note below.
Subsec. (d)(7). Pub. L. 101-140, Sec. 203(b)(1)(A), amended par.
(7) generally. Prior to amendment, par. (7) read as follows: "All
employees who are treated as employed by a single employer under
subsection (b), (c), or (m) of section 414 shall be treated as
employed by a single employer for purposes of this section."
1988 - Subsec. (c). Pub. L. 100-647 struck out at end "In the
case of an employee who has attained age 64, the cost prescribed
shall not exceed the cost with respect to such individual if he
were age 63."
1986 - Subsec. (d). Pub. L. 99-514, Sec. 1151(c)(1), amended
subsec. (d) generally, substituting "In the case of a group-term
life insurance plan which is a discriminatory employee benefit
plan, subsection (a)(1) shall apply only to the extent provided in
section 89." for provisions formerly designated as pars. (1)(A) and
(B) that in the case of a discriminatory group-term life insurance
plan subsec. (a)(1) shall not apply with respect to any key
employee and the cost of group-term life insurance on the life of
any key employee shall be determined without regard to subsec. (c),
and striking out pars. (2) to (7) relating to classifications and
eligibility classifications of nondiscriminatory plans.
Subsec. (d)(1)(B). Pub. L. 99-514, Sec. 1827(a)(1), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: "the cost of group-term life insurance on the life of any
key employee shall be determined without regard to subsection (c)."
Subsec. (d)(6). Pub. L. 99-514, Sec. 1827(c), struck out ",
except that subparagraph (A)(iv) of such paragraph shall be applied
by not taking into account employees described in paragraph (3)(B)
who are not participants in the plan" from first sentence and
inserted provision that such term also includes any retired
employee if such employee when he retired or separated from service
was a key employee.
Subsec. (d)(8). Pub. L. 99-514, Sec. 1827(d), added par. (8).
1984 - Subsec. (b)(1). Pub. L. 98-369, Sec. 223(a)(2), struck out
"either has reached the retirement age with respect to such
employer or" before "is disabled".
Subsec. (d)(1). Pub. L. 98-369, Sec. 223(b), designated existing
provisions as subpar. (A) and added subpar. (B).
Subsec. (e). Pub. L. 98-369, Sec. 223(a)(1), added subsec. (e).
1982 - Subsec. (d). Pub. L. 97-248 added subsec. (d).
1976 - Subsec. (c). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
1965 - Subsec. (b)(1). Pub. L. 89-97 substituted "section
72(m)(7)" for "paragraph (3) of section 213(g), determined without
regard to paragraph (4) thereof".
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11703(e)(2) of Pub. L. 101-508 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to employees separating from service after the date of the
enactment of this Act [Nov. 5, 1990]."
EFFECTIVE DATE OF 1989 AMENDMENT
Section 203(c) of Pub. L. 101-140 provided that: "The amendments
made by this section [amending this section and sections 105, 117,
120, 125, 127, 129, 132, 162, 401, 414, 505, 3121, 3231, 3306,
3401, 4976, and 6652 of this title, section 409 of title 42, The
Public Health and Welfare, and provisions set out as notes under
sections 89 and 3121 of this title] shall take effect as if
included in section 1151 of the Tax Reform Act of 1986 [Pub. L.
99-514, see section 1151(k) set out below]."
EFFECTIVE DATE OF 1988 AMENDMENT
Section 5013(b) of Pub. L. 100-647 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1988."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1151(k) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1011B(a)(25), (26), Nov. 10, 1988, 102 Stat. 3486,
provided that:
"(1) In general. - The amendments made by this section [enacting
section 89 of this title and amending this section and sections
105, 106, 117, 120, 125, 127, 129, 132, 414, 505, 6039D, and 6652
of this title] shall apply to years beginning after the later of -
"(A) December 31, 1987, or
"(B) the earlier of -
"(i) the date which is 3 months after the date on which the
Secretary of the Treasury or his delegate issues such
regulations as are necessary to carry out the provisions of
section 89 of the Internal Revenue Code of 1986 (as added by
this section), or
"(ii) December 31, 1988.
Notwithstanding the preceding sentence, the amendments made by
subsections (e)(1) and (i)(3)(C) [amending section 414 of this
title] shall, to the extent they relate to sections 106, 162(i)(2),
and 162(k) of the Internal Revenue Code of 1986, apply to years
beginning after 1986.
"(2) Special rule for collective bargaining plan. - In the case
of a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified before March 1, 1986, the amendments made by this section
[enacting section 89 of this title and amending this section and
sections 105, 106, 117, 120, 125, 127, 129, 132, 414, 505, 6039D,
and 6652 of this title] shall not apply to employees covered by
such an agreement in years beginning before the earlier of -
"(A) the date on which the last of such collective bargaining
agreements terminates (determined without regard to any extension
thereof after February 28, 1986), or
"(B) January 1, 1991.
A plan shall not be required to take into account employees to
which the preceding sentence applies for purposes of applying
section 89 of the Internal Revenue Code of 1986 (as added by this
section) to employees to which the preceding sentence does not
apply for any year preceding the year described in the preceding
sentence.
"(3) Exception for certain group-term insurance plans. - In the
case of a plan described in section 223(d)(2) of the Tax Reform Act
of 1984 [section 232(d)(2) of Pub. L. 98-369, set out as an
Effective Date of 1984 Amendment note below], such plan shall be
treated as meeting the requirements of section 89 of the Internal
Revenue Code of 1986 (as added by this section) with respect to
individuals described in section 223(d)(2) of such Act. An employer
may elect to disregard such individuals in applying section 89 of
such Code (as so added) to other employees of the employer.
"(4) Special rule for church plans. - In the case of a church
plan (within the meaning of section 414(e)(3) of the Internal
Revenue Code of 1986) maintaining an insured accident and health
plan, the amendments made by this section [enacting section 89 of
this title and amending this section and sections 105, 106, 117,
120, 125, 127, 129, 132, 414, 505, 6039D, and 6652 of this title]
shall apply to years beginning after December 31, 1988.
"(5) Cafeteria plans. - The amendments made by subsection (d)(2)
[amending sections 3121 and 3306 of this title and section 409 of
Title 42, The Public Health and Welfare] shall apply to taxable
years beginning after December 31, 1983.
"(6) Certain plans maintained by educational institutions. - If
an educational organization described in section 170(b)(1)(A)(ii)
of the Internal Revenue Code of 1986 makes an election under this
paragraph with respect to a plan described in section 125(c)(2)(C)
of such Code, the amendments made by this section shall apply with
respect to such plan for plan years beginning after the date of the
enactment of this Act [Oct. 22, 1986]."
Section 1827(a)(2) of Pub. L. 99-514 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to taxable years ending after the date of the enactment of this Act
[Oct. 22, 1986]."
Amendment by section 1827(c), (d) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Section 223(d) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, title XVIII, Sec. 1827(b), Oct. 22, 1986, 100 Stat. 2095,
2850, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
83 of this title] shall apply to taxable years beginning after
December 31, 1983.
"(2) Inclusion of former employees in the case of existing
group-term insurance plans. -
"(A) In general. - The amendments made by subsection (a)
[amending this section] shall not apply -
"(i) to any group-term life insurance plan of the employer in
existence on January 1, 1984, or
"(ii) to any group-term life insurance plan of the employer
(or a successor employer) which is a comparable successor to a
plan described in clause (i),
but only with respect to an individual who attained age 55 on or
before January 1, 1984, and was employed by such employer (or a
predecessor employer) at any time during 1983. Such amendments
also shall not apply to any employee who retired from employment
on or before January 1, 1984, and who, when he retired, was
covered by the plan (or a predecessor plan).
"(B) Special rule in the case of discriminatory group-term life
insurance plan. - In the case of any plan which, after December
31, 1986, is a discriminatory group-term life insurance plan (as
defined in section 79(d) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954]), subparagraph (A) shall not apply in the
case of any individual retiring under such plan after December
31, 1986.
"(C) Benefits to certain retired individuals not taken into
account for purposes of determining whether plan is
discriminatory. - For purposes of determining whether a plan
described in subparagraph (A) meets the requirements of section
79(d) of the Internal Revenue Code of 1986 with respect to
group-term life insurance for former employees, coverage provided
to employees who retired on or before December 31, 1986, may, at
the employer's election, be disregarded.
"(D) Comparable successor plans. - For purposes of subparagraph
(A), a plan shall not fail to be treated as a comparable
successor to a plan described in subparagraph (A)(i) with respect
to any employee whose benefits do not increase under the
successor plan."
EFFECTIVE DATE OF 1982 AMENDMENT
Section 244(b) of Pub. L. 97-248 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years beginning after December 31, 1983."
EFFECTIVE DATE OF 1965 AMENDMENT
Amendment by Pub. L. 89-97 applicable to taxable years beginning
after Dec. 31, 1966, see section 106(e) of Pub. L. 89-97, set out
as a note under section 213 of this title.
EFFECTIVE DATE
Section 204(d) of Pub. L. 88-272, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by subsections (a) [amending this section and
section 7701 of this title] and (c) [amending sections 6052 and
6678 of this title] and paragraph (3) of section 6652(a) of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by
section 221(b)(2) of this Act), shall apply with respect to
group-term life insurance provided after December 31, 1963, in
taxable years ending after such date. The amendments made by
subsection (b) [amending section 3401 of this title] shall apply
with respect to remuneration paid after December 31, 1963, in the
form of group-term life insurance provided after such date. In
applying section 79(b) of the Internal Revenue Code of 1986 (as
added by subsection (a)(1) of this section) to a taxable year
beginning before May 1, 1964, if paragraph (2)(B) of such section
applies with respect to an employee for the period beginning May 1,
1964, and ending with the close of his first taxable year ending
after April 30, 1964, such paragraph (2)(B) shall be treated as
applying with respect to such employee for the period beginning
January 1, 1964, and ending April 30, 1964."
NONENFORCEMENT OF AMENDMENT MADE BY SECTION 1151 OF PUB. L. 99-514
FOR FISCAL YEAR 1990
No monies appropriated by Pub. L. 101-136 to be used to implement
or enforce section 1151 of Pub. L. 99-514 or the amendments made by
such section, see section 528 of Pub. L. 101-136, set out as a note
under section 89 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 83, 125, 414, 505, 6039D,
6052, 7701 of this title.
-End-
-CITE-
26 USC Sec. 80 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 80. Restoration of value of certain securities
-STATUTE-
(a) General rule
In the case of a domestic corporation subject to the tax imposed
by section 11 or 801, if the value of any security (as defined in
section 165(g)(2)) -
(1) which became worthless by reason of the expropriation,
intervention, seizure, or similar taking by the government of any
foreign country, any political subdivision thereof, or any agency
or instrumentality of the foregoing of property to which such
security was related, and
(2) which was taken into account as a loss from the sale or
exchange of a capital asset or with respect to which a deduction
for a loss was allowed under section 165,
is restored in whole or in part during any taxable year by reason
of any recovery of money or other property in respect of the
property to which such security was related, the value so restored
(to the extent that, when added to the value so restored during
prior taxable years, it does not exceed the amount of the loss
described in paragraph (2)) shall, except as provided in subsection
(b), be included in gross income for the taxable year in which such
restoration occurs.
(b) Reduction for failure to receive tax benefit
The amount otherwise includible in gross income under subsection
(a) in respect of any security shall be reduced by an amount equal
to the amount (if any) of the loss described in subsection (a)(2)
which did not result in a reduction of the taxpayer's tax under
this subtitle for any taxable year, determined under regulations
prescribed by the Secretary.
(c) Character of income
For purposes of this subtitle -
(1) Except as provided in paragraph (2), the amount included in
gross income under this section shall be treated as ordinary
income.
(2) If the loss described in subsection (a)(2) was taken into
account as a loss from the sale or exchange of a capital asset,
the amount included in gross income under this section shall be
treated as long-term capital gain.
(d) Treatment under foreign expropriation loss recovery provisions
This section shall not apply to any recovery of a foreign
expropriation loss to which section 1351 applies.
-SOURCE-
(Added Pub. L. 89-384, Sec. 1(b)(1), Apr. 8, 1966, 80 Stat. 101;
amended Pub. L. 94-455, title XIX, Secs. 1901(b)(3)(K),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1793, 1834; Pub. L. 98-369,
div. A, title II, Sec. 211(b)(2), July 18, 1984, 98 Stat. 754.)
-MISC1-
AMENDMENTS
1984 - Subsec. (a). Pub. L. 98-369 substituted "801" for "802".
1976 - Subsec. (b). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out "or his delegate" after "Secretary".
Subsec. (c)(1). Pub. L. 94-455, Sec. 1901(b)(3)(K), substituted
"ordinary income" for "gain from the sale or exchange of property
which is neither a capital asset nor property described in section
1231".
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, see section 215 of Pub. L. 98-369, set out as
an Effective Date note under section 801 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(b)(3)(K) of Pub. L. 94-455 applicable
with respect to taxable years beginning after Dec. 31, 1976, see
section 1901(d) of Pub. L. 94-455, set out as a note under section
2 of this title.
EFFECTIVE DATE
Section 1(b)(3) of Pub. L. 89-384, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendments made by this subsection [enacting this section] shall
apply to taxable years beginning after December 31, 1965, but only
with respect to losses described in section 80(a)(2) of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by
paragraph (1) of this subsection) which were sustained after
December 31, 1958."
-End-
-CITE-
26 USC Sec. 81 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
[Sec. 81. Repealed. Pub. L. 100-203, title X, Sec. 10201(b)(1),
Dec. 22, 1987, 101 Stat. 1330-387]
-MISC1-
Section, added Pub. L. 89-722, Sec. 1(b)(1), Nov. 2, 1966, 80
Stat. 1152; amended Pub. L. 93-625, Sec. 4(c)(1), Jan. 3, 1975, 88
Stat. 2111; Pub. L. 94-455, title VI, Sec. 605(b), Oct. 4, 1976, 90
Stat. 1575; Pub. L. 99-514, title VIII, Sec. 805(c)(1)(A), Oct. 22,
1986, 100 Stat. 2362, included increase in vacation pay suspense
account in gross income.
EFFECTIVE DATE OF REPEAL
Repeal applicable to taxable years beginning after Dec. 31, 1987,
see section 10201(c)(1) of Pub. L. 100-203, set out as an Effective
Date of 1987 Amendment note under section 404 of this title.
-End-
-CITE-
26 USC Sec. 82 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 82. Reimbursement for expenses of moving
-STATUTE-
Except as provided in section 132(a)(6), there shall be included
in gross income (as compensation for services) any amount received
or accrued, directly or indirectly, by an individual as a payment
for or reimbursement of expenses of moving from one residence to
another residence which is attributable to employment or
self-employment.
-SOURCE-
(Added Pub. L. 91-172, title II, Sec. 231(b), Dec. 30, 1969, 83
Stat. 579; amended Pub. L. 103-66, title XIII, Sec. 13213(d)(3)(A),
Aug. 10, 1993, 107 Stat. 474.)
-MISC1-
AMENDMENTS
1993 - Pub. L. 103-66 substituted "Except as provided in section
132(a)(6), there shall" for "There shall".
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to reimbursements or other
payments in respect of expenses incurred after Dec. 31, 1993, see
section 13213(e) of Pub. L. 103-66, set out as a note under section
62 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after December 31,
1969, except that it does not apply to moving expenses paid or
incurred before July 1, 1970, in connection with the commencement
of work by the taxpayer as an employee at a new principal place of
work of which the taxpayer had been notified by his employer on or
before December 19, 1969, see section 231(d) of Pub. L. 91-172, set
out as an Effective Date of 1969 Amendment note under section 217
of this title.
MOVING EXPENSES OF MEMBERS OF THE UNIFORMED SERVICES
Withholding, reporting, inclusion within adjusted gross income,
and deduction for reimbursement for moving expenses of members of
the uniformed services, see section 2 of Pub. L. 93-490, Oct. 26,
1974, 88 Stat. 1466, set out as a note under section 217 of this
title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 274 of this title.
-End-
-CITE-
26 USC Sec. 83 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 83. Property transferred in connection with performance of
services
-STATUTE-
(a) General rule
If, in connection with the performance of services, property is
transferred to any person other than the person for whom such
services are performed, the excess of -
(1) the fair market value of such property (determined without
regard to any restriction other than a restriction which by its
terms will never lapse) at the first time the rights of the
person having the beneficial interest in such property are
transferable or are not subject to a substantial risk of
forfeiture, whichever occurs earlier, over
(2) the amount (if any) paid for such property, shall be
included in the gross income of the person who performed such
services in the first taxable year in which the rights of the
person having the beneficial interest in such property are
transferable or are not subject to a substantial risk of
forfeiture, whichever is applicable. The preceding sentence shall
not apply if such person sells or otherwise disposes of such
property in an arm's length transaction before his rights in such
property become transferable or not subject to a substantial risk
of forfeiture.
(b) Election to include in gross income in year of transfer
(1) In general
Any person who performs services in connection with which
property is transferred to any person may elect to include in his
gross income for the taxable year in which such property is
transferred, the excess of -
(A) the fair market value of such property at the time of
transfer (determined without regard to any restriction other
than a restriction which by its terms will never lapse), over
(B) the amount (if any) paid for such property.
If such election is made, subsection (a) shall not apply with
respect to the transfer of such property, and if such property is
subsequently forfeited, no deduction shall be allowed in respect
of such forfeiture.
(2) Election
An election under paragraph (1) with respect to any transfer of
property shall be made in such manner as the Secretary prescribes
and shall be made not later than 30 days after the date of such
transfer. Such election may not be revoked except with the
consent of the Secretary.
(c) Special rules
For purposes of this section -
(1) Substantial risk of forfeiture
The rights of a person in property are subject to a substantial
risk of forfeiture if such person's rights to full enjoyment of
such property are conditioned upon the future performance of
substantial services by any individual.
(2) Transferability of property
The rights of a person in property are transferable only if the
rights in such property of any transferee are not subject to a
substantial risk of forfeiture.
(3) Sales which may give rise to suit under section 16(b) of the
Securities Exchange Act of 1934
So long as the sale of property at a profit could subject a
person to suit under section 16(b) of the Securities Exchange Act
of 1934, such person's rights in such property are -
(A) subject to a substantial risk of forfeiture, and
(B) not transferable.
(d) Certain restrictions which will never lapse
(1) Valuation
In the case of property subject to a restriction which by its
terms will never lapse, and which allows the transferee to sell
such property only at a price determined under a formula, the
price so determined shall be deemed to be the fair market value
of the property unless established to the contrary by the
Secretary, and the burden of proof shall be on the Secretary with
respect to such value.
(2) Cancellation
If, in the case of property subject to a restriction which by
its terms will never lapse, the restriction is canceled, then,
unless the taxpayer establishes -
(A) that such cancellation was not compensatory, and
(B) that the person, if any, who would be allowed a deduction
if the cancellation were treated as compensatory, will treat
the transaction as not compensatory, as evidenced in such
manner as the Secretary shall prescribe by regulations,
the excess of the fair market value of the property (computed
without regard to the restrictions) at the time of cancellation
over the sum of -
(C) the fair market value of such property (computed by
taking the restriction into account) immediately before the
cancellation, and
(D) the amount, if any, paid for the cancellation,
shall be treated as compensation for the taxable year in which
such cancellation occurs.
(e) Applicability of section
This section shall not apply to -
(1) a transaction to which section 421 applies,
(2) a transfer to or from a trust described in section 401(a)
or a transfer under an annuity plan which meets the requirements
of section 404(a)(2),
(3) the transfer of an option without a readily ascertainable
fair market value,
(4) the transfer of property pursuant to the exercise of an
option with a readily ascertainable fair market value at the date
of grant, or
(5) group-term life insurance to which section 79 applies.
