1. U.S. Code
  2. title 26
  3. subtitle A
  4. chapter 1
  5. subchapter B
  6. part III
  7. § 109

Collapse to view only § 109. Improvements by lessee on lessor’s property

§ 101. Certain death benefits
(a) Proceeds of life insurance contracts payable by reason of death
(1) General rule
(2) Transfer for valuable considerationIn 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).
(3) Exception to valuable consideration rules for commercial transfers
(A) In general
(B) Reportable policy sale
[(b) Repealed. Pub. L. 104–188, title I, § 1402(a), Aug. 20, 1996, 110 Stat. 1789]
(c) Interest
(d) Payment of life insurance proceeds at a date later than death
(1) General rule
(2) Amount held by an insurerAn 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
[(e) Repealed. Pub. L. 98–369, div. A, title IV, § 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 generalAny 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 limitationFor purposes of this subsection—
(A) Guideline premium limitationThe 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 premiumThe 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
(D) Computational rulesIn 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
(3) Other definitions and special rulesFor purposes of this subsection—
(A) Flexible premium life insurance contract
(B) Premiums paidThe 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 percentageThe 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
(E) Qualified additional benefitsThe 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
(G) Net single premiumIn 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 errorsIf 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
(g) Treatment of certain accelerated death benefits
(1) In generalFor 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
(B) Viatical settlement provider
(i) In generalThe 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 insuredsA 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 insuredsA 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 insuredsIn the case of an insured who is a chronically ill individual—
(A) In generalParagraphs (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 requirementsThe 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
(D) Limitation on exclusion for periodic payments
(4) DefinitionsFor purposes of this subsection—
(A) Terminally ill individual
(B) Chronically ill individual
(C) Qualified long-term care services
(D) Physician
(5) Exception for business-related policies
(h) Survivor benefits attributable to service by a public safety officer who is killed in the line of duty
(1) In generalGross 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, as in effect immediately before the enactment of the National Defense Authorization Act for Fiscal Year 2013) 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) ExceptionsParagraph (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
(2) Limitation
(A) In general
(B) Exception
(3) Treatment of self-employed individuals
(4) Relief with respect to astronauts
(j) Treatment of certain employer-owned life insurance contracts
(1) General rule
(2) ExceptionsIn the case of an employer-owned life insurance contract with respect to which the notice and consent requirements of paragraph (4) are met, paragraph (1) shall not apply to any of the following:
(A) Exceptions based on insured’s statusAny amount received by reason of the death of an insured who, with respect to an applicable policyholder—
(i) was an employee at any time during the 12-month period before the insured’s death, or
(ii) is, at the time the contract is issued—(I) a director,(II) a highly compensated employee within the meaning of section 414(q) (without regard to paragraph (1)(B)(ii) thereof), or(III) a highly compensated individual within the meaning of section 105(h)(5), except that “35 percent” shall be substituted for “25 percent” in subparagraph (C) thereof.
(B) Exception for amounts paid to insured’s heirsAny amount received by reason of the death of an insured to the extent—
(i) the amount is paid to a member of the family (within the meaning of section 267(c)(4)) of the insured, any individual who is the designated beneficiary of the insured under the contract (other than the applicable policyholder), a trust established for the benefit of any such member of the family or designated beneficiary, or the estate of the insured, or
(ii) the amount is used to purchase an equity (or capital or profits) interest in the applicable policyholder from any person described in clause (i).
(3) Employer-owned life insurance contract
(A) In generalFor purposes of this subsection, the term “employer-owned life insurance contract” means a life insurance contract which—
(i) is owned by a person engaged in a trade or business and under which such person (or a related person described in subparagraph (B)(ii)) is directly or indirectly a beneficiary under the contract, and
(ii) covers the life of an insured who is an employee with respect to the trade or business of the applicable policyholder on the date the contract is issued.
For purposes of the preceding sentence, if coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract.
(B) Applicable policyholderFor purposes of this subsection—
(i) In general
(ii) Related personsThe term “applicable policyholder” includes any person which—(I) bears a relationship to the person described in clause (i) which is specified in section 267(b) or 707(b)(1), or(II) is engaged in trades or businesses with such person which are under common control (within the meaning of subsection (a) or (b) of section 52).
(4) Notice and consent requirementsThe notice and consent requirements of this paragraph are met if, before the issuance of the contract, the employee—
(A) is notified in writing that the applicable policyholder intends to insure the employee’s life and the maximum face amount for which the employee could be insured at the time the contract was issued,
(B) provides written consent to being insured under the contract and that such coverage may continue after the insured terminates employment, and
(C) is informed in writing that an applicable policyholder will be a beneficiary of any proceeds payable upon the death of the employee.
(5) DefinitionsFor purposes of this subsection—
(A) Employee
(B) Insured
(Aug. 16, 1954, ch. 736, 68A Stat. 26; Pub. L. 85–866, title I, § 23(d), Sept. 2, 1958, 72 Stat. 1622; Pub. L. 87–792, § 7(c), Oct. 10, 1962, 76 Stat. 829; Pub. L. 89–365, § 1(c), Mar. 8, 1966, 80 Stat. 32; Pub. L. 91–172, title I, § 101(j)(l), Dec. 30, 1969, 83 Stat. 526; Pub. L. 93–406, title II, §§ 2005(c)(15), 2007(b)(3), Sept. 2, 1974, 88 Stat. 992, 994; Pub. L. 94–455, title XIX, §§ 1901(a)(16), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1765, 1834; Pub. L. 97–248, title II, §§ 239, 266(a), (b), Sept. 3, 1982, 96 Stat. 514, 547, 550; Pub. L. 98–369, div. A, title II, § 221(b)(2), title IV, § 421(b)(2), title VII, § 713(e), July 18, 1984, 98 Stat. 772, 794, 958; Pub. L. 99–514, title X, § 1001(a)–(c), Oct. 22, 1986, 100 Stat. 2387; Pub. L. 104–188, title I, § 1402(a), (b)(1), Aug. 20, 1996, 110 Stat. 1789; Pub. L. 104–191, title III, § 331(a), Aug. 21, 1996, 110 Stat. 2067; Pub. L. 105–34, title X, § 1084(b)(2), title XV, § 1528(a), Aug. 5, 1997, 111 Stat. 952, 1074; Pub. L. 107–134, title I, § 102(a), Jan. 23, 2002, 115 Stat. 2429; Pub. L. 108–121, title I, § 110(b)(1), (2), Nov. 11, 2003, 117 Stat. 1342; Pub. L. 109–280, title VIII, § 863(a), (c)(1), Aug. 17, 2006, 120 Stat. 1021, 1024; Pub. L. 112–239, div. A, title X, § 1086(b)(3)(B), Jan. 2, 2013, 126 Stat. 1968; Pub. L. 115–97, title I, § 13522(a), (b), Dec. 22, 2017, 131 Stat. 2151, 2152.)

CITE AS: 26 USC 101

§ 102. Gifts and inheritances
(a) General rule
(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
(2) Cross references
(Aug. 16, 1954, ch. 736, 68A Stat. 28; Pub. L. 99–514, title I, § 122(b), Oct. 22, 1986, 100 Stat. 2110.)

CITE AS: 26 USC 102

§ 103. Interest on State and local bonds
(a) Exclusion
(b) Exceptions
Subsection (a) shall not apply to—
(1) Private activity bond which is not a qualified bond
(2) Arbitrage bond
(3) Bond not in registered form, etc.
(c) Definitions
For purposes of this section and part IV—
(1) State or local bond
(2) State
(Aug. 16, 1954, ch. 736, 68A Stat. 29; Pub. L. 90–364, title I, § 107(a), June 28, 1968, 82 Stat. 266; Pub. L. 90–634, title IV, § 401(a), Oct. 24, 1968, 82 Stat. 1349; Pub. L. 91–172, title VI, § 601(a), Dec. 30, 1969, 83 Stat. 656; Pub. L. 92–178, title III, § 315(a), (b), Dec. 10, 1971, 85 Stat. 529; Pub. L. 94–164, § 7(a), Dec. 23, 1975, 89 Stat. 976; Pub. L. 94–182, title III, § 301(a), Dec. 31, 1975, 89 Stat. 1056; Pub. L. 94–455, title XIX, §§ 1901(a)(17), (b)(8)(B), 1906(b)(13)(A), title XXI, §§ 2105(a)–(c), 2137(d), Oct. 4, 1976, 90 Stat. 1765, 1766, 1794, 1834, 1902, 1931; Pub. L. 95–339, title II, § 201(a), Aug. 8, 1978, 92 Stat. 467; Pub. L. 95–600, title III, §§ 331(a), (b), 332(a), 333(a), 334(a), (b), title VII, § 703(j)(1), (q)(1), Nov. 6, 1978, 92 Stat. 2839–2841, 2941, 2944; Pub. L. 96–222, title I, § 107(a)(3)(C), Apr. 1, 1980, 94 Stat. 223; Pub. L. 96–223, title II, §§ 241(a), 242(a), 244(a), Apr. 2, 1980, 94 Stat. 281, 283, 286; Pub. L. 96–499, title XI, § 1103, Dec. 5, 1980, 94 Stat. 2669; Pub. L. 97–34, title VIII, §§ 811(a), (b), 812(a), Aug. 13, 1981, 95 Stat. 349, 350; Pub. L. 97–248, title II, §§ 214(a)–(e), 215(a), (b), 217(a)–(d), 219(a), 221(a), (b), (c)(1), title III, § 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, § 547(a), Jan. 6, 1983, 96 Stat. 2199; Pub. L. 97–473, title II, § 202(b)(2), Jan. 14, 1983, 96 Stat. 2609; Pub. L. 98–369, div. A, title IV, § 474(r)(4), title VI, §§ 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, § 13209(e), Apr. 7, 1986, 100 Stat. 323; Pub. L. 99–514, title XIII, § 1301(a), title XVIII, §§ 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, § 1013(a)(34)(A), (c)(12)(A), Nov. 10, 1988, 102 Stat. 3544, 3547.)