(f) Holding period
In determining the period for which the taxpayer has held
property to which subsection (a) applies, there shall be included
only the period beginning at the first time his rights in such
property are transferable or are not subject to a substantial risk
of forfeiture, whichever occurs earlier.
(g) Certain exchanges
If property to which subsection (a) applies is exchanged for
property subject to restrictions and conditions substantially
similar to those to which the property given in such exchange was
subject, and if section 354, 355, 356, or 1036 (or so much of
section 1031 as relates to section 1036) applied to such exchange,
or if such exchange was pursuant to the exercise of a conversion
privilege -
(1) such exchange shall be disregarded for purposes of
subsection (a), and
(2) the property received shall be treated as property to which
subsection (a) applies.
(h) Deduction by employer
In the case of a transfer of property to which this section
applies or a cancellation of a restriction described in subsection
(d), there shall be allowed as a deduction under section 162, to
the person for whom were performed the services in connection with
which such property was transferred, an amount equal to the amount
included under subsection (a), (b), or (d)(2) in the gross income
of the person who performed such services. Such deduction shall be
allowed for the taxable year of such person in which or with which
ends the taxable year in which such amount is included in the gross
income of the person who performed such services.
-SOURCE-
(Added Pub. L. 91-172, title III, Sec. 321(a), Dec. 30, 1969, 83
Stat. 588; amended Pub. L. 94-455, title XIX, Secs. 1901(a)(15),
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1765, 1834; Pub. L. 97-34,
title II, Sec. 252(a), Aug. 13, 1981, 95 Stat. 260; Pub. L. 97-448,
title I, Sec. 102(k)(1), Jan. 12, 1983, 96 Stat. 2374; Pub. L.
98-369, div. A, title II, Sec. 223(c), July 18, 1984, 98 Stat. 775;
Pub. L. 99-514, title XVIII, Sec. 1827(e), Oct. 22, 1986, 100 Stat.
2851; Pub. L. 101-508, title XI, Sec. 11801(a)(5), Nov. 5, 1990,
104 Stat. 1388-520.)
-REFTEXT-
REFERENCES IN TEXT
Section 16(b) of the Securities Exchange Act of 1934, referred to
in subsec. (c)(3), is classified to section 78p(b) of Title 15,
Commerce and Trade.
-MISC1-
AMENDMENTS
1990 - Subsec. (i). Pub. L. 101-508 struck out subsec. (i)
"Transition rules" which read as follows: "This section shall apply
to property transferred after June 30, 1969, except that this
section shall not apply to property transferred -
"(1) pursuant to a binding written contract entered into before
April 22, 1969,
"(2) upon the exercise of an option granted before April 22,
1969,
"(3) before May 1, 1970, pursuant to a written plan adopted and
approved before July 1, 1969,
"(4) before January 1, 1973, upon the exercise of an option
granted pursuant to a binding written contract entered into
before April 22, 1969, between a corporation and the transferor
requiring the transferor to grant options to employees of such
corporation (or a subsidiary of such corporation) to purchase a
determinable number of shares of stock of such corporation, but
only if the transferee was an employee of such corporation (or a
subsidiary of such corporation) on or before April 22, 1969, or
"(5) in exchange for (or pursuant to the exercise of a
conversion privilege contained in) property transferred before
July 1, 1969, or for property to which this section does not
apply (by reason of paragraphs (1), (2), (3), or (4)), if section
354, 355, 356, or 1036 (or so much of section 1031 as relates to
section 1036) applies, or if gain or loss is not otherwise
required to be recognized upon the exercise of such conversion
privilege, and if the property received in such exchange is
subject to restrictions and conditions substantially similar to
those to which the property given in such exchange was subject."
1986 - Subsec. (e)(5). Pub. L. 99-514 struck out "the cost of"
before "group-life insurance".
1984 - Subsec. (e)(5). Pub. L. 98-369 added par. (5).
1983 - Subsec. (c)(3). Pub. L. 97-448 substituted "Securities
Exchange Act of 1934" for "Securities and Exchange Act of 1934" in
heading and text.
1981 - Subsec. (c)(3). Pub. L. 97-34 added par. (3).
1976 - Subsec. (b)(2). Pub. L. 94-455, Sec. 1901(a)(15), struck
out "(or, if later, 30 days after the date of the enactment of the
Tax Reform Act of 1969)" after "after the date of such transfer",
and Sec. 1906(b)(13)(A), "or his delegate" after "Secretary"
wherever appearing.
Subsec. (d)(1), (2)(B). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 effective, except as otherwise
provided, as if included in the provisions of the Tax Reform Act of
1984, Pub. L. 98-369, div. A, to which such amendment relates, see
section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, see section 223(d)(1) of Pub. L. 98-369, set
out as a note under section 79 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 252(c) of Pub. L. 97-34, as amended by Pub. L. 97-448,
title I, Sec. 102(k)(2), 96 Stat. 2374, provided that: "The
amendment made by subsection (a) [amending this section] and the
provisions of subsection (b) [set out below] shall apply to
transfers after December 31, 1981."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(15) of Pub. L. 94-455 applicable
with respect to taxable years beginning after Dec. 31, 1976, see
section 1901(d) of Pub. L. 94-455, set out as a note under section
2 of this title.
EFFECTIVE DATE
Section 321(d) of Pub. L. 91-172 provided that: "The amendments
made by subsections (a) and (c) [amending sections 402, 403, and
404 of this title] shall apply to taxable years ending after June
30, 1969. The amendments made by subsection (b) [enacting this
section] shall apply with respect to contributions made and
premiums paid after August 1, 1969."
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
APPLICATION OF AMENDMENTS MADE BY SECTION 252 OF PUB. L. 97-34
Section 1879(p) of Pub. L. 99-514, as amended by Pub. L. 100-647,
title I, Sec. 1018(q)(3), Nov. 10, 1988, 102 Stat. 3585, provided
that:
"(1) Notwithstanding subsection (c) of section 252 of the
Economic Recovery Tax Act of 1981 [section 252(c) of Pub. L. 97-34,
set out above], the amendment made by subsection (a) of such
section 252 [amending this section] (and the provisions of
subsection (b) of such section 252 [set out below]) shall apply to
any transfer of stock to any person if -
"(A) such transfer occurred in November or December of 1973 and
was pursuant to the exercise of an option granted in November or
December of 1971,
"(B) in December 1973 the corporation granting the option was
acquired by another corporation in a transaction qualifying as a
reorganization under section 368 of the Internal Revenue Code of
1954 [now 1986],
"(C) the fair market value (as of July 1, 1974) of the stock
received by such person in the reorganization in exchange for the
stock transferred to him pursuant to the exercise of such option
was less than 50 percent of the fair market value of the stock so
received (as of December 4, 1973),
"(D) in 1975 or 1976 such person sold substantially all of the
stock received in such reorganization, and
"(E) such person makes an election under this section at such
time and in such manner as the Secretary of the Treasury or his
delegate shall prescribe.
"(2) Limitation on amount of benefit. - Paragraph (1) shall not
apply to transfers with respect to any employee to the extent that
the application of paragraph (1) with respect to such employee
would (but for this paragraph) result in a reduction in liability
for income tax with respect to such employee for all taxable years
in excess of $100,000 (determined without regard to any interest).
"(3) Statute of limitations. -
"(A) Overpayments. - If refund or credit of any overpayment of
tax resulting from the application of paragraph (1) is prevented
on the date of the enactment of this Act [Oct. 22, 1986] (or at
any time within 6 months after such date of enactment) by the
operation of any law or rule of law, refund or credit of such
overpayment (to the extent attributable to the application of
paragraph (1)) may, nevertheless, be made or allowed if claim
therefor is filed before the close of such 6-month period.
"(B) Deficiencies. - If the assessment of any deficiency of tax
resulting from the application of paragraph (1) is prevented on
the date of the enactment of this Act [Oct. 22, 1986] (or at any
time within 6 months after such date of enactment) by the
operation of any law or rule of law, assessment of such
deficiency (to the extent attributable to the application of
paragraph (1)) may, nevertheless, be made within such 6-month
period."
TIME FOR MAKING CERTAIN SECTION 83(B) ELECTIONS
Section 556 of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec.
2, title XVIII, Sec. 1855(b), Oct. 22, 1986, 100 Stat. 2095, 2882,
provided that: "In the case of any transfer of property in
connection with the performance of services on or before November
18, 1982, the election permitted by section 83(b) of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954] may be made,
notwithstanding paragraph (2) of such section 83(b), with the
income tax return for any taxable year ending after July 18, 1984,
and beginning before the date of the enactment of the Tax Reform
Act of 1986 [Oct. 22, 1986 if -
"(1) the amount paid for such property was not less than its
fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its
terms will never lapse), and
"(2) the election is consented to by the person transferring
such property.
The election shall contain that information required by the
Secretary of the Treasury or his delegate for elections permitted
by such section 83(b). The period for assessing any tax
attributable to a transfer of property which is the subject of an
election made pursuant to this section shall not expire before the
date which is 3 years after the date such election was made."
PROPERTY SUBJECT TO TRANSFER RESTRICTIONS TO COMPLY WITH
"POOLING-OF-INTERESTS ACCOUNTING" RULES
Section 252(b) of Pub. L. 97-34, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided, effective with
respect to taxable years ending after Dec. 31, 1981, that: "For
purposes of section 83 of the Internal Revenue Code of 1986
[formerly I.R.C. 1954], property is subject to substantial risk of
forfeiture and is not transferable so long as such property is
subject to a restriction on transfer to comply with the
"Pooling-of-Interests Accounting" rules set forth in Accounting
Series Release Numbered 130 ((10/5/72) 37 FR 20937; 17 CFR 211.130)
and Accounting Series Release Numbered 135 ((1/18/73) 38 FR 1734;
17 CFR 211.135)."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 402, 403, 419, 422A, 457,
1042, 3121 of this title.
-End-
-CITE-
26 USC Sec. 84 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 84. Transfer of appreciated property to political organization
-STATUTE-
(a) General rule
If -
(1) any person transfers property to a political organization,
and
(2) the fair market value of such property exceeds its adjusted
basis,
then for purposes of this chapter the transferor shall be treated
as having sold such property to the political organization on the
date of the transfer, and the transferor shall be treated as having
realized an amount equal to the fair market value of such property
on such date.
(b) Basis of property
In the case of a transfer of property to a political organization
to which subsection (a) applies, the basis of such property in the
hands of the political organization shall be the same as it would
be in the hands of the transferor, increased by the amount of gain
recognized to the transferor by reason of such transfer.
(c) Political organization defined
For purposes of this section, the term "political organization"
has the meaning given to such term by section 527(e)(1).
-SOURCE-
(Added Pub. L. 93-625, Sec. 13(a)(1), Jan. 3, 1975, 88 Stat. 2120.)
-MISC1-
EFFECTIVE DATE
Section 13(b) of Pub. L. 93-625 provided that: "The amendments
made by subsection (a) [enacting this section] shall apply to
transfers made after May 7, 1974, in taxable years ending after
such date."
NONRECOGNITION OF GAIN OR LOSS WHERE ORGANIZATION SOLD CONTRIBUTED
PROPERTY BEFORE AUGUST 2, 1973
Section 13(c) of Pub. L. 93-625 provided that in the case of the
sale or exchange of property before Aug. 2, 1973, which was
acquired by the exempt political organization by contribution, no
gain or loss shall be recognized by such organization.
-End-
-CITE-
26 USC Sec. 85 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 85. Unemployment compensation
-STATUTE-
(a) General rule
In the case of an individual, gross income includes unemployment
compensation.
(b) Unemployment compensation defined
For purposes of this section, the term "unemployment
compensation" means any amount received under a law of the United
States or of a State which is in the nature of unemployment
compensation.
-SOURCE-
(Added Pub. L. 95-600, title I, Sec. 112(a), Nov. 6, 1978, 92 Stat.
2777; amended Pub. L. 97-34, title I, Sec. 103(c)(1), Aug. 13,
1981, 95 Stat. 188; Pub. L. 97-248, title VI, Sec. 611(a), Sept. 3,
1982, 96 Stat. 706; Pub. L. 98-21, title I, Secs. 121(f)(1),
122(c)(2), Apr. 20, 1983, 97 Stat. 84, 87; Pub. L. 99-514, title I,
Sec. 121, Oct. 22, 1986, 100 Stat. 2109.)
-MISC1-
AMENDMENTS
1986 - Subsec. (a). Pub. L. 99-514 substituted "General rule" for
"In general" in heading and amended text generally. Prior to
amendment, text read as follows: "If the sum for the taxable year
of the adjusted gross income of the taxpayer (determined without
regard to this section, section 86 and section 221) and the
unemployment compensation exceeds the base amount, gross income for
the taxable year includes unemployment compensation in an amount
equal to the lesser of -
"(1) one-half of the amount of the excess of such sum over the
base amount, or
"(2) the amount of the unemployment compensation."
Subsecs. (b), (c). Pub. L. 99-514, in amending section generally,
redesignated former subsec. (c) as (b) and struck out former
subsec. (b), "Base amount defined", which read as follows: "For
purposes of this section, the term 'base amount' means -
"(1) except as provided in paragraphs (2) and (3), $12,000,
"(2) $18,000, in the case of a joint return under section 6013,
or
"(3) zero, in the case of a taxpayer who -
"(A) is married at the close of the taxable year (within the
meaning of section 143) but does not file a joint return for
such year, and
"(B) does not live apart from his spouse at all times during
the taxable year."
1983 - Subsec. (a). Pub. L. 98-21, Sec. 122(c)(2), struck out ",
section 105(d)," after "section 86".
Pub. L. 98-21, Sec. 121(f)(1), inserted "section 86," after "this
section,".
1982 - Subsec. (b)(1). Pub. L. 97-248, Sec. 611(a)(1),
substituted "$12,000" for "$20,000".
Subsec. (b)(2). Pub. L. 97-248, Sec. 611(a)(2), substituted
"$18,000" for "$25,000".
1981 - Subsec. (a). Pub. L. 97-34 substituted "this section,
section 105(d), and section 221" for "this section and without
regard to section 105(d)" in parenthetical provision preceding par.
(1).
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to amounts received after
Dec. 31, 1986, in taxable years ending after such date, see section
151(b) of Pub. L. 99-514, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by section 121(f)(1) of Pub. L. 98-21 applicable to
benefits received after Dec. 31, 1983, in taxable years ending
after such date, except for any portion of a lump-sum payment of
social security benefits received after Dec. 31, 1983, if the
generally applicable payment date for such portion was before Jan.
1, 1984, see section 121(g) of Pub. L. 98-21, set out as an
Effective Date note under section 86 of this title.
Amendment by section 122(c)(2) of Pub. L. 98-21 applicable to
taxable years beginning after Dec. 31, 1983, except that if an
individual's annuity starting date was deferred under section
105(d)(6) of this title as in effect on the day before Apr. 20,
1983, such deferral shall end on the first day of such individual's
first taxable year beginning after Dec. 31, 1983, see section
122(d) of Pub. L. 98-21, set out as a note under section 22 of this
title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 611(b) of Pub. L. 97-248, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) Compensation paid after 1981. - The amendments made by this
section [amending this section] shall apply to payments of
unemployment compensation made after December 31, 1981, in taxable
years ending after such date.
"(2) No addition to tax for underpayment of estimated tax
attributable to application of amendments to compensation paid in
1982. - No addition to tax shall be made under section 6654 of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect
to any underpayment to the extent such underpayment is attributable
to unemployment compensation which is received during 1982 and
which (but for the amendments made by subsection (a)) would not be
includable in gross income.
"(3) Special rule for fiscal year taxpayers. - In the case of a
taxable year (other than a calendar year) which includes January 1,
1982 -
"(A) the amendments made by this section shall be applied by
taking into account the entire amount of unemployment
compensation received during such taxable year, but
"(B) the increase in gross income for such taxable year as a
result of such amendments shall not exceed the amount of
unemployment compensation paid after December 31, 1981.
"(4) Unemployment compensation defined. - For purposes of this
subsection, the term 'unemployment compensation' has the meaning
given to such term by section 85(c) of the Internal Revenue Code of
1986."
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to taxable years beginning
after Dec. 31, 1981, see section 103(d) of Pub. L. 97-34, set out
as a note under section 62 of this title.
EFFECTIVE DATE
Section 112(d) of Pub. L. 95-600, as amended by Pub. L. 98-369,
div. A, title X, Sec. 1075(a), July 18, 1984, 98 Stat. 1053,
provided that: "The amendments made by this section [enacting this
section and section 6050B of this title] shall apply to payments of
unemployment compensation made after December 31, 1978, in taxable
years ending after such date, except that such amendments shall not
apply to payments made for weeks of unemployment ending before
December 1, 1978."
WAIVER OF STATUTE OF LIMITATIONS
Pub. L. 98-369, div. A, title X, Sec. 1075(b), July 18, 1984, 98
Stat. 1053, provided that: "If credit or refund of any overpayment
of tax resulting from the amendment made by subsection (a)
[amending section 112(d) of Pub. L. 95-600, set out as an Effective
Date note above] is barred on the date of the enactment of this Act
[July 18, 1984] or at any time during the 1-year period beginning
on the date of the enactment of this Act by the operation of any
law or rule of law (including res judicata), refund or credit of
such overpayment (to the extent attributable to the amendment made
by subsection (a)) may, nevertheless, be made or allowed if claim
therefor is filed before the close of such 1-year period."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 3402, 6050B of this
title; title 42 section 5177.
-End-
-CITE-
26 USC Sec. 86 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 86. Social security and tier 1 railroad retirement benefits
-STATUTE-
(a) In general
(1) In general
Except as provided in paragraph (2), gross income for the
taxable year of any taxpayer described in subsection (b)
(notwithstanding section 207 of the Social Security Act) includes
social security benefits in an amount equal to the lesser of -
(A) one-half of the social security benefits received during
the taxable year, or
(B) one-half of the excess described in subsection (b)(1).
(2) Additional amount
In the case of a taxpayer with respect to whom the amount
determined under subsection (b)(1)(A) exceeds the adjusted base
amount, the amount included in gross income under this section
shall be equal to the lesser of -
(A) the sum of -
(i) 85 percent of such excess, plus
(ii) the lesser of the amount determined under paragraph
(1) or an amount equal to one-half of the difference between
the adjusted base amount and the base amount of the taxpayer,
or
(B) 85 percent of the social security benefits received
during the taxable year.
(b) Taxpayers to whom subsection (a) applies
(1) In general
A taxpayer is described in this subsection if -
(A) the sum of -
(i) the modified adjusted gross income of the taxpayer for
the taxable year, plus
(ii) one-half of the social security benefits received
during the taxable year, exceeds
(B) the base amount.
(2) Modified adjusted gross income
For purposes of this subsection, the term "modified adjusted
gross income" means adjusted gross income -
(A) determined without regard to this section and sections
135, 137, 221, 222, 911, 931, and 933, and
(B) increased by the amount of interest received or accrued
by the taxpayer during the taxable year which is exempt from
tax.
(c) Base amount and adjusted base amount
For purposes of this section -
(1) Base amount
The term "base amount" means -
(A) except as otherwise provided in this paragraph, $25,000,
(B) $32,000 in the case of a joint return, and
(C) zero in the case of a taxpayer who -
(i) is married as of the close of the taxable year (within
the meaning of section 7703) but does not file a joint return
for such year, and
(ii) does not live apart from his spouse at all times
during the taxable year.
(2) Adjusted base amount
The term "adjusted base amount" means -
(A) except as otherwise provided in this paragraph, $34,000,
(B) $44,000 in the case of a joint return, and
(C) zero in the case of a taxpayer described in paragraph
(1)(C).