CITE AS: 26 USC 103

[§ 103A. Repealed. Pub. L. 99–514, title XIII, § 1301(j)(1), Oct. 22, 1986, 100 Stat. 2657]

CITE AS: 26 USC 103A

§ 104. Compensation for injuries or sickness
(a) In generalExcept in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—
(1) amounts received under workmen’s compensation acts as compensation for personal injuries or sickness;
(2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness;
(3) amounts received through accident or health insurance (or through an arrangement having the effect of accident or health insurance) for personal injuries or sickness (other than amounts received by an employee, to the extent such amounts (A) are attributable to contributions by the employer which were not includible in the gross income of the employee, or (B) are paid by the employer);
(4) amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the Coast and Geodetic Survey or the Public Health Service, or as a disability annuity payable under the provisions of section 808 of the Foreign Service Act of 1980;
(5) amounts received by an individual as disability income attributable to injuries incurred as a direct result of a terroristic or military action (as defined in section 692(c)(2)); and
(6) amounts received pursuant to—
(A) section 1201 of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796); 1
1 See References in Text note below.
or
(B) a program established under the laws of any State which provides monetary compensation for surviving dependents of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty,
except that subparagraph (B) shall not apply to any amounts that would have been payable if death of the public safety officer had occurred other than as the direct and proximate result of a personal injury sustained in the line of duty.
For purposes of paragraph (3), in the case of an individual who is, or has been, an employee within the meaning of section 401(c)(1) (relating to self-employed individuals), contributions made on behalf of such individual while he was such an employee to a trust described in section 401(a) which is exempt from tax under section 501(a), or under a plan described in section 403(a), shall, to the extent allowed as deductions under section 404, be treated as contributions by the employer which were not includible in the gross income of the employee. For purposes of paragraph (2), emotional distress shall not be treated as a physical injury or physical sickness. The preceding sentence shall not apply to an amount of damages not in excess of the amount paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional distress.
(b) Termination of application of subsection (a)(4) in certain cases
(1) In general
(2) Individuals to whom subsection (a)(4) continues to applyAn individual is described in this paragraph if—
(A) on or before September 24, 1975, he was entitled to receive any amount described in subsection (a)(4),
(B) on September 24, 1975, he was a member of any organization (or reserve component thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member,
(C) he receives an amount described in subsection (a)(4) by reason of a combat-related injury, or
(D) on application therefor, he would be entitled to receive disability compensation from the Department of Veterans Affairs.
(3) Special rules for combat-related injuriesFor purposes of this subsection, the term “combat-related injury” means personal injury or sickness—
(A) which is incurred—
(i) as a direct result of armed conflict,
(ii) while engaged in extrahazardous service, or
(iii) under conditions simulating war; or
(B) which is caused by an instrumentality of war.
In the case of an individual who is not described in subparagraph (A) or (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combat-related injury.
(4) Amount excluded to be not less than veterans’ disability compensation
(c) Application of prior law in certain casesThe phrase “(other than punitive damages)” shall not apply to punitive damages awarded in a civil action—
(1) which is a wrongful death action, and
(2) with respect to which applicable State law (as in effect on September 13, 1995 and without regard to any modification after such date) provides, or has been construed to provide by a court of competent jurisdiction pursuant to a decision issued on or before September 13, 1995, that only punitive damages may be awarded in such an action.
This subsection shall cease to apply to any civil action filed on or after the first date on which the applicable State law ceases to provide (or is no longer construed to provide) the treatment described in paragraph (2).
(d) Cross references
(1) For exclusion from employee’s gross income of employer contributions to accident and health plans, see section 106.
(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).
(Aug. 16, 1954, ch. 736, 68A Stat. 30; Pub. L. 86–723, § 51, Sept. 8, 1960, 74 Stat. 847; Pub. L. 87–792, § 7(d), Oct. 10, 1962, 76 Stat. 829; Pub. L. 94–455, title V, § 505(b), (e)(1), title XIX, § 1901(a)(18), Oct. 4, 1976, 90 Stat. 1567, 1568, 1766; Pub. L. 96–465, title II, § 2206(e)(1), Oct. 17, 1980, 94 Stat. 2162; Pub. L. 97–473, title I, § 101(a), Jan. 14, 1983, 96 Stat. 2605; Pub. L. 101–239, title VII, § 7641(a), Dec. 19, 1989, 103 Stat. 2379; Pub. L. 104–188, title I, § 1605(a)–(c), Aug. 20, 1996, 110 Stat. 1838; Pub. L. 104–191, title III, § 311(b), Aug. 21, 1996, 110 Stat. 2053; Pub. L. 107–134, title I, § 113(a), Jan. 23, 2002, 115 Stat. 2435; Pub. L. 114–14, § 2, May 22, 2015, 129 Stat. 198; Pub. L. 115–141, div. U, title IV, § 401(a)(2)(A), Mar. 23, 2018, 132 Stat. 1184.)