(d) Social security benefit
(1) In general
For purposes of this section, the term "social security
benefit" means any amount received by the taxpayer by reason of
entitlement to -
(A) a monthly benefit under title II of the Social Security
Act, or
(B) a tier 1 railroad retirement benefit.
(2) Adjustment for repayments during year
(A) In general
For purposes of this section, the amount of social security
benefits received during any taxable year shall be reduced by
any repayment made by the taxpayer during the taxable year of a
social security benefit previously received by the taxpayer
(whether or not such benefit was received during the taxable
year).
(B) Denial of deduction
If (but for this subparagraph) any portion of the repayments
referred to in subparagraph (A) would have been allowable as a
deduction for the taxable year under section 165, such portion
shall be allowable as a deduction only to the extent it exceeds
the social security benefits received by the taxpayer during
the taxable year (and not repaid during such taxable year).
(3) Workmen's compensation benefits substituted for social
security benefits
For purposes of this section, if, by reason of section 224 of
the Social Security Act (or by reason of section 3(a)(1) of the
Railroad Retirement Act of 1974), any social security benefit is
reduced by reason of the receipt of a benefit under a workmen's
compensation act, the term "social security benefit" includes
that portion of such benefit received under the workmen's
compensation act which equals such reduction.
(4) Tier 1 railroad retirement benefit
For purposes of paragraph (1), the term "tier 1 railroad
retirement benefit" means -
(A) the amount of the annuity under the Railroad Retirement
Act of 1974 equal to the amount of the benefit to which the
taxpayer would have been entitled under the Social Security Act
if all of the service after December 31, 1936, of the employee
(on whose employment record the annuity is being paid) had been
included in the term "employment" as defined in the Social
Security Act, and
(B) a monthly annuity amount under section 3(f)(3) of the
Railroad Retirement Act of 1974.
(5) Effect of early delivery of benefit checks
For purposes of subsection (a), in any case where section 708
of the Social Security Act causes social security benefit checks
to be delivered before the end of the calendar month for which
they are issued, the benefits involved shall be deemed to have
been received in the succeeding calendar month.
(e) Limitation on amount included where taxpayer receives lump-sum
payment
(1) Limitation
If -
(A) any portion of a lump-sum payment of social security
benefits received during the taxable year is attributable to
prior taxable years, and
(B) the taxpayer makes an election under this subsection for
the taxable year,
then the amount included in gross income under this section for the
taxable year by reason of the receipt of such portion shall not
exceed the sum of the increases in gross income under this chapter
for prior taxable years which would result solely from taking into
account such portion in the taxable years to which it is
attributable.
(2) Special rules
(A) Year to which benefit attributable
For purposes of this subsection, a social security benefit is
attributable to a taxable year if the generally applicable
payment date for such benefit occurred during such taxable
year.
(B) Election
An election under this subsection shall be made at such time
and in such manner as the Secretary shall by regulations
prescribe. Such election, once made, may be revoked only with
the consent of the Secretary.
(f) Treatment as pension or annuity for certain purposes
For purposes of -
(1) section 22(c)(3)(A) (relating to reduction for amounts
received as pension or annuity),
(2) section 32(c)(2) (defining earned income),
(3) section 219(f)(1) (defining compensation), and
(4) section 911(b)(1) (defining foreign earned income),
any social security benefit shall be treated as an amount received
as a pension or annuity.
-SOURCE-
(Added and amended Pub. L. 98-21, title I, Sec. 121(a), title III,
Sec. 335(b)(2)(A), Apr. 20, 1983, 97 Stat. 80, 130; Pub. L. 98-76,
title II, Sec. 224(d), Aug. 12, 1983, 97 Stat. 424; Pub. L. 98-369,
div. A, title IV, Sec. 474(r)(2), div. B, title VI, Sec.
2661(o)(1), July 18, 1984, 98 Stat. 839, 1158; Pub. L. 99-272,
title XII, Sec. 12111(b), title XIII, Sec. 13204(a), Apr. 7, 1986,
100 Stat. 287, 313; Pub. L. 99-514, title I, Sec. 131(b)(2), title
XIII, Sec. 1301(j)(8), title XVIII, Sec. 1847(b)(2), Oct. 22, 1986,
100 Stat. 2113, 2658, 2856; Pub. L. 100-647, title I, Sec. 1001(e),
title VI, Sec. 6009(c)(1), Nov. 10, 1988, 102 Stat. 3351, 3690;
Pub. L. 103-66, title XIII, Sec. 13215(a), (b), Aug. 10, 1993, 107
Stat. 475, 476; Pub. L. 103-296, title III, Sec. 309(d), Aug. 15,
1994, 108 Stat. 1523; Pub. L. 104-188, title I, Secs. 1704(t)(3),
1807(c)(2), Aug. 20, 1996, 110 Stat. 1887, 1902; Pub. L. 105-277,
div. J, title IV, Sec. 4003(a)(2)(B), Oct. 21, 1998, 112 Stat.
2681-908; Pub. L. 107-16, title IV, Sec. 431(c)(1), June 7, 2001,
115 Stat. 68.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
The Social Security Act, referred to in subsecs. (a)(1) and
(d)(1)(A), (3), (4)(A), (5), is act Aug. 14, 1935, ch. 531, 49
Stat. 620, as amended, which is classified generally to chapter 7
(Sec. 301 et seq.) of Title 42, The Public Health and Welfare.
Title II of the Act is classified generally to subchapter II (Sec.
401 et seq.) of Title 42. Sections 207, 224, and 708 of the Act are
classified to sections 407, 424a, and 909 of Title 42,
respectively. For complete classification of this Act to the Code,
see section 1305 of Title 42 and Tables.
The Railroad Retirement Act of 1974, referred to in subsec.
(d)(3), (4), is act Aug. 29, 1935, ch. 812, as amended generally by
Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88 Stat. 1305,
which is classified generally to subchapter IV (Sec. 231 et seq.)
of chapter 9 of Title 45, Railroads. Section 3(a)(1), (f)(3) of the
Act is classified to section 231b(a)(1), (f)(3) of Title 45. For
further details and complete classification of this Act to the
Code, see Codification note set out preceding section 231 of Title
45, section 231t of Title 45, and Tables.
-MISC1-
PRIOR PROVISIONS
A prior section 86 was renumbered section 87 of this title.
AMENDMENTS
2001 - Subsec. (b)(2)(A). Pub. L. 107-16, Secs. 431(c)(1), 901,
temporarily inserted "222," after "221,". See Effective and
Termination Dates of 2001 Amendment note below.
1998 - Subsec. (b)(2)(A). Pub. L. 105-277 inserted "221," after
"137,".
1996 - Subsec. (b)(2). Pub. L. 104-188, Sec. 1704(t)(3),
substituted "means adjusted" for "means adusted" in introductory
provisions.
Subsec. (b)(2)(A). Pub. L. 104-188, Sec. 1807(c)(2), inserted
"137," before "911".
1994 - Subsec. (d)(1). Pub. L. 103-296 struck out at end "For
purposes of the preceding sentence, the amount received by any
taxpayer shall be determined as if the Social Security Act did not
contain section 203(i) thereof."
1993 - Subsec. (a). Pub. L. 103-66, Sec. 13215(a), designated
existing provisions as par. (1), inserted par. (1) heading,
substituted "Except as provided in paragraph (2), gross" for
"Gross", redesignated former pars. (1) and (2) as subpars. (A) and
(B), respectively, and added par. (2).
Subsec. (c). Pub. L. 103-66, Sec. 13215(b), amended heading and
text of subsec. (c) generally. Prior to amendment, text read as
follows: "For purposes of this section, the term 'base amount'
means -
"(1) except as otherwise provided in this subsection, $25,000,
"(2) $32,000, in the case of a joint return, and
"(3) zero, in the case of a taxpayer who -
"(A) is married at the close of the taxable year (within the
meaning of section 7703) but does not file a joint return for
such year, and
"(B) does not live apart from his spouse at all times during
the taxable year."
1988 - Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 6009(c)(1),
inserted "135," before "911".
Subsec. (f)(4), (5). Pub. L. 100-647, Sec. 1001(e), redesignated
par. (5) as (4) and struck out former par. (4) which read as
follows: "section 221(b)(2) (defining earned income), and".
1986 - Subsec. (b)(2)(A). Pub. L. 99-514, Sec. 131(b)(2),
substituted "sections" for "sections 221,".
Subsec. (c)(3)(A). Pub. L. 99-514, Sec. 1301(j)(8), substituted
"section 7703" for "section 143".
Subsec. (d)(4). Pub. L. 99-272, Sec. 13204(a), in amending par.
(4) generally, designated existing provisions as introductory
clause of par. (4), struck out "a monthly benefit under section
3(a), 3(f)(3), 4(a), or 4(f) of the Railroad Retirement Act of
1974", and added cls. (A) and (B).
Subsec. (d)(5). Pub. L. 99-272, Sec. 12111(b), added par. (5).
Subsec. (f)(1). Pub. L. 99-514, Sec. 1847(b)(2), substituted
"section 22(c)(3)(A)" for "section 37(c)(3)(A)".
1984 - Subsec. (f)(1). Pub. L. 98-369, Sec. 2661(o)(1), added
par. (1). Former par. (1) redesignated par. (2).
Pub. L. 98-369, Sec. 474(r)(2), substituted "section 32(c)(2)"
for "section 43(c)(2)".
Subsec. (f)(2)-(5). Pub. L. 98-369, Sec. 2661(o)(1), redesignated
pars. (1) to (4) as (2) to (5), respectively.
1983 - Subsec. (a). Pub. L. 98-21, Sec. 335(b)(2)(A), inserted
"(notwithstanding section 207 of the Social Security Act)".
Subsec. (d)(4). Pub. L. 98-76 inserted "3(f)(3)," after "3(a),".
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to payments made in
taxable years beginning after Dec. 31, 2001, see section 431(d) of
Pub. L. 107-16, set out as a note under section 62 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-277, div. J, title IV, Sec. 4003(l), Oct. 21, 1998,
112 Stat. 2681-910, provided that: "The amendments made by this
section [amending this section and sections 135, 137, 163, 172,
219, 221, 264, 351, 368, 469, 954, 2001, 6311, 6404, and 9510 of
this title and amending provisions set out as a note under section
7508A of this title] shall take effect as if included in the
provisions of the 1997 Act [Pub. L. 105-34] to which they relate."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1807(c)(2) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1996, see section 1807(e) of
Pub. L. 104-188, set out as an Effective Date note under section 23
of this title.
EFFECTIVE DATE OF 1994 AMENDMENT
Section 309(e)(2) of Pub. L. 103-296 provided that: "The
amendment made by subsection (d) [amending this section] shall
apply with respect to benefits received after December 31, 1995, in
taxable years ending after such date."
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13215(d) of Pub. L. 103-66 provided that: "The amendments
made by subsections (a) and (b) [amending this section] shall apply
to taxable years beginning after December 31, 1993."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1001(e) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 6009(d) of Pub. L. 100-647 provided that: "The amendments
made by this section [enacting section 135 of this title, amending
this section and sections 219 and 469 of this title, and
renumbering former section 135 as section 136 of this title] shall
apply to taxable years beginning after December 31, 1989."
EFFECTIVE DATE OF 1986 AMENDMENTS
Amendment by section 131(b)(2) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1301(j)(8) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311-1318 of Pub. L. 99-514, set out as an Effective Date;
Transitional Rules note under section 141 of this title.
Amendment by section 1847(b)(2) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
Amendment by section 12111(b) of Pub. L. 99-272 applicable with
respect to benefit checks issued for months ending after Apr. 7,
1986, see section 12111(c) of Pub. L. 99-272, set out as a note
under section 909 of Title 42, The Public Health and Welfare.
Section 13204(b) of Pub. L. 99-272 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to any
monthly benefit for which the generally applicable payment date is
after December 31, 1985."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(r)(2) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 2661 of Pub. L. 98-369 effective as though
included in the enactment of the Social Security Amendments of
1983, Pub. L. 98-21, see section 2664(a) of Pub. L. 98-369, set out
as a note under section 401 of Title 42, The Public Health and
Welfare.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-76 applicable to benefits received after
Dec. 31, 1983, in taxable years ending after such date, except for
portions of lump-sum payments received after Dec. 31, 1983, if the
generally applicable payment date for such portion was before Jan.
1, 1984, see section 227(b) of Pub. L. 98-76 set out as a note
under section 72 of this title.
EFFECTIVE DATE
Section 121(g) of Pub. L. 98-21, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [enacting this section and section
6050F of this title, amending sections 85, 128, 861, 871, 1441, and
6103 of this title and section 3413 of Title 12, Banks and Banking,
and enacting provisions set out as a note under section 401 of
Title 42, The Public Health and Welfare] shall apply to benefits
received after December 31, 1983, in taxable years ending after
such date.
"(2) Treatment of certain lump-sum payments received after
december 31, 1983. - The amendments made by this section shall not
apply to any portion of a lump-sum payment of social security
benefits (as defined in section 86(d) of the Internal Revenue Code
of 1986 [formerly I.R.C. 1954]) received after December 31, 1983,
if the generally applicable payment date for such portion was
before January 1, 1984."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 22, 72, 135, 137, 219,
221, 222, 469, 861, 871, 3402, 6015, 6050F, 6050G, 6103 of this
title.
-End-
-CITE-
26 USC Sec. 87 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 87. Alcohol fuel credit
-STATUTE-
Gross income includes the amount of the alcohol fuel credit
determined with respect to the taxpayer for the taxable year under
section 40(a).
-SOURCE-
(Added Pub. L. 96-223, title II, Sec. 232(c)(1), Apr. 2, 1980, 94
Stat. 276, Sec. 86; renumbered Sec. 87, Pub. L. 98-21, title I,
Sec. 121(a), Apr. 20, 1983, 97 Stat. 80; amended Pub. L. 98-369,
div. A, title IV, Sec. 474(r)(3), July 18, 1984, 98 Stat. 839.)
-MISC1-
AMENDMENTS
1984 - Pub. L. 98-369 amended section generally, substituting
"the amount of the alcohol fuel credit determined with respect to
the taxpayer for the taxable year under section 40(a)" for "an
amount equal to the amount of the credit allowable to the taxpayer
under section 44E for the taxable year (determined without regard
to subsection (e) thereof)".
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, and to carrybacks from such years, see section
475(a) of Pub. L. 98-369, set out as a note under section 21 of
this title.
EFFECTIVE DATE
Section applicable to sales or uses after Sept. 30, 1980, in
taxable years ending after such date, see section 232(h)(1) of Pub.
L. 96-223, set out as a note under section 40 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 56 of this title.
-End-
-CITE-
26 USC Sec. 88 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 88. Certain amounts with respect to nuclear decommissioning
costs
-STATUTE-
In the case of any taxpayer who is required to include the amount
of any nuclear decommissioning costs in the taxpayer's cost of
service for ratemaking purposes, there shall be includible in the
gross income of such taxpayer the amount so included for any
taxable year.
-SOURCE-
(Added Pub. L. 98-369, div. A, title I, Sec. 91(f)(1), July 18,
1984, 98 Stat. 607; amended Pub. L. 99-514, title XVIII, Sec.
1807(a)(4)(E)(vii), Oct. 22, 1986, 100 Stat. 2813.)
-MISC1-
AMENDMENTS
1986 - Pub. L. 99-514 substituted "for ratemaking purposes" for
"of ratemaking purposes".
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 effective, except as otherwise
provided, as if included in the provisions of the Tax Reform Act of
1984, Pub. L. 98-369, div. A, to which such amendment relates, see
section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
EFFECTIVE DATE
Section effective July 18, 1984, with respect to taxable years
ending after such date, see section 91(g)(5) of Pub. L. 98-369, as
amended, set out as an Effective Date of 1984 Amendment note under
section 461 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-End-
-CITE-
26 USC Sec. 89 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
[Sec. 89. Repealed. Pub. L. 101-140, title II, Sec. 202(a), Nov. 8,
1989, 103 Stat. 830]
-MISC1-
Section, added Pub. L. 99-514, title XI, Sec. 1151(a), Oct. 22,
1986, 100 Stat. 2494; amended Pub. L. 100-647, title I, Sec.
1011B(a)(1)-(9), (21), (28), (29), (34), title III, Sec.
3021(a)(1)(A), (B), (2)(A), (3)-(9), (11)-(13)(A), (b)(2)(B), (3),
title VI, Sec. 6051(a), Nov. 10, 1988, 102 Stat. 3483-3485, 3487,
3488, 3625-3632, 3695, related to nondiscrimination rules regarding
benefits provided under employee benefit plans.
EFFECTIVE DATE OF REPEAL
Section 202(c) of Pub. L. 101-140 provided that: "The amendments
made by this section [repealing this section] shall take effect as
if included in section 1151 of the Tax Reform Act of 1986 [Pub. L.
99-514, see section 1151(k) set out as a note under section 79 of
this title]."
NONENFORCEMENT OF SECTION FOR FISCAL YEAR 1990
Pub. L. 101-136, title V, Sec. 528, Nov. 3, 1989, 103 Stat. 816,
provided that: "No monies appropriated by this Act [see Tables for
classification] may be used to implement or enforce section 1151 of
the Tax Reform Act of 1986 or the amendments made by such section
[section 1151 of Pub. L. 99-514, which enacted section 89 of this
title, amended sections 79, 105, 106, 117, 120, 125, 127, 129, 132,
414, 505, 3121, 3306, 6039D, and 6652 of this title and section 409
of Title 42, The Public Health and Welfare, and enacted provisions
set out as a note under section 89 of this title]."
TRANSITIONAL PROVISIONS
Section 3021(c) of Pub. L. 100-647 provided for the first issue
of valuation rules, the interim impact on former employees, the
meeting of the written requirement for covered plans in connection
with implementation of section 89 of the Code, and the issuance by
Nov. 15, 1988, of rules necessary to carry out section 89, prior to
repeal by Pub. L. 101-140, title II, Sec. 203(a)(7), Nov. 8, 1989,
103 Stat. 831.
PART-TIME EMPLOYEE DEFINED FOR PURPOSES OF SUBSECTION (F)
Section 6070 of Pub. L. 100-647 increased the number of employees
who would be excluded from consideration under this section during
plan years 1989 and 1990, in the case of a plan maintained by an
employer which employs fewer than 10 employees on a normal working
day during a plan year, prior to repeal by Pub. L. 101-140, title
II, Sec. 203(a)(7), Nov. 8, 1989, 103 Stat. 831.
-End-
-CITE-
26 USC Sec. 90 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART II - ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
-HEAD-
Sec. 90. Illegal Federal irrigation subsidies
-STATUTE-
(a) General rule
Gross income shall include an amount equal to any illegal Federal
irrigation subsidy received by the taxpayer during the taxable
year.
(b) Illegal Federal irrigation subsidy
For purposes of this section -
(1) In general
The term "illegal Federal irrigation subsidy" means the excess
(if any) of -
(A) the amount required to be paid for any Federal irrigation
water delivered to the taxpayer during the taxpayer year, over
(B) the amount paid for such water.
(2) Federal irrigation water
The term "Federal irrigation water" means any water made
available for agricultural purposes from the operation of any
reclamation or irrigation project referred to in paragraph (8) of
section 202 of the Reclamation Reform Act of 1982.
(c) Denial of deduction
No deduction shall be allowed under this subtitle by reason of
any inclusion in gross income under subsection (a).
-SOURCE-
(Added Pub. L. 100-203, title X, Sec. 10611(a), Dec. 22, 1987, 101
Stat. 1330-451.)
-REFTEXT-
REFERENCES IN TEXT
Section 202 of the Reclamation Reform Act of 1982, referred to in
subsec. (b)(2), is classified to section 390bb of Title 43, Public
Lands.
-MISC1-
EFFECTIVE DATE
Section 10611(c) of Pub. L. 100-203 provided that: "The
amendments made by this section [enacting this section] shall apply
to water delivered to the taxpayer in months beginning after the
date of the enactment of this Act [Dec. 22, 1987]."
-End-
-CITE-
26 USC PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS
INCOME 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
-HEAD-
PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
-MISC1-
Sec.
101. Certain death payments.(!1)
102. Gifts and inheritances.
103. Interest on State and local bonds.
[103A. Repealed.]
104. Compensation for injuries or sickness.
105. Amounts received under accident and health plans.
106. Contributions by employer to accident and health
plans.
107. Rental value of parsonages.
108. Income from discharge of indebtedness.
109. Improvements by lessee on lessor's property.
110. Qualified lessee construction allowances for
short-term leases.
111. Recovery of tax benefit items.
112. Certain combat zone compensation of members of the
Armed Forces.
[113. Repealed.]
114. Extraterritorial income.
115. Income of States, municipalities, etc.(!1)
[116. Repealed.]
117. Qualified scholarships.
118. Contributions to the capital of a corporation.
119. Meals or lodging furnished for convenience of
employer.(!1)
120. Amounts received under qualified group legal services
plans.
121. Exclusion of gain from sale of principal residence.
122. Certain reduced uniformed services retirement pay.
123. Amounts received under insurance contracts for certain
living expenses.
[124. Repealed.]
125. Cafeteria plans.
126. Certain cost-sharing payments.
127. Educational assistance programs.
[128. Repealed.]
129. Dependent care assistance programs.(!2)
130. Certain personal injury liability assignments.
131. Certain foster care payments.
132. Certain fringe benefits.
[133. Repealed.]
134. Certain military benefits.
135. Income from United States savings bonds used to pay
higher education tuition and fees.
136. Energy conservation subsidies provided by public
utilities.
137. Adoption assistance programs.
138. Medicare+Choice MSA.
139. Disaster relief payments.
139A. Federal subsidies for prescription drug plans.
140. Cross references to other Acts.
AMENDMENTS
2003 - Pub. L. 108-173, title XII, Sec. 1202(c), Dec. 8, 2003,
117 Stat. 2480, added item 139A.
2002 - Pub. L. 107-134, title I, Sec. 111(b), Jan. 23, 2002, 115
Stat. 2433, added item 139 and redesignated former item 139 as 140.
2000 - Pub. L. 106-519, Sec. 4(6), Nov. 15, 2000, 114 Stat. 2433,
added item 114.
1997 - Pub. L. 105-34, title III, Sec. 312(d)(14), title XII,
Sec. 1213(d), Aug. 5, 1997, 111 Stat. 841, 1001, added item 110 and
substituted "Exclusion of gain from sale of principal residence"
for "One-time exclusion of gain from sale of principal residence by
individual who has attained age 55" in item 121.
Pub. L. 105-33, title IV, Sec. 4006(b)(3), Aug. 5, 1997, 111
Stat. 334, added items 138 and 139 and struck out former item 138
"Cross reference to other Acts".
1996 - Pub. L. 104-188, title I, Secs. 1602(b)(8), 1704(t)(4)(B),
1807(c)(7), Aug. 20, 1996, 110 Stat. 1834, 1887, 1902, substituted
"combat zone compensation" for "combat pay" in item 112, struck out
item 133 "Interest on certain loans used to acquire employer
securities", added items 137 and 138, and struck out former item
137 "Cross reference to other Acts".
1992 - Pub. L. 102-486, title XIX, Sec. 1912(b), Oct. 24, 1992,
106 Stat. 3016, added items 136 and 137 and struck out former item
136 "Cross references to other Acts".
1990 - Pub. L. 101-508, title XI, Sec. 11801(b)(2), Nov. 5, 1990,
104 Stat. 1388-522, struck out item 110 "Income taxes paid by
lessee corporation", item 113 "Mustering-out payments for members
of the Armed Forces", item 114 "Sports programs conducted for the
American National Red Cross", item 124 "Qualified transportation
provided by employer", and item 128 "Interest on certain savings
certificates".
1988 - Pub. L. 100-647, title I, Sec. 1013(a)(37), title VI, Sec.
6009(c)(4), Nov. 10, 1988, 102 Stat. 3544, 3690, substituted
"Interest on State and local bonds" for "Interest on certain
governmental obligations" in item 103, struck out item 103A
"Mortgage subsidy bonds", added item 135 and redesignated former
item 135 "Cross references to other Acts" as item 136.
1986 - Pub. L. 99-514, title I, Sec. 123(b)(4), title VI, Sec.
612(b)(8), title XI, Sec. 1168(b), Oct. 22, 1986, 100 Stat. 2113,
2251, 2512, struck out item 116 "Partial exclusion of dividends
received by individuals", substituted in item 117 "Qualified
scholarships" for "Scholarships and fellowship grants", added item
134, and redesignated former item 134 as 135.
1984 - Pub. L. 98-369, div. A, title I, Sec. 171(b), title V,
Secs. 531(a)(2), 543(b), July 18, 1984, 98 Stat. 699, 881, 892,
substituted "Recovery of tax benefit items" for "Recovery of bad
debts, prior taxes, and delinquency amounts" in item 111, added
items 132 (relating to certain fringe benefits) and 133 (relating
to interest on certain loans used to acquire employer securities),
and redesignated former item 132 (relating to cross references to
other Acts) as item 134.
Pub. L. 98-369, div. A, title I, Sec. 16(a), July 18, 1984, 98
Stat. 505, repealed an amendment made by Pub. L. 97-34, Sec.
302(c). See 1981 Amendment note below.
1983 - Pub. L. 97-473, title I, Sec. 101(b)(2), Jan. 14, 1983, 96
Stat. 2606, purported to strike out the item relating to section
130, and added items 130 (relating to certain personal injury
liability assignments) and 131 (relating to cross references to
other Acts).
Pub. L. 97-473, title I, Sec. 102(b), Jan. 14, 1983, 96 Stat.
2607, struck out item 131 (relating to cross references to other
Acts) and added items 131 (relating to certain foster care
payments) and 132 (relating to cross references to other Acts).
1981 - Pub. L. 97-34, title III, Secs. 301(b)(1), 302(c)(1),
(d)(1), Aug. 13, 1981, 95 Stat. 270, 272, 274, effective with
regard to taxable years beginning after Sept. 30, 1981,
redesignated item 128 "Cross References to other Acts" as 129 and
added item 128 "Interest on certain savings certificates" and,
section 302(c)(1), with regard to taxable years beginning after
Dec. 31, 1984, provided that "Partial exclusion of interest" is
substituted for "Interest on certain savings certificates" in item
128. Section 16(a) of Pub. L. 98-369, repealed section 302(c) of
Pub. L. 97-34, and provided that this title shall be applied and
administered as if section 302(c), and the amendments made by
section 302(c), had not been enacted.
1980 - Pub. L. 96-499, title XI, Sec. 1102(b), Dec. 5, 1980, 94
Stat. 2669, added item 103A.
Pub. L. 96-223, title IV, Sec. 404(b)(1), Apr. 2, 1980, 94 Stat.
306, inserted "and interest" after "dividends" in item 116.
1978 - Pub. L. 95-618, title II, Sec. 242(b), Nov. 9, 1978, 92
Stat. 3194, redesignated former item 124 as 125 and added item 124.
Pub. L. 95-600, title I, Secs. 134(b), 164(c), title IV, Sec.
404(c)(3), title V, Sec. 543(b), Nov. 6, 1978, 92 Stat. 2785, 2814,
2870, 2890, in item 121 substituted "One-time exclusion of gain
from sale of principal residence by individual who has attained age
55" for "Gain from sale of exchange of residence of individual who
has attained age 65", redesignated former item 124 as 128, and
added items 125 to 127.
1976 - Pub. L. 94-455, title XXI, Sec. 2134(c), Oct. 4, 1976, 90
Stat. 1928, added item 120.
1969 - Pub. L. 91-172, title IX, Sec. 901(b), Dec. 30, 1969, 83
Stat. 709, redesignated former item 123 as 124, and added item 123.
1966 - Pub. L. 89-365, Sec. 1(a)(2), Mar. 8, 1966, 80 Stat. 32,
redesignated former item 122 as 123, and added item 122.
1964 - Pub. L. 88-272, title II, Sec. 206(b)(2), Feb. 26, 1964,
78 Stat. 40, redesignated former item 121 as 122, and added item
121.
1958 - Pub. L. 85-866, title I, Sec. 3(b), Sept. 2, 1958, 72
Stat. 1607, struck out item 120 "Statutory subsistence allowance
received by police".
NO FEDERAL INCOME TAX ON RESTITUTION RECEIVED BY VICTIMS OF THE
NAZI REGIME OR THEIR HEIRS OR ESTATES
Pub. L. 107-16, title VIII, Sec. 803, June 7, 2001, 115 Stat.
149, provided that:
"(a) In General. - For purposes of the Internal Revenue Code of
1986, any excludable restitution payments received by an eligible
individual (or the individual's heirs or estate) and any excludable
interest -
"(1) shall not be included in gross income; and
"(2) shall not be taken into account for purposes of applying
any provision of such Code which takes into account excludable
income in computing adjusted gross income, including section 86
of such Code (relating to taxation of Social Security benefits).
For purposes of such Code, the basis of any property received by an
eligible individual (or the individual's heirs or estate) as part
of an excludable restitution payment shall be the fair market value
of such property as of the time of the receipt.
"(b) Eligible Individual. - For purposes of this section, the
term 'eligible individual' means a person who was persecuted on the
basis of race, religion, physical or mental disability, or sexual
orientation by Nazi Germany, any other Axis regime, or any other
Nazi-controlled or Nazi-allied country.
"(c) Excludable Restitution Payment. - For purposes of this
section, the term 'excludable restitution payment' means any
payment or distribution to an individual (or the individual's heirs
or estate) which -
"(1) is payable by reason of the individual's status as an
eligible individual, including any amount payable by any foreign
country, the United States of America, or any other foreign or
domestic entity, or a fund established by any such country or
entity, any amount payable as a result of a final resolution of a
legal action, and any amount payable under a law providing for
payments or restitution of property;
"(2) constitutes the direct or indirect return of, or
compensation or reparation for, assets stolen or hidden from, or
otherwise lost to, the individual before, during, or immediately
after World War II by reason of the individual's status as an
eligible individual, including any proceeds of insurance under
policies issued on eligible individuals by European insurance
companies immediately before and during World War II; or
"(3) consists of interest which is payable as part of any
payment or distribution described in paragraph (1) or (2).
"(d) Excludable Interest. - For purposes of this section, the
term 'excludable interest' means any interest earned by -
"(1) escrow accounts or settlement funds established pursuant
to the settlement of the action entitled 'In re: Holocaust Victim
Assets Litigation,' (E.D.N.Y.) C.A. No. 96-4849,
"(2) funds to benefit eligible individuals or their heirs
created by the International Commission on Holocaust Insurance
Claims as a result of the Agreement between the Government of the
United States of America and the Government of the Federal
Republic of Germany concerning the Foundation 'Remembrance,
Responsibility, and Future,' dated July 17, 2000, or
"(3) similar funds subject to the administration of the United
States courts created to provide excludable restitution payments
to eligible individuals (or eligible individuals' heirs or
estates).
"(e) Effective Date. -
"(1) In general. - This section shall apply to any amount
received on or after January 1, 2000.
"(2) No inference. - Nothing in this Act [see Tables for
classification] shall be construed to create any inference with
respect to the proper tax treatment of any amount received before
January 1, 2000."
-SECREF-
PART REFERRED TO IN OTHER SECTIONS
This part is referred to in section 61 of this title.
-FOOTNOTE-
(!1) So in original. Does not conform to section catchline.
(!2) Editorially supplied. Section 129 added by Pub. L. 97-34
without corresponding amendment of part analysis.
-End-
-CITE-
26 USC Sec. 101 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
-HEAD-
Sec. 101. Certain death benefits
-STATUTE-
(a) Proceeds of life insurance contracts payable by reason of death
(1) General rule
Except as otherwise provided in paragraph (2), subsection (d),
and subsection (f), gross income does not include amounts
received (whether in a single sum or otherwise) under a life
insurance contract, if such amounts are paid by reason of the
death of the insured.
(2) Transfer for valuable consideration
In the case of a transfer for a valuable consideration, by
assignment or otherwise, of a life insurance contract or any
interest therein, the amount excluded from gross income by
paragraph (1) shall not exceed an amount equal to the sum of the
actual value of such consideration and the premiums and other
amounts subsequently paid by the transferee. The preceding
sentence shall not apply in the case of such a transfer -
(A) if such contract or interest therein has a basis for
determining gain or loss in the hands of a transferee
determined in whole or in part by reference to such basis of
such contract or interest therein in the hands of the
transferor, or
(B) if such transfer is to the insured, to a partner of the
insured, to a partnership in which the insured is a partner, or
to a corporation in which the insured is a shareholder or
officer.
The term "other amounts" in the first sentence of this paragraph
includes interest paid or accrued by the transferee on
indebtedness with respect to such contract or any interest
therein if such interest paid or accrued is not allowable as a
deduction by reason of section 264(a)(4).
[(b) Repealed. Pub. L. 104-188, title I, Sec. 1402(a), Aug. 20,
1996, 110 Stat. 1789]
(c) Interest
If any amount excluded from gross income by subsection (a) is
held under an agreement to pay interest thereon, the interest
payments shall be included in gross income.
(d) Payment of life insurance proceeds at a date later than death
(1) General rule
The amounts held by an insurer with respect to any beneficiary
shall be prorated (in accordance with such regulations as may be
prescribed by the Secretary) over the period or periods with
respect to which such payments are to be made. There shall be
excluded from the gross income of such beneficiary in the taxable
year received any amount determined by such proration. Gross
income includes, to the extent not excluded by the preceding
sentence, amounts received under agreements to which this
subsection applies.
(2) Amount held by an insurer
An amount held by an insurer with respect to any beneficiary
shall mean an amount to which subsection (a) applies which is -
(A) held by any insurer under an agreement provided for in
the life insurance contract, whether as an option or otherwise,
to pay such amount on a date or dates later than the death of
the insured, and
(B) equal to the value of such agreement to such beneficiary
(i) as of the date of death of the insured (as if any
option exercised under the life insurance contract were
exercised at such time), and
(ii) as discounted on the basis of the interest rate used
by the insurer in calculating payments under the agreement
and mortality tables prescribed by the Secretary.
(3) Application of subsection
This subsection shall not apply to any amount to which
subsection (c) is applicable.
[(e) Repealed. Pub. L. 98-369, div. A, title IV, Sec. 421(b)(2),
July 18, 1984, 98 Stat. 794]
(f) Proceeds of flexible premium contracts issued before January 1,
1985 payable by reason of death
(1) In general
Any amount paid by reason of the death of the insured under a
flexible premium life insurance contract issued before January 1,
1985 shall be excluded from gross income only if -
(A) under such contract -
(i) the sum of the premiums paid under such contract does
not at any time exceed the guideline premium limitation as of
such time, and
(ii) any amount payable by reason of the death of the
insured (determined without regard to any qualified
additional benefit) is not at any time less than the
applicable percentage of the cash value of such contract at
such time, or
(B) by the terms of such contract, the cash value of such
contract may not at any time exceed the net single premium with
respect to the amount payable by reason of the death of the
insured (determined without regard to any qualified additional
benefit) at such time.
(2) Guideline premium limitation
For purposes of this subsection -
(A) Guideline premium limitation
The term "guideline premium limitation" means, as of any
date, the greater of -
(i) the guideline single premium, or
(ii) the sum of the guideline level premiums to such date.
(B) Guideline single premium
The term "guideline single premium" means the premium at
issue with respect to future benefits under the contract
(without regard to any qualified additional benefit), and with
respect to any charges for qualified additional benefits, at
the time of a determination under subparagraph (A) or (E) and
which is based on -
(i) the mortality and other charges guaranteed under the
contract, and
(ii) interest at the greater of an annual effective rate of
6 percent or the minimum rate or rates guaranteed upon issue
of the contract.
(C) Guideline level premium
The term "guideline level premium" means the level annual
amount, payable over the longest period permitted under the
contract (but ending not less than 20 years from date of issue
or not later than age 95, if earlier), computed on the same
basis as the guideline single premium, except that subparagraph
(B)(ii) shall be applied by substituting "4 percent" for "6
percent".
(D) Computational rules
In computing the guideline single premium or guideline level
premium under subparagraph (B) or (C) -
(i) the excess of the amount payable by reason of the death
of the insured (determined without regard to any qualified
additional benefit) over the cash value of the contract shall
be deemed to be not greater than such excess at the time the
contract was issued,
(ii) the maturity date shall be the latest maturity date
permitted under the contract, but not less than 20 years
after the date of issue or (if earlier) age 95, and
(iii) the amount of any endowment benefit (or sum of
endowment benefits) shall be deemed not to exceed the least
amount payable by reason of the death of the insured
(determined without regard to any qualified additional
benefit) at any time under the contract.
(E) Adjustments
The guideline single premium and guideline level premium
shall be adjusted in the event of a change in the future
benefits or any qualified additional benefit under the contract
which was not reflected in any guideline single premiums or
guideline level premium previously determined.
(3) Other definitions and special rules
For purposes of this subsection -
(A) Flexible premium life insurance contract
The terms "flexible premium life insurance contract" and
"contract" mean a life insurance contract (including any
qualified additional benefits) which provides for the payment
of one or more premiums which are not fixed by the insurer as
to both timing and amount. Such terms do not include that
portion of any contract which is treated under State law as
providing any annuity benefits other than as a settlement
option.
(B) Premiums paid
The term "premiums paid" means the premiums paid under the
contract less any amounts (other than amounts includible in
gross income) to which section 72(e) applies. If, in order to
comply with the requirements of paragraph (1)(A), any portion
of any premium paid during any contract year is returned by the
insurance company (with interest) within 60 days after the end
of a contract year -
(i) the amount so returned (excluding interest) shall be
deemed to reduce the sum of the premiums paid under the
contract during such year, and
(ii) notwithstanding the provisions of section 72(e), the
amount of any interest so returned shall be includible in the
gross income of the recipient.
(C) Applicable percentage
The term "applicable percentage" means -
(i) 140 percent in the case of an insured with an attained
age at the beginning of the contract year of 40 or less, and
(ii) in the case of an insured with an attained age of more
than 40 as of the beginning of the contract year, 140 percent
reduced (but not below 105 percent) by one percent for each
year in excess of 40.
(D) Cash value
The cash value of any contract shall be determined without
regard to any deduction for any surrender charge or policy
loan.
(E) Qualified additional benefits
The term "qualified additional benefits" means any -
(i) guaranteed insurability,
(ii) accidental death benefit,
(iii) family term coverage, or
(iv) waiver of premium.
(F) Premium payments not disqualifying contract
The payment of a premium which would result in the sum of the
premiums paid exceeding the guideline premium limitation shall
be disregarded for purposes of paragraph (1)(A)(i) if the
amount of such premium does not exceed the amount necessary to
prevent the termination of the contract without cash value on
or before the end of the contract year.
(G) Net single premium
In computing the net single premium under paragraph (1)(B) -
(i) the mortality basis shall be that guaranteed under the
contract (determined by reference to the most recent
mortality table allowed under all State laws on the date of
issuance),
(ii) interest shall be based on the greater of -
(I) an annual effective rate of 4 percent (3 percent for
contracts issued before July 1, 1983), or
(II) the minimum rate or rates guaranteed upon issue of
the contract, and
(iii) the computational rules of paragraph (2)(D) shall
apply, except that the maturity date referred to in clause
(ii) thereof shall not be earlier than age 95.