CITE AS: 26 USC 104

§ 105. Amounts received under accident and health plans
(a) Amounts attributable to employer contributions
(b) Amounts expended for medical care
(c) Payments unrelated to absence from workGross income does not include amounts referred to in subsection (a) to the extent such amounts—
(1) constitute payment for the permanent loss or loss of use of a member or function of the body, or the permanent disfigurement, of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), and
(2) are computed with reference to the nature of the injury without regard to the period the employee is absent from work.
[(d) Repealed. Pub. L. 98–21, title I, § 122(b), Apr. 20, 1983, 97 Stat. 87]
(e) Accident and health plansFor purposes of this section and section 104—
(1) amounts received under an accident or health plan for employees, and
(2) amounts received from a sickness and disability fund for employees maintained under the law of a State or the District of Columbia,
shall be treated as amounts received through accident or health insurance.
(f) Rules for application of section 213
(g) Self-employed individual not considered an employee
(h) Amount paid to highly compensated individuals under a discriminatory self-insured medical expense reimbursement plan
(1) In general
(2) Prohibition of discriminationA self-insured medical reimbursement plan satisfies the requirements of this paragraph only if—
(A) the plan does not discriminate in favor of highly compensated individuals as to eligibility to participate; and
(B) the benefits provided under the plan do not discriminate in favor of participants who are highly compensated individuals.
(3) Nondiscriminatory eligibility classifications
(A) In generalA self-insured medical reimbursement plan does not satisfy the requirements of subparagraph (A) of paragraph (2) unless such plan benefits—
(i) 70 percent or more of all employees, or 80 percent or more of all the employees who are eligible to benefit under the plan if 70 percent or more of all employees are eligible to benefit under the plan; or
(ii) such employees as qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of highly compensated individuals.
(B) Exclusion of certain employeesFor purposes of subparagraph (A), there may be excluded from consideration—
(i) employees who have not completed 3 years of service;
(ii) employees who have not attained age 25;
(iii) part-time or seasonal employees;
(iv) 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 accident and health benefits were the subject of good faith bargaining between such employee representatives and such employer or employers; and
(v) 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
(5) Highly compensated individual definedFor purposes of this subsection, the term “highly compensated individual” means an individual who is—
(A) one of the 5 highest paid officers,
(B) a shareholder who owns (with the application of section 318) more than 10 percent in value of the stock of the employer, or
(C) among the highest paid 25 percent of all employees (other than employees described in paragraph (3)(B) who are not participants).
(6) Self-insured medical reimbursement plan
(7) Excess reimbursement of highly compensated individualFor purposes of this section, the excess reimbursement of a highly compensated individual which is attributable to a self-insured medical reimbursement plan is—
(A) in the case of a benefit available to highly compensated individuals but not to all other participants (or which otherwise fails to satisfy the requirements of paragraph (2)(B)), the amount reimbursed under the plan to the employee with respect to such benefit, and
(B) in the case of benefits (other than benefits described in subparagraph (A)) paid to a highly compensated individual by a plan which fails to satisfy the requirements of paragraph (2), the total amount reimbursed to the highly compensated individual for the plan year multiplied by a fraction—
(i) the numerator of which is the total amount reimbursed to all participants who are highly compensated individuals under the plan for the plan year, and
(ii) the denominator of which is the total amount reimbursed to all employees under the plan for such plan year.
In determining the fraction under subparagraph (B), there shall not be taken into account any reimbursement which is attributable to a benefit described in subparagraph (A).
(8) Certain controlled groups, etc.
(9) Regulations
(10) Time of inclusion
(i) Sick pay under Railroad Unemployment Insurance Act
(j) Special rule for certain governmental plans
(1) In general
(2) Plan describedAn accident or health plan is described in this paragraph if such plan is funded by a medical trust that is established in connection with a public retirement system or established by or on behalf of a State or political subdivision thereof and that—
(A) has been authorized by a State legislature, or
(B) has received a favorable ruling from the Internal Revenue Service that the trust’s income is not includible in gross income under section 115 or 501(c)(9).
(3) Qualified taxpayerFor purposes of paragraph (1), with respect to an accident or health plan described in paragraph (2), the term “qualified taxpayer” means a taxpayer who is—
(A) an employee, or
(B) the spouse, dependent (as defined for purposes of subsection (b)), or child (as defined for purposes of such subsection) of an employee.
(Aug. 16, 1954, ch. 736, 68A Stat. 30; Pub. L. 87–792, § 7(e), Oct. 10, 1962, 76 Stat. 829; Pub. L. 88–272, title II, § 205(a), Feb. 26, 1964, 78 Stat. 38; Pub. L. 94–455, title V, § 505(a), title XIX, § 1901(c)(2), Oct. 4, 1976, 90 Stat. 1566, 1803; Pub. L. 95–600, title III, § 366(a), title VII, § 701(c)(1), Nov. 6, 1978, 92 Stat. 2855, 2899; Pub. L. 96–222, title I, § 103(a)(13)(B), (C), Apr. 1, 1980, 94 Stat. 213; Pub. L. 96–605, title II, § 201(b)(1), Dec. 28, 1980, 94 Stat. 3527; Pub. L. 96–613, § 5(b)(1), Dec. 28, 1980, 94 Stat. 3581; Pub. L. 97–34, title I, §§ 103(c)(2), 111(b)(4), Aug. 13, 1981, 95 Stat. 188, 194; Pub. L. 97–248, title II, § 202(b)(3)(C), Sept. 3, 1982, 96 Stat. 421; Pub. L. 98–21, title I, § 122(b), Apr. 20, 1983, 97 Stat. 87; Pub. L. 98–76, title II, § 241(a), Aug. 12, 1983, 97 Stat. 430; Pub. L. 98–369, div. A, title IV, § 423(b)(2), July 18, 1984, 98 Stat. 800; Pub. L. 99–514, title XI, § 1151(c)(2), title XIII, § 1301(j)(9), Oct. 22, 1986, 100 Stat. 2503, 2658; Pub. L. 101–140, title II, § 203(a)(1), Nov. 8, 1989, 103 Stat. 830; Pub. L. 108–311, title II, § 207(9), Oct. 4, 2004, 118 Stat. 1177; Pub. L. 110–458, title I, § 124(a), Dec. 23, 2008, 122 Stat. 5114; Pub. L. 111–152, title I, § 1004(d)(1), Mar. 30, 2010, 124 Stat. 1035; Pub. L. 113–295, div. A, title II, § 221(a)(16), Dec. 19, 2014, 128 Stat. 4039; Pub. L. 114–113, div. Q, title III, § 305(a)–(c), Dec. 18, 2015, 129 Stat. 3088; Pub. L. 115–141, div. U, title IV, § 401(a)(36), Mar. 23, 2018, 132 Stat. 1186.)

CITE AS: 26 USC 105

§ 106. Contributions by employer to accident and health plans
(a) General rule
(b) Contributions to Archer MSAs
(1) In general
(2) No constructive receipt
(3) Special rule for deduction of employer contributions
(4) Employer MSA contributions required to be shown on return
(5) MSA contributions not part of COBRA coverage
(6) Definitions
(7) Cross reference
(c) Inclusion of long-term care benefits provided through flexible spending arrangements
(1) In general
(2) Flexible spending arrangement
For purposes of this subsection, a flexible spending arrangement is a benefit program which provides employees with coverage under which—
(A) specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions), and
(B) the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage.
In the case of an insured plan, the maximum amount reasonably available shall be determined on the basis of the underlying coverage.
(d) Contributions to health savings accounts
(1) In general
(2) Special rules
(3) Cross reference
(e) FSA and HRA terminations to fund HSAs
(1) In general
(2) Qualified HSA distribution
The term “qualified HSA distribution” means a distribution from a health flexible spending arrangement or health reimbursement arrangement to the extent that such distribution—
(A) does not exceed the lesser of the balance in such arrangement on September 21, 2006, or as of the date of such distribution, and
(B) is contributed by the employer directly to the health savings account of the employee before January 1, 2012.
Such term shall not include more than 1 distribution with respect to any arrangement.
(3) Additional tax for failure to maintain high deductible health plan coverage
(A) In general
If, at any time during the testing period, the employee is not an eligible individual, then the amount of the qualified HSA distribution—
(i) shall be includible in the gross income of the employee for the taxable year in which occurs the first month in the testing period for which such employee is not an eligible individual, and
(ii) the tax imposed by this chapter for such taxable year on the employee shall be increased by 10 percent of the amount which is so includible.
(B) Exception for disability or death
(4) Definitions and special rules
For purposes of this subsection—
(A) Testing period
(B) Eligible individual
(C) Treatment as rollover contribution
(5) Tax treatment relating to distributions
For purposes of this title—
(A) In general
(B) Comparability excise tax
(i) In general
(ii) Failure to offer to all employees
(f) Reimbursements for menstrual care products
(g) Qualified small employer health reimbursement arrangement
(Aug. 16, 1954, ch. 736, 68A Stat. 32; Pub. L. 99–272, title X, § 10001(b), Apr. 7, 1986, 100 Stat. 223; Pub. L. 99–514, title XI, §§ 1114(b)(1), 1151(j)(2), Oct. 22, 1986, 100 Stat. 2450, 2508; Pub. L. 100–647, title I, § 1018(t)(7)(A), title III, § 3011(b)(1), Nov. 10, 1988, 102 Stat. 3589, 3624; Pub. L. 101–239, title VII, § 7862(c)(1)(A), Dec. 19, 1989, 103 Stat. 2432; Pub. L. 104–191, title III, §§ 301(c)(1), 321(c)(2), Aug. 21, 1996, 110 Stat. 2048, 2058; Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(2), (b)(2)(A), (6), (10)], Dec. 21, 2000, 114 Stat. 2763, 2763A–628, 2763A–629; Pub. L. 108–173, title XII, § 1201(d)(1), Dec. 8, 2003, 117 Stat. 2476; Pub. L. 109–432, div. A, title III, § 302(a), Dec. 20, 2006, 120 Stat. 2948; Pub. L. 111–148, title IX, § 9003(c), Mar. 23, 2010, 124 Stat. 854; Pub. L. 113–295, div. A, title II, § 221(a)(17), Dec. 19, 2014, 128 Stat. 4039; Pub. L. 114–255, div. C, title XVIII, § 18001(a)(2), Dec. 13, 2016, 130 Stat. 1341; Pub. L. 116–136, div. A, title III, § 3702(c), Mar. 27, 2020, 134 Stat. 416.)

CITE AS: 26 USC 106

§ 107. Rental value of parsonages
(1) the rental value of a home furnished to him as part of his compensation; or
(2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.
(Aug. 16, 1954, ch. 736, 68A Stat. 32; Pub. L. 107–181, § 2(a), May 20, 2002, 116 Stat. 583.)