(H) Correction of errors
If the taxpayer establishes to the satisfaction of the
Secretary that -
(i) the requirements described in paragraph (1) for any
contract year was not satisfied due to reasonable error, and
(ii) reasonable steps are being taken to remedy the error,
the Secretary may waive the failure to satisfy such
requirements.
(I) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
subsection.
(g) Treatment of certain accelerated death benefits
(1) In general
For purposes of this section, the following amounts shall be
treated as an amount paid by reason of the death of an insured:
(A) Any amount received under a life insurance contract on
the life of an insured who is a terminally ill individual.
(B) Any amount received under a life insurance contract on
the life of an insured who is a chronically ill individual.
(2) Treatment of viatical settlements
(A) In general
If any portion of the death benefit under a life insurance
contract on the life of an insured described in paragraph (1)
is sold or assigned to a viatical settlement provider, the
amount paid for the sale or assignment of such portion shall be
treated as an amount paid under the life insurance contract by
reason of the death of such insured.
(B) Viatical settlement provider
(i) In general
The term "viatical settlement provider" means any person
regularly engaged in the trade or business of purchasing, or
taking assignments of, life insurance contracts on the lives
of insureds described in paragraph (1) if -
(I) such person is licensed for such purposes (with
respect to insureds described in the same subparagraph of
paragraph (1) as the insured) in the State in which the
insured resides, or
(II) in the case of an insured who resides in a State not
requiring the licensing of such persons for such purposes
with respect to such insured, such person meets the
requirements of clause (ii) or (iii), whichever applies to
such insured.
(ii) Terminally ill insureds
A person meets the requirements of this clause with respect
to an insured who is a terminally ill individual if such
person -
(I) meets the requirements of sections 8 and 9 of the
Viatical Settlements Model Act of the National Association
of Insurance Commissioners, and
(II) meets the requirements of the Model Regulations of
the National Association of Insurance Commissioners
(relating to standards for evaluation of reasonable
payments) in determining amounts paid by such person in
connection with such purchases or assignments.
(iii) Chronically ill insureds
A person meets the requirements of this clause with respect
to an insured who is a chronically ill individual if such
person -
(I) meets requirements similar to the requirements
referred to in clause (ii)(I), and
(II) meets the standards (if any) of the National
Association of Insurance Commissioners for evaluating the
reasonableness of amounts paid by such person in connection
with such purchases or assignments with respect to
chronically ill individuals.
(3) Special rules for chronically ill insureds
In the case of an insured who is a chronically ill individual -
(A) In general
Paragraphs (1) and (2) shall not apply to any payment
received for any period unless -
(i) such payment is for costs incurred by the payee (not
compensated for by insurance or otherwise) for qualified
long-term care services provided for the insured for such
period, and
(ii) the terms of the contract giving rise to such payment
satisfy -
(I) the requirements of section 7702B(b)(1)(B), and
(II) the requirements (if any) applicable under
subparagraph (B).
For purposes of the preceding sentence, the rule of section
7702B(b)(2)(B) shall apply.
(B) Other requirements
The requirements applicable under this subparagraph are -
(i) those requirements of section 7702B(g) and section
4980C which the Secretary specifies as applying to such a
purchase, assignment, or other arrangement,
(ii) standards adopted by the National Association of
Insurance Commissioners which specifically apply to
chronically ill individuals (and, if such standards are
adopted, the analogous requirements specified under clause
(i) shall cease to apply), and
(iii) standards adopted by the State in which the
policyholder resides (and if such standards are adopted, the
analogous requirements specified under clause (i) and
(subject to section 4980C(f)) standards under clause (ii),
shall cease to apply).
(C) Per diem payments
A payment shall not fail to be described in subparagraph (A)
by reason of being made on a per diem or other periodic basis
without regard to the expenses incurred during the period to
which the payment relates.
(D) Limitation on exclusion for periodic payments
For limitation on amount of periodic payments which are
treated as described in paragraph (1), see section 7702B(d).
(4) Definitions
For purposes of this subsection -
(A) Terminally ill individual
The term "terminally ill individual" means an individual who
has been certified by a physician as having an illness or
physical condition which can reasonably be expected to result
in death in 24 months or less after the date of the
certification.
(B) Chronically ill individual
The term "chronically ill individual" has the meaning given
such term by section 7702B(c)(2); except that such term shall
not include a terminally ill individual.
(C) Qualified long-term care services
The term "qualified long-term care services" has the meaning
given such term by section 7702B(c).
(D) Physician
The term "physician" has the meaning given to such term by
section 1861(r)(1) of the Social Security Act (42 U.S.C.
1395x(r)(1)).
(5) Exception for business-related policies
This subsection shall not apply in the case of any amount paid
to any taxpayer other than the insured if such taxpayer has an
insurable interest with respect to the life of the insured by
reason of the insured being a director, officer, or employee of
the taxpayer or by reason of the insured being financially
interested in any trade or business carried on by the taxpayer.
(h) Survivor benefits attributable to service by a public safety
officer who is killed in the line of duty
(1) In general
Gross income shall not include any amount paid as a survivor
annuity on account of the death of a public safety officer (as
such term is defined in section 1204 of the Omnibus Crime Control
and Safe Streets Act of 1968) killed in the line of duty -
(A) if such annuity is provided, under a governmental plan
which meets the requirements of section 401(a), to the spouse
(or a former spouse) of the public safety officer or to a child
of such officer; and
(B) to the extent such annuity is attributable to such
officer's service as a public safety officer.
(2) Exceptions
Paragraph (1) shall not apply with respect to the death of any
public safety officer if, as determined in accordance with the
provisions of the Omnibus Crime Control and Safe Streets Act of
1968 -
(A) the death was caused by the intentional misconduct of the
officer or by such officer's intention to bring about such
officer's death;
(B) the officer was voluntarily intoxicated (as defined in
section 1204 of such Act) at the time of death;
(C) the officer was performing such officer's duties in a
grossly negligent manner at the time of death; or
(D) the payment is to an individual whose actions were a
substantial contributing factor to the death of the officer.
(i) Certain employee death benefits payable by reason of death of
certain terrorist victims or astronauts
(1) In general
Gross income does not include amounts (whether in a single sum
or otherwise) paid by an employer by reason of the death of an
employee who is a specified terrorist victim (as defined in
section 692(d)(4)).
(2) Limitation
(A) In general
Subject to such rules as the Secretary may prescribe,
paragraph (1) shall not apply to amounts which would have been
payable after death if the individual had died other than as a
specified terrorist victim (as so defined).
(B) Exception
Subparagraph (A) shall not apply to incidental death benefits
paid from a plan described in section 401(a) and exempt from
tax under section 501(a).
(3) Treatment of self-employed individuals
For purposes of paragraph (1), the term "employee" includes a
self-employed individual (as defined in section 401(c)(1)).
(4) Relief with respect to astronauts
The provisions of this subsection shall apply to any astronaut
whose death occurs in the line of duty.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 26; Pub. L. 85-866, title I,
Sec. 23(d), Sept. 2, 1958, 72 Stat. 1622; Pub. L. 87-792, Sec.
7(c), Oct. 10, 1962, 76 Stat. 829; Pub. L. 89-365, Sec. 1(c), Mar.
8, 1966, 80 Stat. 32; Pub. L. 91-172, title I, Sec. 101(j)(l), Dec.
30, 1969, 83 Stat. 526; Pub. L. 93-406, title II, Secs.
2005(c)(15), 2007(b)(3), Sept. 2, 1974, 88 Stat. 992, 994; Pub. L.
94-455, title XIX, Secs. 1901(a)(16), 1906(b)(13)(A), Oct. 4, 1976,
90 Stat. 1765, 1834; Pub. L. 97-248, title II, Secs. 239, 266(a),
(b), Sept. 3, 1982, 96 Stat. 514, 547, 550; Pub. L. 98-369, div. A,
title II, Sec. 221(b)(2), title IV, Sec. 421(b)(2), title VII, Sec.
713(e), July 18, 1984, 98 Stat. 772, 794, 958; Pub. L. 99-514,
title X, Sec. 1001(a)-(c), Oct. 22, 1986, 100 Stat. 2387; Pub. L.
104-188, title I, Sec. 1402(a), (b)(1), Aug. 20, 1996, 110 Stat.
1789; Pub. L. 104-191, title III, Sec. 331(a), Aug. 21, 1996, 110
Stat. 2067; Pub. L. 105-34, title X, Sec. 1084(b)(2), title XV,
Sec. 1528(a), Aug. 5, 1997, 111 Stat. 952, 1074; Pub. L. 107-134,
title I, Sec. 102(a), Jan. 23, 2002, 115 Stat. 2429; Pub. L.
108-121, title I, Sec. 110(b)(1), (2), Nov. 11, 2003, 117 Stat.
1342.)
-REFTEXT-
REFERENCES IN TEXT
The Omnibus Crime Control and Safe Streets Act of 1968, referred
to in subsec. (h), is Pub. L. 90-351, June 19, 1968, 82 Stat. 197,
as amended. Section 1204 of the Act is classified to section 3796b
of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note set
out under section 3711 of Title 42 and Tables.
-COD-
CODIFICATION
Another section 1084(b) of Pub. L. 105-34 amended sections 805,
807, 812, and 832 of this title.
-MISC1-
AMENDMENTS
2003 - Subsec. (i). Pub. L. 108-121, Sec. 110(b)(2), inserted "or
astronauts" after "victims" in heading.
Subsec. (i)(4). Pub. L. 108-121, Sec. 110(b)(1), added par. (4).
2002 - Subsec. (i). Pub. L. 107-134 added subsec. (i).
1997 - Subsec. (a)(2). Pub. L. 105-34, Sec. 1084(b)(2), inserted
at end "The term 'other amounts' in the first sentence of this
paragraph includes interest paid or accrued by the transferee on
indebtedness with respect to such contract or any interest therein
if such interest paid or accrued is not allowable as a deduction by
reason of section 264(a)(4)."
Subsec. (h). Pub. L. 105-34, Sec. 1528(a), added subsec. (h).
1996 - Subsec. (b). Pub. L. 104-188, Sec. 1402(a), struck out
subsec. (b) which related to employees' death benefits.
Subsec. (c). Pub. L. 104-188, Sec. 1402(b)(1), substituted
"subsection (a)" for "subsection (a) or (b)".
Subsec. (g). Pub. L. 104-191 added subsec. (g).
1986 - Subsec. (d)(1). Pub. L. 99-514, Sec. 1001(a), amended
second sentence generally, which prior to amendment read as
follows: "There shall be excluded from the gross income of such
beneficiary in the taxable year received -
"(A) any amount determined by such proration, and
"(B) in the case of the surviving spouse of the insured, that
portion of the excess of the amounts received under one or more
agreements specified in paragraph (2)(A) (whether or not payment
of any part of such amounts is guaranteed by the insurer) over
the amount determined in subparagraph (A) of this paragraph which
is not greater than $1,000 with respect to any insured."
Subsec. (d)(2)(B). Pub. L. 99-514, Sec. 1001(c)(2), substituted
"equal" for "is equal" in introductory provisions.
Subsec. (d)(2)(B)(ii). Pub. L. 99-514, Sec. 1001(b), amended cl.
(ii) generally. Prior to amendment, cl. (ii) read as follows: "as
discounted on the basis of the interest rate and mortality tables
used by the insurer in calculating payments under the agreement."
Subsec. (d)(3), (4). Pub. L. 99-514, Sec. 1001(c)(1),
redesignated par. (4) as (3), and struck out former par. (3),
"Surviving spouse", which read as follows: "For purposes of this
subsection, the term 'surviving spouse' means the spouse of the
insured as of the date of death, including a spouse legally
separated but not under a decree of absolute divorce."
1984 - Subsec. (b)(3)(B). Pub. L. 98-369, Sec. 713(e), amended
subpar. (B) generally, substituting "certain distributions" for
"certain lump sum distributions" in heading, substituting "amount
paid or distributed" for "lump sum distribution described in the
second sentence of paragraph (2)(B)" in introductory text and
adding cls. (i) and (ii).
Subsec. (e). Pub. L. 98-369, Sec. 421(b)(2), repealed subsec. (e)
relating to payments of alimony or of income of an estate or trust
in case of divorce, etc.
Subsec. (f). Pub. L. 98-369, Sec. 221(b)(2)(B), inserted "issued
before January 1, 1985" in heading.
Subsec. (f)(1). Pub. L. 98-369, Sec. 221(b)(2)(A), inserted
"issued before January 1, 1985" in introductory text.
1982 - Subsec. (a)(1). Pub. L. 97-248, Sec. 266(b), substituted
", subsection (d), and subsection (f)" for "and in subsection (d)".
Subsec. (b)(3). Pub. L. 97-248, Sec. 239, amended par. (3)
generally, substituting "Treatment of self-employed individuals"
for "Self-employed individual not considered an employee" in
heading, designating existing provisions as subparagraph (A) and,
as so designated, adding heading and exception for subpar. (B), and
adding subparagraph (B).
Subsec. (f). Pub. L. 97-248, Sec. 266(a), added subsec. (f).
1976 - Subsec. (d)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsec. (f). Pub. L. 94-455, Sec. 1901(a)(16), struck out subsec.
(f) relating to effective date of section.
1974 - Subsec. (b)(2)(B). Pub. L. 93-406, Sec. 2005(c)(15),
substituted "a lump sum distribution (as defined in section
402(e)(4)" for "total distributions payable (as defined in section
402(a)(3)) which are paid to a distributee within one taxable year
of the distributee by reason of the employee's death".
Subsec. (b)(2)(D). Pub. L. 93-406, Sec. 2007(b)(3), substituted
"if the member or former member of the uniformed services by reason
of whose death such annuity is payable" for "if the individual who
made the election under such chapter".
1969 - Subsec. (b)(2)(B)(iii). Pub. L. 91-172 substituted
references to section 170(b)(1)(A) (ii) and (vi), and to religious
organizations, for references to section 503(b)(1), (2), or (3).
1966 - Subsec. (b)(2)(D). Pub. L. 89-365 provided that par. (1)
shall not apply in the case of an annuity under chapter 73 of title
10 if the individual who made the election under that chapter died
after attaining retirement age.
1962 - Subsec. (b)(2)(B)(ii). Pub. L. 87-792, Sec. 7(c)(1),
substituted "described in section 403(a)" for "which meets the
requirements of paragraphs (3), (4), (5), and (6) of section
401(a)".
Subsec. (b)(3). Pub. L. 87-792, Sec. 7(c)(2), added par. (3).
1958 - Subsec. (b)(2)(B). Pub. L. 85-866 substituted "This
subparagraph shall not apply to total distributions payable (as
defined in section 402(a)(3) which are paid to a distributee within
one taxable year of the distributee by reason of the employee's
death - " for "(other than total distributions payable, as defined
in section 402(a)(3), which are paid to distributee, by a stock
bonus, pension, or profit-sharing trust described in section 401(a)
which is exempt from tax under section 501(a), or under an annuity
contract under a plan which meets the requirements of paragraphs
(3), (4), (5), and (6) of section 401(a), within one taxable year
of the distributee by reason of the employee's death)", and added
cls. (i), (ii), and (iii).
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108-121, title I, Sec. 110(b)(3), Nov. 11, 2003, 117
Stat. 1342, provided that: "The amendments made by this subsection
[amending this section] shall apply to amounts paid after December
31, 2002, with respect to deaths occurring after such date."
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-134, title I, Sec. 102(b), Jan. 23, 2002, 115 Stat.
2429, provided that:
"(1) Effective date. - The amendment made by this section
[amending this section] shall apply to taxable years ending before,
on, or after September 11, 2001.
"(2) Waiver of limitations. - If refund or credit of any
overpayment of tax resulting from the amendments made by this
section is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this Act [Jan. 23,
2002] by the operation of any law or rule of law (including res
judicata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such
period."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1084(d) of Pub. L. 105-34, as amended by Pub. L. 105-206,
title VI, Sec. 6010(o)(3)(B), July 22, 1998, 112 Stat. 816,
provided that: "The amendments made by this section [amending this
section and sections 264, 265, 805, 807, 812, and 832 of this
title] shall apply to contracts issued after June 8, 1997, in
taxable years ending after such date. For purposes of the preceding
sentence, any material increase in the death benefit or other
material change in the contract shall be treated as a new contract
except that, in the case of a master contract (within the meaning
of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the
addition of covered lives shall be treated as a new contract only
with respect to such additional covered lives. For purposes of this
subsection, an increase in the death benefit under a policy or
contract issued in connection with a lapse described in section
501(d)(2) of the Health Insurance Portability and Accountability
Act of 1996 [Pub. L. 104-191, set out as a note under section 264
of this title] shall not be treated as a new contract."
Section 1528(b) of Pub. L. 105-34, as amended by Pub. L. 107-15,
Sec. 2, June 5, 2001, 115 Stat. 37, provided that: "The amendments
made by this section [amending this section] shall apply to amounts
received in taxable years beginning after December 31, 1996, with
respect to individuals dying after such date, and to amounts
received in taxable years beginning after December 31, 2001, with
respect to individuals dying on or before December 31, 1996."
EFFECTIVE DATE OF 1996 AMENDMENTS
Section 331(b) of Pub. L. 104-191 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
amounts received after December 31, 1996."
Section 1402(c) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section and sections 406, 407,
and 7701 of this title] shall apply with respect to decedents dying
after the date of the enactment of this Act [Aug. 20, 1996]."
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1001(d) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section] shall apply to amounts
received with respect to deaths occurring after the date of the
enactment of this section [Oct. 22, 1986] in taxable years ending
after such date."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 221(b)(2) of Pub. L. 98-369 effective Jan.
1, 1984, see section 221(d)(4) of Pub. L. 98-369, set out as an
Effective Date note under section 7702 of this title.
Amendment by section 421(b)(2) of Pub. L. 98-369 applicable to
transfers after July 18, 1984, in taxable years ending after such
date, subject to election to have repeal apply to transfers after
1983 or to transfers pursuant to existing decrees, see section
421(d) of Pub. L. 98-369, set out as an Effective Date note under
section 1041 of this title.
Amendment by section 713 of Pub. L. 98-369 effective as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
EFFECTIVE DATE OF 1982 AMENDMENTS
Section 266(c)(1) of Pub. L. 97-248, as amended by Pub. L.
98-369, div. A, title II, Sec. 221(b)(1), July 18, 1984, 98 Stat.
772, provided that: "The amendments made by this section [amending
this section] shall apply to contracts entered into before January
1, 1985."
Amendment by section 239 of Pub. L. 97-248 applicable to
decedents dying after Dec. 31, 1983, see section 241(b) of Pub. L.
97-248, set out as an Effective Date note under section 416 of this
title. Such amendment is applicable, in the case of amounts
received under the plan of an S corporation, with respect to
decedents dying after Dec. 31, 1982, notwithstanding section 241(b)
of Pub. L. 97-248, see section 6(b)(2) of Pub. L. 97-354, Oct. 19,
1982, 96 Stat. 1697, set out as a note under section 1361 of this
title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(16) of Pub. L. 94-455 applicable
with respect to taxable years beginning after Dec. 31, 1976, see
section 1901(d) of Pub. L. 94-455, set out as a note under section
2 of this title.
Amendment by section 1906(b)(13)(A) of Pub. L. 94-455 effective
Feb. 1, 1977, see section 1906(d)(1) of Pub. L. 94-455, set out as
a note under section 6013 of this title.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by section 2005(c)(15) of Pub. L. 93-406 applicable
only with respect to distributions and payments made after Dec. 31,
1973, in taxable years beginning after Dec. 31, 1973, see section
2005(d) of Pub. L. 93-406, set out as a note under section 402 of
this title.