CITE AS: 26 USC 107

§ 108. Income from discharge of indebtedness
(a) Exclusion from gross income
(1) In generalGross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if—
(A) the discharge occurs in a title 11 case,
(B) the discharge occurs when the taxpayer is insolvent,
(C) the indebtedness discharged is qualified farm indebtedness,
(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness, or
(E) the indebtedness discharged is qualified principal residence indebtedness which is discharged—
(i) before January 1, 2026, or
(ii) subject to an arrangement that is entered into and evidenced in writing before January 1, 2026.
(2) Coordination of exclusions
(A) Title 11 exclusion takes precedence
(B) Insolvency exclusion takes precedence over qualified farm exclusion and qualified real property business exclusion
(C) Principal residence exclusion takes precedence over insolvency exclusion unless elected otherwise
(3) Insolvency exclusion limited to amount of insolvency
(b) Reduction of tax attributes
(1) In general
(2) Tax attributes affected; order of reductionExcept as provided in paragraph (5), the reduction referred to in paragraph (1) shall be made in the following tax attributes in the following order:
(A) NOL
(B) General business credit
(C) Minimum tax credit
(D) Capital loss carryovers
(E) Basis reduction
(i) In general
(ii) Cross reference
(F) Passive activity loss and credit carryovers
(G) Foreign tax credit carryovers
(3) Amount of reduction
(A) In general
(B) Credit carryover reduction
(4) Ordering rules
(A) Reductions made after determination of tax for year
(B) Reductions under subparagraph (A) or (D) of paragraph (2)
(C) Reductions under subparagraphs (B) and (G) of paragraph (2)
(5) Election to apply reduction first against depreciable property
(A) In general
(B) Limitation
(C) Other tax attributes not reduced
(c) Treatment of discharge of qualified real property business indebtedness
(1) Basis reduction
(A) In general
(B) Cross reference
(2) Limitations
(A) Indebtedness in excess of valueThe amount excluded under subparagraph (D) of subsection (a)(1) with respect to any qualified real property business indebtedness shall not exceed the excess (if any) of—
(i) the outstanding principal amount of such indebtedness (immediately before the discharge), over
(ii) the fair market value of the real property described in paragraph (3)(A) (as of such time), reduced by the outstanding principal amount of any other qualified real property business indebtedness secured by such property (as of such time).
(B) Overall limitation
(3) Qualified real property business indebtednessThe term “qualified real property business indebtedness” means indebtedness which—
(A) was incurred or assumed by the taxpayer in connection with real property used in a trade or business and is secured by such real property,
(B) was incurred or assumed before January 1, 1993, or if incurred or assumed on or after such date, is qualified acquisition indebtedness, and
(C) with respect to which such taxpayer makes an election to have this paragraph apply.
Such term shall not include qualified farm indebtedness. Indebtedness under subparagraph (B) shall include indebtedness resulting from the refinancing of indebtedness under subparagraph (B) (or this sentence), but only to the extent it does not exceed the amount of the indebtedness being refinanced.
(4) Qualified acquisition indebtedness
(5) Regulations
(d) Meaning of terms; special rules relating to certain provisions
(1) Indebtedness of taxpayerFor purposes of this section, the term “indebtedness of the taxpayer” means any indebtedness—
(A) for which the taxpayer is liable, or
(B) subject to which the taxpayer holds property.
(2) Title 11 case
(3) Insolvent
[(4) Repealed. Pub. L. 99–514, title VIII, § 822(b)(3)(A), Oct. 22, 1986, 100 Stat. 2373]
(5) Depreciable property
(6) Certain provisions to be applied at partner level
(7) Special rules for S corporation
(A) Certain provisions to be applied at corporate level
(B) Reduction in carryover of disallowed losses and deductions
(C) Coordination with basis adjustments under section 1367(b)(2)
(8) Reductions of tax attributes in title 11 cases of individuals to be made by estate
(9) Time for making election, etc.
(A) Time
(B) Revocation only with consent
(C) Manner
(10) Cross reference
(e) General rules for discharge of indebtedness (including discharges not in title 11 cases or insolvency)For purposes of this title—
(1) No other insolvency exception
(2) Income not realized to extent of lost deductions
(3) Adjustments for unamortized premium and discount
(4) Acquisition of indebtedness by person related to debtor
(A) Treated as acquisition by debtor
(B) Members of family
(C) Entities under common control treated as related
(5) Purchase-money debt reduction for solvent debtor treated as price reductionIf—
(A) the debt of a purchaser of property to the seller of such property which arose out of the purchase of such property is reduced,
(B) such reduction does not occur—
(i) in a title 11 case, or
(ii) when the purchaser is insolvent, and
(C) but for this paragraph, such reduction would be treated as income to the purchaser from the discharge of indebtedness,
then such reduction shall be treated as a purchase price adjustment.
(6) Indebtedness contributed to capitalExcept as provided in regulations, for purposes of determining income of the debtor from discharge of indebtedness, if a debtor corporation acquires its indebtedness from a shareholder as a contribution to capital—
(A) section 118 shall not apply, but
(B) such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the shareholder’s adjusted basis in the indebtedness.
(7) Recapture of gain on subsequent sale of stock
(A) In generalIf a creditor acquires stock of a debtor corporation in satisfaction of such corporation’s indebtedness, for purposes of section 1245—
(i) such stock (and any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) shall be treated as section 1245 property,
(ii) the aggregate amount allowed to the creditor—(I) as deductions under subsection (a) or (b) of section 166 (by reason of the worthlessness or partial worthlessness of the indebtedness), or(II) as an ordinary loss on the exchange,
 shall be treated as an amount allowed as a deduction for depreciation, and
(iii) an exchange of such stock qualifying under section 354(a), 355(a), or 356(a) shall be treated as an exchange to which section 1245(b)(3) applies.
The amount determined under clause (ii) shall be reduced by the amount (if any) included in the creditor’s gross income on the exchange.
(B) Special rule for cash basis taxpayers
(C) Stock of parent corporation
(D) Treatment of successor corporation
(E) Partnership rule
(8) Indebtedness satisfied by corporate stock or partnership interestFor purposes of determining income of a debtor from discharge of indebtedness, if—
(A) a debtor corporation transfers stock, or
(B) a debtor partnership transfers a capital or profits interest in such partnership,
to a creditor in satisfaction of its recourse or nonrecourse indebtedness, such corporation or partnership shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock or interest. In the case of any partnership, any discharge of indebtedness income recognized under this paragraph shall be included in the distributive shares of taxpayers which were the partners in the partnership immediately before such discharge.
(9) Discharge of indebtedness income not taken into account in determining whether entity meets REIT qualifications
(10) Indebtedness satisfied by issuance of debt instrument
(A) In general
(B) Issue price
(f) Student loans
(1) In general
(2) Student loanFor purposes of this subsection, the term “student loan” means any loan to an individual to assist the individual in attending an educational organization described in section 170(b)(1)(A)(ii) made by—
(A) the United States, or an instrumentality or agency thereof,
(B) a State, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof,
(C) a public benefit corporation—
(i) which is exempt from taxation under section 501(c)(3),
(ii) which has assumed control over a State, county, or municipal hospital, and
(iii) whose employees have been deemed to be public employees under State law, or
(D) any educational organization described in section 170(b)(1)(A)(ii) if such loan is made—
(i) pursuant to an agreement with any entity described in subparagraph (A), (B), or (C) under which the funds from which the loan was made were provided to such educational organization, or
(ii) pursuant to a program of such educational organization which is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in section 501(c)(3) and exempt from tax under section 501(a).
The term “student loan” includes any loan made by an educational organization described in section 170(b)(1)(A)(ii) or by an organization exempt from tax under section 501(a) to refinance a loan to an individual to assist the individual in attending any such educational organization but only if the refinancing loan is pursuant to a program of the refinancing organization which is designed as described in subparagraph (D)(ii).
(3) Exception for discharges on account of services performed for certain lenders
(4) Payments under national health service corps loan repayment program and certain state loan repayment programs
(5) Special rule for discharges in 2021 through 2025Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) after December 31, 2020, and before January 1, 2026, of—
(A) any loan provided expressly for postsecondary educational expenses, regardless of whether provided through the educational institution or directly to the borrower, if such loan was made, insured, or guaranteed by—
(i) the United States, or an instrumentality or agency thereof,
(ii) a State, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof, or
(iii) an eligible educational institution (as defined in section 25A),
(B) any private education loan (as defined in section 140(a)(7) 1
1 So in original. Probably should be “140(a)(8)”. See References in Text note below.
of the Truth in Lending Act),
(C) any loan made by any educational organization described in section 170(b)(1)(A)(ii) if such loan is made—
(i) pursuant to an agreement with any entity described in subparagraph (A) or any private education 2
2 So in original. Such section defines the term “private educational lender”.
lender (as defined in section 140(a) of the Truth in Lending Act) under which the funds from which the loan was made were provided to such educational organization, or
(ii) pursuant to a program of such educational organization which is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in section 501(c)(3) and exempt from tax under section 501(a), or
(D) any loan made by an educational organization described in section 170(b)(1)(A)(ii) or by an organization exempt from tax under section 501(a) to refinance a loan to an individual to assist the individual in attending any such educational organization but only if the refinancing loan is pursuant to a program of the refinancing organization which is designed as described in subparagraph (C)(ii).
The preceding sentence shall not apply to the discharge of a loan made by an organization described in subparagraph (C) or made by a private education 2 lender (as defined in section 140(a)(7) of the Truth in Lending Act) if the discharge is on account of services performed for either such organization or for such private education lender.
(g) Special rules for discharge of qualified farm indebtedness
(1) Discharge must be by qualified person
(A) In general
(B) Qualified person
(2) Qualified farm indebtednessFor purposes of this section, indebtedness of a taxpayer shall be treated as qualified farm indebtedness if—
(A) such indebtedness was incurred directly in connection with the operation by the taxpayer of the trade or business of farming, and
(B) 50 percent or more of the aggregate gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the discharge of such indebtedness occurs is attributable to the trade or business of farming.
(3) Amount excluded cannot exceed sum of tax attributes and business and investment assets
(A) In generalThe amount excluded under subparagraph (C) of subsection (a)(1) shall not exceed the sum of—
(i) the adjusted tax attributes of the taxpayer, and
(ii) the aggregate adjusted bases of qualified property held by the taxpayer as of the beginning of the taxable year following the taxable year in which the discharge occurs.
(B) Adjusted tax attributes
(C) Qualified property
(D) Coordination with insolvency exclusion