Amendment by section 2007(b)(3) of Pub. L. 93-406 applicable to
taxable years ending on or after Sept. 21, 1972, with respect to
individuals dying on or after Sept. 21, 1972, see section 2007(c)
of Pub. L. 93-406, set out as a note under section 122 of this
title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section
101(k)(1) of Pub. L. 91-172, set out as an Effective Date note
under section 4940 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-365 applicable with respect to
individuals making an election under chapter 73 of Title 10 who
died after Dec. 31, 1965, see section 1(d) of Pub. L. 89-365, set
out as an Effective Date note under section 122 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85-866 applicable to taxable years beginning
after Dec. 31, 1957, see section 23(g) of Pub. L. 85-866, set out
as a note under section 403 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
FLEXIBLE PREMIUM CONTRACTS ISSUED DURING 1984 WHICH MEET
REQUIREMENTS OF SECTION 7702 TREATED AS MEETING REQUIREMENTS OF
SECTION 101(F)
Flexible premium contracts issued during 1984 which meet
requirements of section 7702 of this title treated as meeting
requirements of subsec. (f) of this section, see section 221(b)(3)
of Pub. L. 98-369, as added by Pub. L. 99-514, set out as a note
under section 7702 of this title.
SPECIAL RULES FOR CONTRACTS ENTERED INTO BEFORE JANUARY 1, 1983
Section 266(c)(2), (3) of Pub. L. 97-248, as amended by Pub. L.
97-448, title III, Sec. 306(a)(13), Jan. 12, 1983, 96 Stat. 2405;
Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided
that:
"(2) Special rule for contracts entered into before january 1,
1983. - Any contract entered into before January 1, 1983, which
meets the requirements of section 101(f) of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954] on the date which is 1 year
after the date of the enactment of this Act [Sept. 3, 1982] shall
be treated as meeting the requirements of such section for any
period before the date on which such contract meets such
requirements. Any death benefits paid under a flexible premium life
insurance contract (within the meaning of section 101(f)(3)(A) of
such Code) before the date which is 1 year after such date of
enactment [Sept. 3, 1982] shall be excluded from gross income.
"(3) Special rule for certain contracts. - Any contract entered
into before January 1, 1983, shall be treated as meeting the
requirements of subparagraph (A) of section 101(f)(1) of such Code
if such contract would meet such requirements if section
101(f)(2)(C) of such Code were applied by substituting '3 percent'
for '4 percent'."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 72, 818, 953, 6050Q,
7702, 7702B of this title.
-End-
-CITE-
26 USC Sec. 102 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
-HEAD-
Sec. 102. Gifts and inheritances
-STATUTE-
(a) General rule
Gross income does not include the value of property acquired by
gift, bequest, devise, or inheritance.
(b) Income
Subsection (a) shall not exclude from gross income -
(1) the income from any property referred to in subsection (a);
or
(2) where the gift, bequest, devise, or inheritance is of
income from property, the amount of such income.
Where, under the terms of the gift, bequest, devise, or
inheritance, the payment, crediting, or distribution thereof is to
be made at intervals, then, to the extent that it is paid or
credited or to be distributed out of income from property, it shall
be treated for purposes of paragraph (2) as a gift, bequest,
devise, or inheritance of income from property. Any amount included
in the gross income of a beneficiary under subchapter J shall be
treated for purposes of paragraph (2) as a gift, bequest, devise,
or inheritance of income from property.
(c) Employee gifts
(1) In general
Subsection (a) shall not exclude from gross income any amount
transferred by or for an employer to, or for the benefit of, an
employee.
(2) Cross references
For provisions excluding certain employee achievement awards
from gross income, see section 74(c).
For provisions excluding certain de minimis fringes from
gross income, see section 132(e).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 28; Pub. L. 99-514, title I,
Sec. 122(b), Oct. 22, 1986, 100 Stat. 2110.)
-MISC1-
AMENDMENTS
1986 - Subsec. (c). Pub. L. 99-514 added subsec. (c).
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to prizes and awards
granted after Dec. 31, 1986, see section 151(c) of Pub. L. 99-514,
set out as a note under section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 25A, 135, 274 of this
title.
-End-
-CITE-
26 USC Sec. 103 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART III - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
-HEAD-
Sec. 103. Interest on State and local bonds
-STATUTE-
(a) Exclusion
Except as provided in subsection (b), gross income does not
include interest on any State or local bond.
(b) Exceptions
Subsection (a) shall not apply to -
(1) Private activity bond which is not a qualified bond
Any private activity bond which is not a qualified bond (within
the meaning of section 141).
(2) Arbitrage bond
Any arbitrage bond (within the meaning of section 148).
(3) Bond not in registered form, etc.
Any bond unless such bond meets the applicable requirements of
section 149.
(c) Definitions
For purposes of this section and part IV -
(1) State or local bond
The term "State or local bond" means an obligation of a State
or political subdivision thereof.
(2) State
The term "State" includes the District of Columbia and any
possession of the United States.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 29; Pub. L. 90-364, title I,
Sec. 107(a), June 28, 1968, 82 Stat. 266; Pub. L. 90-634, title IV,
Sec. 401(a), Oct. 24, 1968, 82 Stat. 1349; Pub. L. 91-172, title
VI, Sec. 601(a), Dec. 30, 1969, 83 Stat. 656; Pub. L. 92-178, title
III, Sec. 315(a), (b), Dec. 10, 1971, 85 Stat. 529; Pub. L. 94-164,
Sec. 7(a), Dec. 23, 1975, 89 Stat. 976; Pub. L. 94-182, title III,
Sec. 301(a), Dec. 31, 1975, 89 Stat. 1056; Pub. L. 94-455, title
XIX, Secs. 1901(a)(17), (b)(8)(B), 1906(b)(13)(A), title XXI, Secs.
2105(a)-(c), 2137(d), Oct. 4, 1976, 90 Stat. 1765, 1766, 1794,
1834, 1902, 1931; Pub. L. 95-339, title II, Sec. 201(a), Aug. 8,
1978, 92 Stat. 467; Pub. L. 95-600, title III, Secs. 331(a), (b),
332(a), 333(a), 334(a), (b), title VII, Sec. 703(j)(1), (q)(1),
Nov. 6, 1978, 92 Stat. 2839-2841, 2941, 2944; Pub. L. 96-222, title
I, Sec. 107(a)(3)(C), Apr. 1, 1980, 94 Stat. 223; Pub. L. 96-223,
title II, Secs. 241(a), 242(a), 244(a), Apr. 2, 1980, 94 Stat. 281,
283, 286; Pub. L. 96-499, title XI, Sec. 1103, Dec. 5, 1980, 94
Stat. 2669; Pub. L. 97-34, title VIII, Secs. 811(a), (b), 812(a),
Aug. 13, 1981, 95 Stat. 349, 350; Pub. L. 97-248, title II, Secs.
214(a)-(e), 215(a), (b), 217(a)-(d), 219(a), 221(a), (b), (c)(1),
title III, Sec. 310(b)(1), (c)(1), (2), Sept. 3, 1982, 96 Stat.
466-469, 472-474, 477, 478, 596, 599; Pub. L. 97-424, title V, Sec.
547(a), Jan. 6, 1983, 96 Stat. 2199; Pub. L. 97-473, title II, Sec.
202(b)(2), Jan. 14, 1983, 96 Stat. 2609; Pub. L. 98-369, div. A,
title IV, Sec. 474(r)(4), title VI, Secs. 621-624(a), (b)(2), (3),
626(a), 627, 628(a), (c)-(e), (g), 630, July 18, 1984, 98 Stat.
839, 915-922, 924, 926, 928, 931-933; Pub. L. 99-272, title XIII,
Sec. 13209(e), Apr. 7, 1986, 100 Stat. 323; Pub. L. 99-514, title
XIII, Sec. 1301(a), title XVIII, Secs. 1864(a)(1), (b)-(e),
1865(a), 1869(a), (b), 1870, 1871(a)(1), (b), 1899A(2)-(4), Oct.
22, 1986, 100 Stat. 2602, 2885, 2886, 2888, 2890, 2891, 2958; Pub.
L. 100-647, title I, Sec. 1013(a)(34)(A), (c)(12)(A), Nov. 10,
1988, 102 Stat. 3544, 3547.)
-MISC1-
AMENDMENTS
1988 - Subsec. (b)(6)(N). Pub. L. 100-647, Sec. 1013(c)(12)(A),
amended subpar. (N), as in effect on the day before the date of the
enactment of Pub. L. 99-514 [Oct. 22, 1986], by redesignating cls.
(ii) and (iii) as (iii) and (iv), respectively, and by striking out
cl. (i) and inserting in lieu thereof the following new cls.:
"(i) In general. - Except as provided in clause (ii), this
paragraph shall not apply to any obligation issued after December
31, 1986.
"(ii) Certain refundings. - This paragraph shall apply to any
obligation (or series of obligations) issued to refund an
obligation issued on or before December 31, 1986, if -
"(I) the average maturity date of the issue of which the
refunding obligation is a part is not later than the average
maturity date of the obligations to be refunded by such issue,
"(II) the amount of the refunding obligation does not exceed
the outstanding amount of the refunded obligation, and
"(III) the proceeds of the refunding obligation are used to
redeem the refunded obligation not later than 90 days after the
date of the issuance of the refunding obligation.
For purposes of subclause (I), average maturity shall be determined
in accordance with subsection (b)(14)(B)(i)."
Subsec. (c)(7). Pub. L. 100-647, Sec. 1013(a)(34)(A), amended
par. (7), as in effect on the day before the date of the enactment
of Pub. L. 99-514 [Oct. 22, 1986], by substituting "necessary" for
"necessary".
1986 - Pub. L. 99-514, Sec. 1301(a), in amending section
generally, substituted "Interest on State and local bonds" for
"Interest on certain governmental obligations" in section
catchline.
Subsec. (a). Pub. L. 99-514, Sec. 1301(a), substituted
"Exclusion" for "General rule" in heading and amended text
generally. Prior to amendment, text read as follows: "Gross income
does not include interest on -
"(1) the obligations of a State, a Territory, or a possession
of the United States, or any political subdivision of any of the
foregoing, or of the District of Columbia; and
"(2) qualified scholarship funding bonds."
Subsec. (b). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, substituted provision relating to exceptions for
provision relating to industrial development bonds.
Subsec. (b)(11). Pub. L. 99-272 struck out par. (11) relating to
pollution control facilities acquired by regional pollution control
authorities.
Subsec. (b)(13), (14)(A). Pub. L. 99-514, Sec. 1871(b),
substituted "and (6)" for "(6), and (7)".
Subsec. (b)(16)(A). Pub. L. 99-514, Sec. 1870, substituted
"clause (ii)" for "clause (i)".
Subsec. (b)(17)(A). Pub. L. 99-514, Sec. 1871(b), substituted
"and (6)" for "(6), and (7)".
Subsec. (c). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, substituted provision relating to definitions for
provision relating to arbitrage.
Subsecs. (d) to (g). Pub. L. 99-514, Sec. 1301(a), in amending
section generally, struck out subsecs. (d) to (g) which related to
certain irrigation dams, qualified scholarship funding bonds,
certain federally guaranteed obligations, and qualified
steam-generating or alcohol-producing facilities, respectively.
Subsec. (h). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (h) which provided that obligations
must not be guaranteed.
Subsec. (h)(2)(A). Pub. L. 99-514, Sec. 1899A(2), substituted
"guaranteed" for "guaranted".
Subsec. (h)(5)(A). Pub. L. 99-514, Sec. 1865(a), struck out "the
United States," after "program of".
Subsecs. (i) to (k). Pub. L. 99-514, Sec. 1301(a), in amending
section generally, struck out subsecs. (i) to (k) which related to
obligations of certain volunteer fire departments, provided that
obligations must be in registered form to be tax-exempt, and
required public approval for industrial development bonds,
respectively.
Subsec. (l). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (l) which related to information
reporting requirements for certain bonds.
Subsec. (l)(2)(F). Pub. L. 99-514, Sec. 1864(d), added subpar.
(F) which read: "if such obligation is a private activity bond (as
defined in subsection (n)(7)), such information as the Secretary
may require for purposes of determining whether the requirements of
subsection (n) are met with respect to such obligation."
Subsec. (m). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (m) which related to obligations
exempt other than under this title.
Subsec. (m)(1). Pub. L. 99-514, Sec. 1871(a)(1), substituted
"(j), (k), (l), (n), and (o)" for "(k), (l), and (n)".
Subsec. (m)(3)(B). Pub. L. 99-514, Sec. 1899A(3), substituted
"608(a)(6)(A)" for "608(6)(A)".
Subsec. (n). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (n) which related to limitation on
aggregate amount of private activity bonds issued during any
calendar year.
Subsec. (n)(6)(A), (B)(i). Pub. L. 99-514, Sec. 1864(b),
substituted "governmental units or other authorities" for
"governmental units".
Subsec. (n)(7)(C)(i). Pub. L. 99-514, Sec. 1864(c), substituted
"all of the property to be financed by the obligation" for "the
property described in such paragraph".
Subsec. (n)(10)(B). Pub. L. 99-514, Sec. 1864(e), substituted
"identify project" for "specify project" in heading and "identify
(with reasonable specificity) the project" for "specify the
project" in text of subpar. (B)(i).
Subsec. (n)(10)(D). Pub. L. 99-514, Sec. 1864(e)(2), substituted
"any identification or specification" for "any specification".
Subsec. (n)(13). Pub. L. 99-514, Sec. 1864(a)(1), added par.
(13).
Subsec. (o). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (o) relating to consumer loan bonds.
Pub. L. 99-514, Sec. 1869(a), (b)(1), substituted "Private loan
bonds" for "Consumer loan bonds" in subsection and par. (2)
headings, "private loan bond" for "consumer loan bond" in text of
pars. (1), (2)(A) and (B), and "subsection (c)(6)(H)(i)" for
"subsection (c)(6)(G)(i)" in par. (2)(C)(ii).
Pub. L. 99-514, Sec. 1869(b)(2), redesignated subsec. (o),
relating to cross references, as (p).
Subsec. (p). Pub. L. 99-514, Sec. 1301(a), in amending section
generally, struck out subsec. (p) which related to cross
references.
Pub. L. 99-514, Sec. 1869(b)(2), redesignated former subsec. (o),
relating to cross references, as (p).
Subsec. (p)(4). Pub. L. 99-514, Sec. 1899A(4), substituted
"October 27, 1949 (48 U.S.C. 1403)" for "October 27, 1919 (48
U.S.C. 1403)".
1984 - Subsec. (b)(4). Pub. L. 98-369, Sec. 628(e), inserted "For
purposes of subparagraph (A), any property shall not be treated as
failing to be residential rental property merely because part of
the building in which such property is located is used for purposes
other than residential rental purposes."
Subsec. (b)(6)(F)(iv). Pub. L. 98-369, Sec. 474(r)(4),
substituted "section 30(b)(2)(A)" for "section 44F(b)(2)(A)".
Subsec. (b)(6)(N). Pub. L. 98-369, Sec. 630, designated existing
provisions as cl. (i) and added cls. (ii) and (iii).
Subsec. (b)(6)(P). Pub. L. 98-369, Sec. 628(c), added subpar.
(P).
Subsec. (b)(7). Pub. L. 98-369, Sec. 628(g), repealed par. (7)
which related to advance refunding of qualified public facilities.
Subsec. (b)(13). Pub. L. 98-369, Sec. 628(d), inserted "For
purposes of this paragraph - (A) a partnership and each of its
partners (and their spouses and minor children) shall be treated as
related persons, and (B) an S corporation and each of its
shareholders (and their spouses and minor children) shall be
treated as related persons."
Subsec. (b)(15). Pub. L. 98-369, Sec. 623, added par. (15).
Subsec. (b)(16) to (18). Pub. L. 98-369, Sec. 627, added pars.
(16) to (18).
Subsec. (c). Pub. L. 98-369, Sec. 624(b)(2), struck out "bonds"
after "Arbitrage" in heading.
Subsec. (c)(1). Pub. L. 98-369, Sec. 624(b)(3), inserted "to
arbitrage bonds" in heading.
Subsec. (c)(6), (7). Pub. L. 98-369, Sec. 624(a), added par. (6)
and redesignated former par. (6) as (7).
Subsec. (h). Pub. L. 98-369, Sec. 622, amended subsec. (h)
generally, in par. (1) substituting provisions that obligations are
not included in the section if they are federally guaranteed for
provisions which excluded obligations guaranteed, in whole or part,
by the U.S. under a program to conserve energy, or under other
Federal or State programs, in par. (2) substituting provisions
defining "federally guaranteed" for provisions setting forth
obligations to which this subsection applies, and adding pars. (3)
to (5).
Subsec. (m)(1). Pub. L. 98-369, Sec. 628(a)(1), inserted "In the
case of an obligation issued after December 31, 1983, such
obligation shall not be treated as described in this paragraph
unless the appropriate requirements of subsections (b), (c), (h),
(k), (l), and (n) of this section and section 103A are met with
respect to such obligation. For purposes of applying such
requirements, a possession of the United States shall be treated as
a State; except that clause (ii) of subsection (n)(4)(A) shall not
apply."
Subsec. (m)(2)(B). Pub. L. 98-369, Sec. 628(a)(2), substituted
"is exempt from tax under this title without regard to any
provision of law which is not contained in this title and which is
not contained in a revenue Act" for "is exempt from taxation under
any provision of this title".
Subsec. (m)(3). Pub. L. 98-369, Sec. 628(a)(3), added par. (3).
Subsec. (n). Pub. L. 98-369, Sec. 621, added subsec. (n). Former
subsec. (n), relating to cross references, redesignated (o).
Subsec. (o). Pub. L. 98-369, Sec. 626(a), added subsec. (o)
relating to consumer loan bonds.
Pub. L. 98-369, Sec. 621, redesignated subsec. (n), relating to
cross references, as (o).
1983 - Subsec. (m). Pub. L. 97-424, Sec. 547(a), added subsec.
(m). Former subsec. (m) redesignated (n).
Pub. L. 97-473 amended subsec. (m) generally, adding pars. (1)
and (2), redesignating former pars. (1) to (3) as (3) to (5),
respectively, and striking out par. (24) which had provided
reference regarding exempt-interest dividends to section
852(b)(5)(B.) See section 722(b) of Pub. L. 98-369, set out as a
note below.
Subsec. (n). Pub. L. 97-424, Sec. 547(a), redesignated former
subsec. (m), relating to cross references, as (n).
1982 - Subsec. (b)(2). Pub. L. 97-248, Sec. 215(b)(2),
substituted "For purposes of this section" for "For purposes of
this subsection".
Subsec. (b)(4). Pub. L. 97-248, Secs. 217(a)(1), (b), 221(a),
(c)(1), 310(c)(1), in subpar. (A) substituted "if at all times
during the qualified project period" for "if each obligation issued
pursuant to the issue is in registered form and if" after
"residential rental property", and struck out "(within the meaning
of section 167(k)(3)(B))" after "low or moderate income", added
subpar. (J), struck out provision that for purposes of subpar. (A),
"targeted area project" meant a project located in a qualified
census tract (within the meaning of section 103A(k)(2)) or an area
of chronic economic distress (within the meaning of section
103A(k)(3)) and, in last sentence, substituted "electric energy or
gas from" for "electric energy from".
Subsec. (b)(6)(C). Pub. L. 97-248, Sec. 217(a)(3), substituted
"paragraph (13)" for "paragraph (7)".
Subsec. (b)(6)(F)(iv). Pub. L. 97-248, Sec. 214(d), added cl.
(iv).
Subsec. (b)(6)(K) to (O). Pub. L. 97-248, Sec. 214(a)-(c), (e),
added subpars. (K) to (O).
Subsec. (b)(9)(A). Pub. L. 97-248, Sec. 217(c), inserted "ferry,"
after "rail car" in provisions preceding cl. (i), and in cl. (ii),
inserted "(or, in the case of a ferry, mass transportation
services)" after "mass commuting services".
Subsec. (b)(10). Pub. L. 97-248, Sec. 217(a)(2), added par. (10).
Former par. (10) redesignated (13).
Subsec. (b)(11). Pub. L. 97-248, Sec. 217(d), added par. (11).
Subsec. (b)(12). Pub. L. 97-248, Sec. 221(b), added par. (12).
[Provisions of par. (12)(A) were formerly contained, as
undesignated provisions, in par. (4).]
Subsec. (b)(13). Pub. L. 97-248, Sec. 217(a)(2), redesignated
former par. (10) as (13).
Subsec. (b)(14). Pub. L. 97-248, Sec. 219(a), added par. (14).
Subsec. (h). Pub. L. 97-248, Sec. 310(c)(2), substituted "must
not be guaranteed or subsidized" for "must be in registered form
and not guaranteed or subsidized" in heading, and in par. (1)
struck out subpar. (A) reading "such obligation is not issued in
registered form", and redesignated subpars. (B) and (C) as (A) and
(B), respectively.
Subsec. (j). Pub. L. 97-248, Sec. 310(b)(1), added subsec. (j).
Former subsec. (j), relating to cross references, redesignated (m).
Subsec. (k). Pub. L. 97-248, Sec. 215(a), added subsec. (k).
Subsec. (l). Pub. L. 97-248, Sec. 215(b)(1), added subsec. (l).
Subsec. (m). Pub. L. 97-248, Secs. 215(a), (b)(1), 310(b)(1),
redesignated former subsec. (j), relating to cross references, as
(m).
1981 - Subsec. (b)(4)(I). Pub. L. 97-34, Sec. 811(a), added
subpar. (I).
Subsec. (b)(9), (10). Pub. L. 97-34, Sec. 811(b), added par. (9)
and redesignated former par. (9) as (10).
Subsecs. (i), (j). Pub. L. 97-34, Sec. 812(a), added subsec. (i)
and redesignated former subsec. (i) as (j).
1980 - Subsec. (b)(4). Pub. L. 96-499, Sec. 1103(b), inserted
before last sentence provisions defining "targeted area project"
for purposes of subpar. (A).
Subsec. (b)(4)(A). Pub. L. 96-499, Sec. 1103(a), substituted
provisions relating to low or moderate income residential rental
property for provisions relating to residential real property for
family units.
Subsec. (b)(4)(H). Pub. L. 96-223, Sec. 242(a)(1), added subpar.
(H).
Subsec. (b)(6)(J). Pub. L. 96-499, Sec. 1103(c), added subpar.
(J).
Subsec. (b)(8), (9). Pub. L. 96-223, Sec. 242(a)(2), added par.
(8) and redesignated former par. (8) as (9).
Subsec. (c)(5). Pub. L. 96-222, Sec. 107(a)(3)(C), amended the
directory language of Pub. L. 96-500, Sec. 703(q)(1). See 1978
Amendment note below for subsec. (c)(5).
Subsec. (g). Pub. L. 96-223, Sec. 241(a), added subsec. (g).
Former subsec. (g) redesignated (i).
Subsec. (h). Pub. L. 96-223, Sec. 244(a), added subsec. (h).
Subsec. (i). Pub. L. 96-223, Secs. 241(a), 244(a), redesignated
former subsec. (g) as (i).
1978 - Subsec. (b)(1). Pub. L. 95-600, Sec. 703(j)(1)(A),
substituted "subsection (a)(1) or (2)" for "subsection (a)(1)" in
heading.
Subsec. (b)(4). Pub. L. 95-600, Secs. 332(a), 333(a), in subpar.
(G)(i) inserted reference to electric utility, industrial,
agricultural, or commercial users and added subpar. (G)(ii) and
provision following subpar. (G)(ii) relating to the local
furnishing of electric energy.
Subsec. (b)(6)(D). Pub. L. 95-600, Sec. 331(a), substituted in
heading and cl. (i) "$10,000,000" for "$5,000,000".
Subsec. (b)(6)(I). Pub. L. 95-600, Sec. 331(b), added subpar.
(I).
Subsec. (b)(7), (8). Pub. L. 95-600, Sec. 334(a), (b), added par.
(7), redesignated former par. (7) as (8) and, as so redesignated,
substituted "(6), and (7)" for "and (6)".
Subsec. (c)(1). Pub. L. 95-600, Sec. 703(j)(1)(B), substituted in
heading and text "(a)(1) or (2)" for "(a)(1) or (4)".
Subsec. (c)(2)(A). Pub. L. 95-600, Sec. 703(j)(1)(C), substituted
"subsection (a)(1) or (2)" for "subsection (a)(1) or (2) or (4)".
Subsec. (c)(5). Pub. L. 95-600, Sec. 703(j)(1)(D), (q)(1), as
amended by Pub. L. 96-222, Sec. 107(a)(3)(C), substituted "section
438 of the Higher Education Act of 1965" for "section 2 of the
Emergency Insured Student Loan Act of 1969" and "paragraph (2)(A)"
for "subsection (d)(2)(A)".
Subsec. (d). Pub. L. 95-600, Sec. 703(j)(1)(E), substituted
"subsection (b)(4)(G)" for "subsection (c)(4)(G)".
Subsec. (e). Pub. L. 95-339 redesignated second subsec. (e),
relating to cross references, as (g).
Subsec. (f). Pub. L. 95-339 added subsec. (f).
Subsec. (g). Pub. L. 95-339 redesignated second subsec. (e),
relating to cross references, as (g).
1976 - Subsec. (a). Pub. L. 94-455, Secs. 1901(a)(17)(A),
2105(a), added par. (2) relating to qualified scholarship funding
bonds. Former pars. (2) and (3), relating to obligations of the
United States and to the obligations of corporations organized
under an Act of Congress, were struck out.
Subsec. (b). Pub. L. 94-455, Sec. 1901(a)(17)(B), (C),
redesignated subsec. (c) as (b) and in par. (1) of subsec. (b) as
so redesignated substituted "subsection (a)(1) or (2)" for
"subsection (a)(1)". Former subsec. (b), which created an exception
to the rule that gross income did not include interest on
obligations of the United States, by providing that the exception
did not apply to obligations of the United States (with specified
exceptions) unless under the authorizing Acts such interest is
wholly exempt from the taxes imposed by this subtitle, was struck
out.
Subsec. (c). Pub. L. 94-455, Secs. 1901(a)(17)(B), (D),
(b)(8)(B), 1906(b)(13)(A), 2105(c), redesignated subsec. (d) as (c)
and, in subsec. (c) as so redesignated, substituted "(a)(1) or (4)"
for "(a)(1)" in par. (1) and "(a)(1) or (2) or (4)" for "(a)(1)" in
par. (2)(A), substituted "educational organization described in
section 170(b)(1)(A)(ii)" for "educational institution (within the
meaning of section 151(e)(4))" in par. (3)(A), added par. (5),
redesignated former par. (5) as (6), and in par. (6) as so
redesignated substituted "Secretary" for "Secretary or his
delegate". Former subsec. (c) redesignated (b). See Codification
note above.
Subsec. (d). Pub. L. 94-455, Sec. 1901(a)(17)(B), redesignated
subsec. (e) as (d). Former subsec. (d) redesignated (c).
Subsec. (e). Pub. L. 94-455, Secs. 1901(a)(17)(B), (E), 2105(b),
2137(d), added subsec. (e) relating to qualified scholarship
funding bonds, redesignated former subsec. (f) relating to cross
references as a second subsec. (e), reduced the number of cross
references in subsec. (e) as so redesignated from twenty-three
(which made reference to various obligations of the United States
and of corporations organized under Acts of Congress) to three,
relating, respectively, to Puerto Rican bonds, Virgin Islands
insular and municipal bonds, and certain obligations issued under
title I of the Housing Act of 1949, and inserted a fourth cross
reference, designated as par. (24) relating to the treatment of
exempt-interest dividends. Former subsec. (e) redesignated (d).
Subsec. (f). Pub. L. 94-455, Sec. 1901(a)(17)(B), redesignated
subsec. (f), relating to cross references, as (e).
1975 - Subsecs. (e), (f). Pub. L. 94-182 and Pub. L. 94-164 made
identical amendments, adding subsec. (e) and redesignating former
subsec. (e) as (f).
1971 - Subsec. (c)(4)(E). Pub. L. 92-178, Sec. 315(a)(1),
substituted "energy or gas," for "energy, gas, or water or".
Subsec. (c)(4)(F). Pub. L. 92-178, Sec. 315(a)(2), substituted ",
or" for a period.
Subsec. (c)(4)(G). Pub. L. 92-178, Sec. 315(a)(3), added subpar.
(G).
Subsec. (c)(6)(F)(iii). Pub. L. 92-178, Sec. 315(b), substituted
"$1,000,000" for "$250,000".
1969 - Subsecs. (d), (e). Pub. L. 91-172 added subsec. (d) and
redesignated former subsec. (d) as (e).
1968 - Subsec. (c). Pub. L. 90-364 added subsec. (c). Former
subsec. (c) redesignated (d).
Subsec. (c)(6)(D) to (H). Pub. L. 90-634 added subpars. (D) to
(H).
Subsec. (d). Pub. L. 90-364 redesignated former subsec. (c) as
(d).
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1013(a)(34)(B) of Pub. L. 100-647 provided that:
"Subparagraph (A) [amending this section] shall apply to
obligations sold after May 2, 1978, and to which Treasury
regulation section 1.103-13 (1979) was provided to apply."
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 1301(a) of Pub. L. 99-514 applicable to
bonds issued after Aug. 15, 1986, except as otherwise provided, see
sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective
Date; Transitional Rules note under section 141 of this title.
Amendment by sections 1864(b)-(e), 1865(a), 1869(a), (b), 1870,
and 1871(b) of Pub. L. 99-514 effective, except as otherwise
provided, as if included in the provisions of the Tax Reform Act of
1984, Pub. L. 98-369, div. A, to which such amendment relates, see
section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
Section 1864(a)(2) of Pub. L. 99-514 provided that:
"(A) Except as provided in subparagraph (B), the amendment made
by paragraph (1) [amending this section] shall apply to obligations
issued after the date of the enactment of this Act [Oct. 22, 1986]
in taxable years ending after such date.
"(B) At the election of the issuer (made at such time and in such
manner as the Secretary of the Treasury or his delegate shall
prescribe), the amendment made by paragraph (1) shall apply to any
obligation issued on or before the date of the enactment of this
Act."
Section 1871(a)(2) of Pub. L. 99-514 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to obligations issued after March 28, 1985, in taxable years ending
after such date."
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(r)(4) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Section 624(c) of Pub. L. 98-369, as amended by Pub. L. 99-514,
title XVIII, Sec. 1867(a), Oct. 22, 1986, 100 Stat. 2888, provided
that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and section 103A of this title] shall apply with respect to
bonds issued after December 31, 1984.
"(2) Exception. - The amendments made by this section shall not
apply to obligations issued for the Essex County New Jersey
Resource Recovery Project authorized by the Port Authority of New
York and New Jersey on November 10, 1983, as part of an agreement
approved by Essex County, New Jersey, on July 7, 1981, and approved
by the State of New Jersey on December 31, 1981. The aggregate face
amount of bonds to which this paragraph applies shall not exceed
$350,000,000."
Section 626(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, title XIII, Sec. 1317(22), title XVIII, Sec. 1869(c)(5),
Oct. 22, 1986, 100 Stat. 2095, 2698, 2890; Pub. L. 100-647, title
I, Sec. 1013(g)(24), Nov. 10, 1988, 102 Stat. 3554, provided that:
"(1) In general. - Except as otherwise provided in this
subsection the amendment made by subsection (a) [amending this
section] shall apply to obligations issued after the date of
enactment of this Act [July 18, 1984].
"(2) Exceptions for certain student loan programs. -
"(A) In general. - The amendments made by this section
[amending this section] shall not apply to obligations issued by
a program described in the following table to the extent the
aggregate face amount of such obligations does not exceed the
amount of allowable obligations specified in the following table
with respect to such program:
Program Amount of
Allowable
Obligations
--------------------------------------------------------------------
Colorado Student Obligation Bond Authority $60 million
Connecticut Higher Education Supplementary Loan $15.5
Authority million
District of Columbia $50 million
Illinois Higher Education Authority $70 million
State of Iowa $16 million
Louisiana Public Facilities Authority $75 million
Maine Health and Higher Education Facilities $5 million
Authority
Maryland Higher Education Supplemental Loan Progra $24 million
Massachusetts College Student Loan Authority $90 million
Minnesota Higher Education Coordinating Board $60 million
New Hampshire Higher Education and Health $39 million
Facilities Authority
New York Dormitory Authority $120 million
Pennsylvania Higher Education Assistance Agency $300 million
Georgia Private Colleges and University Authority $31 million
Wisconsin State Building Commission $60 million
South Dakota Health and Educational Facilities $6 million
Authority
--------------------------------------------------------------------
"(B) Pennsylvania higher education assistance agency. -
Subparagraph (A) shall apply to obligations issued by the
Pennsylvania Higher Education Assistance Agency only if such
obligations are issued solely for the purpose of refunding
student loan bonds outstanding on March 15, 1984.
"(3) Certain tax-exempt mortgage subsidy bonds. - For purposes of
applying section 103(o) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954], the term 'consumer loan bond' shall not
include any mortgage subsidy bond (within the meaning of section
103A(b) of such Code) to which the amendments made by section 1102
of the Mortgage Subsidy Bond Tax Act of 1980 [enacting section 103A
of this title] do not apply.
"(4) Refunding exception. - The amendments made by this section
[amending this section] shall not apply to any obligation or series
of obligations the proceeds of which are used exclusively to refund
obligations issued before March 15, 1984, except that -
"(A) the amount of the refunding obligations may not exceed 101
percent of the aggregate face amount of the refunded obligations,
and
"(B) the maturity date of any refunding obligation may not be
later than the date which is 17 years after the date on which the
refunded obligation was issued (or, in the case of a series of
refundings, the date on which the original obligation was
issued).
"(5) Exception for certain established programs. - The amendments
made by this section [amending this section] shall not apply to any
obligation substantially all of the proceeds of which are used to
carry out a program established under State law which has been in
effect in substantially the same form during the 30-year period
ending on the date of enactment of this Act [July 18, 1984], but
only if such proceeds are used to make loans or to fund similar
obligations -
"(A) in the same manner in which,
"(B) in the same (or lesser) amount per participant, and
"(C) for the same purposes for which,
such program was operated on March 15, 1984. This subparagraph
shall not apply to obligations issued on or after March 15, 1987.
"(6) Certain bonds for renewable energy property. - The
amendments made by this section [amending this section] shall not
apply to any obligations described in section 243 of the Crude Oil
Windfall Profit Tax Act of 1980 [Pub. L. 96-223, set out as a note
below].
"(7) Exception for certain downtown redevelopment project. - The
amendments made by this section [amending this section] shall not
apply to any obligation which is issued as part of an issue 95
percent or more of the proceeds of which are to be used to provide
a project to acquire and redevelop a downtown area if -
"(A) on August 15, 1985, a downtown redevelopment authority
adopted a resolution to issue obligations for such project,
"(B) before September 26, 1985, the city expended, or entered
into binding contracts to expend, more than $10,000,000 in
connection with such project, and
"(C) the State supreme court issued a ruling regarding the
proposed financing structure for such project on December 11,
1985.
The aggregate face amount of obligations to which this paragraph
applies shall not exceed $85,000,000 and such obligations must be
issued before January 1, 1992."
Section 631 of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec.
2, title XIII, Secs. 1316(j), 1317(43), title XVIII, Sec.
1872(a)-(c)(1), Oct. 22, 1986, 100 Stat. 2095, 2670, 2708, 2891,
2892; Pub. L. 100-647, title I, Sec. 1013(f)(8), (g)(40), Nov. 10,
1988, 102 Stat. 3549, 3557, provided that:
"(a) Private Activity Bond Cap. -
"(1) In general. - Except as otherwise provided in this
subsection, the amendment made by section 621 [amending this
section] shall apply to obligations issued after December 31,
1983.
"(2) Inducement resolution before june 19, 1984. - The
amendment made by section 621 shall not apply to any issue of
obligations if -
"(A) there was an inducement resolution (or other comparable
preliminary approval) for the issue before June 19, 1984, and
"(B) the issue is issued before January 1, 1985.
"(3) Certain projects preliminarily approved before october 19,
1983, given approval. - If -
"(A) there was an inducement resolution (or other comparable
preliminary approval) for a project before October 19, 1983, by
any issuing authority,
"(B) a substantial user of such project notifies the issuing
authority within 30 days after the date of the enactment of
this Act [July 18, 1984] that it intends to claim its rights
under this paragraph, and
"(C) construction of such project began before October 19,
1983, or the substantial user was under a binding contract on
such date to incur significant expenditures with respect to
such project,
such issuing authority shall allocate its share of the limitation
under section 103(n) of such Code for the calendar year during
which the obligations were to be issued pursuant to such
resolution (or other approval) first to such project. If the
amount of obligations required by all projects which meet the
requirements of the preceding sentence exceeds the issuing
authority's share of the limitation under section 103(n) of such
Code, priority under the preceding sentence shall be provided
first to those projects for which substantial expenditures were
incurred before October 19, 1983. If any issuing authority fails
to meet the requirements of this paragraph, the limitation under
section 103(n) of such Code for the issuing authority for the
calendar year following such failure shall be reduced by the
amount of obligations with respect to which such failure
occurred.
"(3) [(4)] Exception for certain bonds for a convention center
and resource recovery project. - In the case of any city, if -
"(A) the city council of such city authorized a feasibility
study for a convention center on June 10, 1982, and
"(B) on November 4, 1983, a municipal authority acting for
such city accepted a proposal for the construction of a
facility that is capable of generating steam and electricity
through the combustion of municipal waste,
the amendment made by section 621 shall not apply to any issue,
issued during 1984, 1985, 1986, or 1987 and substantially all of
the proceeds of which are to be used to finance the convention
center (or access ramps and parking facilities therefor)
described in subparagraph (A) or the facility described in
subparagraph (B).
"(b) Property Financed With Tax-Exempt Bonds Required To Be
Depreciated on Straight-Line Basis. -
"(1) In general. - Except as otherwise provided in this
section, the amendments made by section 628(b) [amending section
168 of this title] shall apply to property placed in service
after December 31, 1983, to the extent such property is financed
by the proceeds of an obligation (including a refunding
obligation) issued after October 18, 1983.
"(2) Exceptions. -
"(A) Construction or binding agreement. - The amendments made
by section 628(b) shall not apply with respect to facilities -
"(i) the original use of which commences with the taxpayer
and the construction, reconstruction, or rehabilitation of
which began before October 19, 1983, or
"(ii) with respect to which a binding contract to incur
significant expenditures was entered into before October 19,
1983.
"(B) Refunding. -
"(i) In general. - Except as provided in clause (ii), in
the case of property placed in service after December 31,
1983, which is financed by the proceeds of an obligation
which is issued solely to refund another obligation which was
issued before October 19, 1983, the amendments made by
section 628(b) shall apply only with respect to an amount
equal to the basis in such property which has not been
recovered before the date such refunded obligation is issued.
"(ii) Significant expenditures. - In the case of facilities
the original use of which commences with the taxpayer and
with respect to which significant expenditures are made
before January 1, 1984, the amendments made by section 628(b)
shall not apply with respect to such facilities to the extent
such facilities are financed by the proceeds of an obligation
issued solely to refund another obligation which was issued
before October 19, 1983.
"(C) Facilities. - In the case of an inducement resolution or
other comparable preliminary approval adopted by an issuing
authority before October 19, 1983, for purposes of applying
subparagraphs (A)(i) and (B)(ii) with respect to obligations
described in such resolution, the term 'facilities' means the
facilities described in such resolution.
"(c) Other Provisions Relating to Tax-Exempt Bonds. -
"(1) In general. - Except as otherwise provided in this
subtitle, the amendments made by sections 622, 623, 627, and
628(c), (d), and (e) (and the provisions of sections 625(c),
628(f), and 629(b)) [amending this section and enacting
provisions set out as notes under this section] shall apply to
obligations issued after December 31, 1983.
"(2) Obligations invested in federally insured deposits. -
Notwithstanding any other provision of this section, clause (ii)
of section 103(h)(2)(B) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954] (as amended by this subtitle) shall apply
to obligations issued after April 14, 1983; except that such
clause shall not apply to any obligation issued pursuant to a
binding contract in effect on March 4, 1983.
"(3) Exceptions. -
"(A) Construction or binding agreement. - The amendments (and
provisions) referred to in paragraph (1) shall not apply to
obligations with respect to facilities -
"(i) the original use of which commences with the taxpayer
and the construction, reconstruction, or rehabilitation of
which began before October 19, 1983, and was completed on or
after such date,
"(ii) the original use of which commences with the taxpayer
and with respect to which a binding contract to incur
significant expenditures for construction, reconstruction, or
rehabilitation was entered into before October 19, 1983, and
some of such expenditures are incurred on or after such date,
or
"(iii) acquired after October 19, 1983, pursuant to a
binding contract entered into on or before such date.
"(B) Facilities. - Subparagraph (C) of subsection (b)(2)
shall apply for purposes of subparagraph (A) of this paragraph.
"(C) Exception. - Subparagraph (A) shall not apply with
respect to the amendment made by section 628(e) and the
provisions of sections 628(f) and 629(b) [amending this section
and enacting provisions set out as notes under this section].
"(4) Repeal of advance refunding of qualified public
facilities. - The amendment made by section 628(g) [amending this
section] shall apply to refunding obligations issued after the
date of the enactment of this Act [July 18, 1984]; except that if
substantially all the proceeds of the refunded issue were used to
provide airports or docks, such amendment shall only apply to
refunding obligations issued after December 31, 1984. In the case
of refunding obligations not to exceed $100,000,000 issued after
October 21, 1986, by Dade County, Florida, for the purpose of
advance refunding its Aviation Revenue Bonds (Series J), the
first sentence of this paragraph shall be applied by substituting
'the date which is 1 year after the date of the enactment of the
Technical and Miscellaneous Revenue Act of 1988 [Nov. 10, 1988]'
for 'December 31, 1984' and the amendments made by section 1301
of the Tax Reform Act of 1986 [section 1301 of Pub. L. 99-514,
enacting sections 141 to 150 and 7703 of this title, amending
this section and sections 2, 22, 25, 32, 86, 105, 152, 153, 163,
194, 269A, 414, 879, 1398, 3402, 4701, 4940, 4942, 4988, 6362,
6652, and 7871 of this title, repealing section 103A of this
title, enacting provisions set out as notes under sections 141
and 148 of this title, and amending provisions set out as a note
under section 103A of this title] shall not apply. In the case of
refunding obligations not exceeding $100,000,000 issued by the
Alabama State Docks Department, the first sentence of this
paragraph shall be applied by substituting 'December 31, 1987'
for 'December 31, 1984' and the Internal Revenue Code of 1986
shall be applied without regard to section 149(d)(2)..[sic]
"(5) Special rule for health club facilities. - In the case of
any health club facility, with respect to the amendment made by
section 627(c) [amending this section] -
"(A) paragraph (1) shall be applied by substituting 'April
12, 1984' for 'December 31, 1983', and
"(B) paragraph (3) shall be applied by substituting 'April
13, 1984' for 'October 19, 1983' each place it appears.
"(d) Provisions of This Subtitle Not To Apply to Certain
Property. - The amendments made by this subtitle [sections 621-632
of Pub. L. 98-369, amending this section and sections 103A and 168
of this title and enacting provisions set out as notes under this
section] shall not apply to any property (and shall not apply to
obligations issued to finance such property) if such property is
described in any of the following paragraphs:
"(1) Any property described in paragraph (5), (6), or (7) of
section 31(g) of this Act [set out as an Effective Date of 1984
Amendment note under section 168 of this title].
"(2) Any property described in paragraph (4), (8), or (17) of
section 31(g) of this Act [set out as an Effective Date of 1984
Amendment note under section 168 of this title] but only if the
obligation is issued before January 1, 1985, and only if before
June 19, 1984, the issuer had evidenced an intent to issue
obligations exempt from taxation under the Internal Revenue Code
of 1986 in connection with such property.
"(3) Any property described in paragraph (3) of section 216(b)
of the Tax Equity and Fiscal Responsibility Act of 1982 [set out
as an Effective Date of 1982 Amendment note under section 168 of
this title].
"(4) Any solid waste disposal facility described in section
103(b)(4)(E) of the Internal Revenue Code of 1986 if -
"(A) a State public authority created pursuant to State
legislation which took effect on June 18, 1973, took formal
action before October 19, 1983, to commit development funds for
such facility.
"(B) such authority issues obligations for any such facility
before January 1, 1987, and
"(C) expenditures have been made for the development of any
such facility before October 19, 1983.
"(5) Any solid waste disposal facility described in section
103(b)(4)(E) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954] if -
"(A) a city government, by resolutions adopted on April 10,
1980, and December 27, 1982, took formal action to authorize
the submission of a proposal for a feasibility study for such
facility and to authorize the presentation to the Department of
the Army (U.S. Army Missile Command) of a proposed agreement to
jointly pursue construction and operation of such facility,
"(B) such city government (or a public authority on its
behalf) issues obligations for such facility before January 1,
1988, and
"(C) expenditures have been made for the development of such
facility before October 19, 1983. Notwithstanding the foregoing
provisions of this subsection, the amendments made by section
624 [amending sections 103 and 103A of this title and enacting
provisions set out as a note under this section] (relating to
arbitrage) shall apply to obligations issued to finance
property described in paragraph (5).
"(e) Determination of Significant Expenditure. -
"(1) In general. - For purposes of this section, the term
'significant expenditures' means expenditures which equal or
exceed the lesser of -
"(A) $15,000,000, or
"(B) 20 percent of the estimated cost of the facilities.
"(2) Certain grants treated as expenditures. - For purposes of
paragraph (1), the amount of any UDAG grant preliminarily
approved on May 5, 1981, or April 4, 1983, shall be treated as an
expenditure with respect to the facility for which such grant was
so approved.
"(f) Exceptions for Certain Other Amendments. - If -
"(1) there was an inducement resolution (or other comparable
preliminary approval) for an issue before June 19, 1984, by any
issuing authority, and
"(2) such issue is issued before January 1, 1985, the following
amendments shall not apply:
"(A) the amendments made by section 623 [amending this
section],
"(B) the amendments made by subsections (a) and (b) of
section 627 [amending this section] (except to the extent such
amendments relate to farm land),
"(C) in the case of a race track, the amendment made by
section 627(c) [amending this section], and
"(D) the amendments made by section 628(c) [amending this
section]."
[Section 1872(a)(2)(B) of Pub. L. 99-514 provided that the
amendment of section 631(c)(3) of Pub. L. 98-369, set out above,
made by section 1872(a)(2)(B) of Pub. L. 99-514 is effective with
respect to obligations issued after Mar. 28, 1985.]
EFFECTIVE DATE OF 1983 AMENDMENT
For effective date of amendment by Pub. L. 97-473, see section
204(2) of Pub. L. 97-473, set out as an Effective Date note under
section 7871 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 214(f) of Pub. L. 97-248 provided that:
"(1) Composite issues; small issue exemption. - The amendments
made by subsections (a) and (b) [amending this section] shall apply
to obligations issued after the date of the enactment of this Act
[Sept. 3, 1982].
"(2) Termination. - The amendment made by subsection (c)
[amending this section] shall take effect on the date of the
enactment of this Act [Sept. 3, 1982].
"(3) Research expenditures. - The amendment made by subsection
(d) [amending this section] shall apply with respect to
expenditures made after the date of the enactment of this Act
[Sept. 3, 1982].
"(4) Certain facilities. - The amendment made by subsection (e)
[amending this section] shall apply to obligations issued after
December 31, 1982."
Section 215(c) of Pub. L. 97-248 provided that:
"(1) Public approval. - The amendment made by subsection (a)
[amending this section] shall apply to obligations issued after
December 31, 1982, other than obligations issued solely to refund
any obligation which -
"(A) was issued before July 1, 1982, and
"(B) has a maturity which does not exceed 3 years.
"(2) Information reporting. - The amendments made by subsection
(b) [amending this section] shall apply to obligations issued after
December 31, 1982 (including any obligation issued to refund an
obligation issued before such date)."
Section 217(e) of Pub. L. 97-248, as amended by Pub. L. 98-369,
div. A, title VII, Sec. 712(h), July 18, 1984, 98 Stat. 947; Pub.
L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"The amendments made by this section [amending this section] shall
apply to obligations issued after the date of the enactment of this
Act [Sept. 3, 1982]. For purposes of applying section
168(f)(8)(D)(v) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954], the amendments made by subsection (c) [amending this
section] shall apply to agreements entered into after the date of
the enactment of this Act."
Section 219(b) of Pub. L. 97-248 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
obligations issued after December 31, 1982."
Section 221(d) of Pub. L. 97-248 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and section
1104 of Pub. L. 96-499, formerly set out as a note under section
103A of this title] shall apply to obligations issued after the
date of the enactment of this Act [Sept. 3, 1982].
"(2) Exception. - The amendments made by this section shall not
apply with respect to any obligation to which the amendments made
by section 1103 of the Mortgage Subsidy Bond Tax Act of 1980
[section 1103 of Pub. L. 96-499, amending this section] do not
apply by reason of section 1104 of such Act [section 1104 of Pub.
L. 96-499, formerly set out as a note under section 103A of this
title]."
Section 310(d) of Pub. L. 97-248, as amended by Pub. L. 97-448,
title III, Sec. 306(b)(2), 96 Stat. 2405; Pub. L. 98-216, Sec.
6(b), Feb. 14, 1984, 98 Stat. 8; Pub. L. 99-514, Sec. 2, Oct. 22,
1986, 100 Stat. 2095, provided that:
"(1) In general. - Except as otherwise provided in this
subsection, the amendments made by this section [enacting section
4701 of this title and section 757c-5 of former Title 31, Money and
Finance, and amending this section and sections 103A, 163, 165,
312, and 1232 of this title] shall apply to obligations issued
after December 31, 1982.
"(2) [Repealed. Pub. L. 98-216, Sec. 6(b), Feb. 14, 1984, 98
Stat. 8.]
"(3) Exception for certain warrants, etc. - The amendments made
by subsection (b) [enacting section 4701 of this title and amending
this section and sections 163, 165, 312, and 1232 of this title]
shall not apply to any obligations issued after December 31, 1982,
on the exercise of a warrant or the conversion of a convertible
obligation if such warrant or obligation was offered or sold
outside the United States without registration under the Securities
Act of 1933 [15 U.S.C. 77a et seq.] and was issued before August
10, 1982. A rule similar to the rule of the preceding sentence
shall also apply in the case of any regulations issued under
section 163(f)(2)(C) of the Internal Revenue Code of 1986 [formerly
I.R.C. 1954] (as added by this section) except that the date on
which such regulations take effect shall be substituted for 'August
10, 1982'.
"(4) [Repealed. Pub. L. 98-216, Sec. 6(b), Feb. 14, 1984, 98
Stat. 8.]"
EFFECTIVE DATE OF 1981 AMENDMENT
Section 811(c) of Pub. L. 97-34 provided that: "The amendments
made by this section [amending this section] shall apply to
obligations issued after the date of the enactment of this Act
[Aug. 13, 1981]."
Section 812(b)(1) of Pub. L. 97-34 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
obligations issued after December 31, 1980."
EFFECTIVE DATE OF 1980 AMENDMENTS
For effective date of amendment by Pub. L. 96-499, see section
1104 of Pub. L. 96-499, set out as an Effective Date note under
section 103A of this title.
Section 241(d) of Pub. L. 96-223 provided that: "The amendments
made by subsection (a) [amending this section] and the provisions
of subsections (b) and (c) [set out as notes under this section]
shall apply with respect to obligations issued after October 18,
1979."
Section 242(c) of Pub. L. 96-223 provided that: "The amendments
made by subsection (a) [amending this section] and the provisions
of subsection (b) [set out as a note under this section] shall
apply with respect to obligations issued after October 18, 1979."
Section 244(b) of Pub. L. 96-223 provided that: "The amendments
made by subsection (a) [amending this section] shall apply to
obligations issued on or after October 18, 1979."
EFFECTIVE DATE OF 1978 AMENDMENTS
Section 201(c) of Pub. L. 95-339 provided that: "The amendments
made by subsection (a) [amending this section] shall apply to
taxable years ending after the date of the enactment of this Act
[Aug. 8, 1978]."
Section 331(c) of Pub. L. 95-600 provided that:
"(1) The amendments made by subsection (a) [amending this
section] shall apply to -
"(A) obligations issued after December 31, 1978, in taxable
years ending after such date, and
"(B) capital expenditures made after December 31, 1978, with
respect to obligations issued before January 1, 1979.
"(2) The amendment made by subsection (b) [amending this section]
shall apply to -
"(A) obligations issued after September 30, 1979, in taxable
years ending after such date, and
"(B) capital expenditures made after September 30, 1979, with
respect to obligations issued after such date."
Section 332(b) of Pub. L. 95-600 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
taxable years ending after April 30, 1968, but only with respect to
obligations issued after such date."
Section 333(b) of Pub. L. 95-600 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
obligations issued after the date of the enactment of this Act
[Nov. 6, 1978] in taxable years ending after such date."
Section 334(c) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section] shall apply to
obligations issued after the date of the enactment of this Act
[Nov. 6, 1978]."
Section 703(q)(2) of Pub. L. 95-600 provided that: "The
amendments made by paragraph (1) [amending this section] shall
apply with respect to payments made by the Commissioner of
Education after December 31, 1976."
Amendment by section 703(j)(1) of Pub. L. 95-600 effective on
Oct. 4, 1976, see section 703(r) of Pub. L. 95-600, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(17), (b)(8)(B) of Pub. L. 94-455
applicable with respect to taxable years ending after Oct. 4, 1976,
see section 1901(d) of Pub. L. 94-455, set out as a note under
section 2 of this title.
Amendment by section 1906(b)(13)(A) of Pub. L. 94-455 effective
Feb. 1, 1977, see section 1906(d)(1) of Pub. L. 94-455, set out as
a note under section 6013 of this title.
Section 2105(d) of Pub. L. 94-455 provided that: "The amendments
made by this section [amending this section] apply to obligations
issued on or after the date of the enactment of this Act [Oct. 4,
1976]."
Amendment by section 2137(d) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1975, see section 2137(e) of
Pub. L. 94-455, set out as a note under section 852 of this title.
EFFECTIVE DATE OF 1975 AMENDMENTS
Section 301(b) of Pub. L. 94-182 provided that: "The amendment
made by subsection (a) [amending this section] shall apply to
obligations issued after the date of the enactment of this Act
[Dec. 31, 1975]."
Section 7(b) of Pub. L. 94-164 provided that: "The amendments
made by this section [amending this section] shall apply to
obligations issued after the date of enactment of this Act [Dec.
23, 1975]."
EFFECTIVE DATE OF 1971 AMENDMENT
Section 315(c) of Pub. L. 92-178 provided that: "The amendments
made by subsection (a) [amending this section] shall apply with
respect to obligations issued after January 1, 1969. The amendment
made by subsection (b) [amending this section] shall apply with
respect to expenditures incurred after the date of the enactment of
this Act [Dec. 10, 1971]."
EFFECTIVE DATE OF 1969 AMENDMENT
Section 601(b) of Pub. L. 91-172 provided that: "The amendments
made by subsection (a) [amending this section] shall apply with
respect to obligations issued after October 9, 1969."
EFFECTIVE DATE OF 1968 AMENDMENT
Section 401(b) of Pub. L. 90-634 provided that: "The amendment
made by subsection (a) [amending this section] shall apply with
respect to obligations issued after the date of the enactment of
this Act [Oct. 24, 1968]."
Section 107(b)(1) of Pub. L. 90-364 provided that: "Except as
provided by paragraph (2) [set out as a note below], the amendment
made by subsection (a) [amending this section] shall apply to
taxable years ending after April 30, 1968, but only with respect to
obligations issued after such date."
-TRANS-
TRANSFER OF FUNCTIONS
Functions of Commissioner of Education transferred to Secretary
of Education by section 3441(a)(1) of Title 20, Education.
-MISC2-
COORDINATION OF CERTAIN AMENDMENTS MADE BY PUB. L. 97-424 AND PUB.
L. 97-473
Section 722(b) of Pub. L. 98-369 provided that: "For purposes of
applying the amendments made by section 547 of the Highway Revenue
Act of 1982 [Pub. L. 97-424, amending this section] and the
amendment made by section 202(b)(2) of Public Law 97-473 [amending
this section], Public Law 97-473 shall be deemed to have been
enacted immediately before the Highway Revenue Act of 1982."
VALIDATION OF SINKING FUND REGULATIONS
Section 1013(a)(35) of Pub. L. 100-647 provided that:
"(A) Treasury Regulation section 1.103-13(g) (1979) is hereby
enacted into positive law.
"(B)(i) Except as provided in clause (ii), subparagraph (A) shall
apply to obligations sold after May 2, 1978, and to which such
regulation was provided to apply.
"(ii) Treasury Regulation section 1.103-13(g) (1979) as enacted
into positive law by subparagraph (A) shall cease to apply to the
extent hereafter modified by the Secretary of the Treasury or his
delegate by regulations."
BONDS ISSUED TO REFUND SUBSECTION (O)(3) OBLIGATIONS
Section 1013(c)(15) of Pub. L. 100-647 provided that: "A bond
issued to refund an obligation described in section 103(o)(3) of
the Internal Revenue Code of 1954 (as in effect on the day before
the date of the enactment of the Tax Reform Act of 1986 [Oct. 22,
1986]) shall not be treated as described in section 144(b) of the
1986 Code unless it is described in section 144(b)(1)(A) of the
1986 Code."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
TREATMENT OF CERTAIN GUARANTEES BY FARMERS HOME ADMINISTRATION
Section 1865(b) of Pub. L. 99-514 provided that: "An obligation
shall not be treated as federally guaranteed for purposes of
section 103(h) of the Internal Revenue Code of 1954 [now 1986] by
reason of a guarantee by the Farmers Home Administration if -
"(1) such guarantee is pursuant to a commitment made by the
Farmers Home Administration before July 1, 1984, and
"(2) such obligation is issued to finance a convention center
project in Carbondale, Illinois."
TREATMENT OF CERTAIN OBLIGATIONS USED TO FINANCE SOLID WASTE
DISPOSAL FACILITY
Section 1865(c) of Pub. L. 99-514 provided that:
"(1) In general. - Any obligation which is part of an issue a
substantial portion of the proceeds of which is to be used to
finance a solid waste disposal facility described in paragraph (2)
shall not, for purp |