(h) Special rules relating to qualified principal residence indebtedness
(1) Basis reduction
(2) Qualified principal residence indebtedness
(3) Exception for certain discharges not related to taxpayer’s financial condition
(4) Ordering rule
(5) Principal residence
(i) Deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument
(1) In generalAt the election of the taxpayer, income from the discharge of indebtedness in connection with the reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument shall be includible in gross income ratably over the 5-taxable-year period beginning with—
(A) in the case of a reacquisition occurring in 2009, the fifth taxable year following the taxable year in which the reacquisition occurs, and
(B) in the case of a reacquisition occurring in 2010, the fourth taxable year following the taxable year in which the reacquisition occurs.
(2) Deferral of deduction for original issue discount in debt for debt exchanges
(A) In generalIf, as part of a reacquisition to which paragraph (1) applies, any debt instrument is issued for the applicable debt instrument being reacquired (or is treated as so issued under subsection (e)(4) and the regulations thereunder) and there is any original issue discount determined under subpart A of part V of subchapter P of this chapter with respect to the debt instrument so issued—
(i) except as provided in clause (ii), no deduction otherwise allowable under this chapter shall be allowed to the issuer of such debt instrument with respect to the portion of such original issue discount which—(I) accrues before the 1st taxable year in the 5-taxable-year period in which income from the discharge of indebtedness attributable to the reacquisition of the debt instrument is includible under paragraph (1), and(II) does not exceed the income from the discharge of indebtedness with respect to the debt instrument being reacquired, and
(ii) the aggregate amount of deductions disallowed under clause (i) shall be allowed as a deduction ratably over the 5-taxable-year period described in clause (i)(I).
If the amount of the original issue discount accruing before such 1st taxable year exceeds the income from the discharge of indebtedness with respect to the applicable debt instrument being reacquired, the deductions shall be disallowed in the order in which the original issue discount is accrued.
(B) Deemed debt for debt exchanges
(3) Applicable debt instrumentFor purposes of this subsection—
(A) Applicable debt instrumentThe term “applicable debt instrument” means any debt instrument which was issued by—
(i) a C corporation, or
(ii) any other person in connection with the conduct of a trade or business by such person.
(B) Debt instrument
(4) ReacquisitionFor purposes of this subsection—
(A) In generalThe term “reacquisition” means, with respect to any applicable debt instrument, any acquisition of the debt instrument by—
(i) the debtor which issued (or is otherwise the obligor under) the debt instrument, or
(ii) a related person to such debtor.
(B) Acquisition
(5) Other definitions and rulesFor purposes of this subsection—
(A) Related person
(B) Election
(i) In generalAn election under this subsection with respect to any applicable debt instrument shall be made by including with the return of tax imposed by chapter 1 for the taxable year in which the reacquisition of the debt instrument occurs a statement which—(I) clearly identifies such instrument, and(II) includes the amount of income to which paragraph (1) applies and such other information as the Secretary may prescribe.
(ii) Election irrevocable
(iii) Pass-thru entities
(C) Coordination with other exclusions
(D) Acceleration of deferred items
(i) In general
(ii) Special rule for pass-thru entities
(6) Special rule for partnerships
(7) Secretarial authorityThe Secretary may prescribe such regulations, rules, or other guidance as may be necessary or appropriate for purposes of applying this subsection, including—
(A) extending the application of the rules of paragraph (5)(D) to other circumstances where appropriate,
(B) requiring reporting of the election (and such other information as the Secretary may require) on returns of tax for subsequent taxable years, and
(C) rules for the application of this subsection to partnerships, S corporations, and other pass-thru entities, including for the allocation of deferred deductions.
(Aug. 16, 1954, ch. 736, 68A Stat. 32; June 29, 1956, ch. 463, § 5, 70 Stat. 403; Pub. L. 88–496, § 1(a), June 8, 1960, 74 Stat. 164; Pub. L. 94–455, title XIX, §§ 1906(b)(13)(A), 1951(b)(2)(A), Oct. 4, 1976, 90 Stat. 1834, 1836; Pub. L. 96–589, § 2(a), Dec. 24, 1980, 94 Stat. 3389; Pub. L. 97–354, § 3(e), Oct. 19, 1982, 96 Stat. 1689; Pub. L. 97–448, title I, § 102(h)(1), title III, § 304(d), Jan. 12, 1983, 96 Stat. 2372, 2398; Pub. L. 98–369, div. A, title I, § 59(a), (b)(1), title IV, § 474(r)(5), title VII, § 721(b)(2), title X, § 1076(a), July 18, 1984, 98 Stat. 576, 839, 966, 1053; Pub. L. 99–514, title I, § 104(b)(2), title II, § 231(d)(3)(D), title IV, § 405(a), title VI, § 621(e)(1), title VIII, §§ 805(c)(2)–(4), 822(a), (b)(1)–(3), title XI, § 1171(b)(4), title XVIII, § 1847(b)(7), Oct. 22, 1986, 100 Stat. 2105, 2179, 2224, 2266, 2362, 2373, 2513, 2856; Pub. L. 100–647, title I, § 1004(a)(1)–(4), (6), Nov. 10, 1988, 102 Stat. 3385, 3387; Pub. L. 101–508, title XI, §§ 11325(a)(1), (b), 11813(b)(6), Nov. 5, 1990, 104 Stat. 1388–466, 1388–551; Pub. L. 103–66, title XIII, §§ 13150(a)–(c)(5), 13226(a)(1), (2)(B), (b)(1)–(3), Aug. 10, 1993, 107 Stat. 446–448, 487, 488; Pub. L. 104–188, title I, § 1703(n)(2), Aug. 20, 1996, 110 Stat. 1877; Pub. L. 105–34, title II, § 225(a), Aug. 5, 1997, 111 Stat. 820; Pub. L. 105–206, title VI, § 6004(f), July 22, 1998, 112 Stat. 795; Pub. L. 107–147, title IV, § 402(a), Mar. 9, 2002, 116 Stat. 40; Pub. L. 108–357, title III, § 320(a), title VIII, § 896(a), Oct. 22, 2004, 118 Stat. 1473, 1648; Pub. L. 110–142, § 2(a)–(c), Dec. 20, 2007, 121 Stat. 1803, 1804; Pub. L. 110–343, div. A, title III, § 303(a), Oct. 3, 2008, 122 Stat. 3807; Pub. L. 111–5, div. B, title I, § 1231(a), Feb. 17, 2009, 123 Stat. 338; Pub. L. 111–148, title X, § 10908(a), Mar. 23, 2010, 124 Stat. 1021; Pub. L. 112–240, title II, § 202(a), Jan. 2, 2013, 126 Stat. 2323; Pub. L. 113–295, div. A, title I, § 102(a), Dec. 19, 2014, 128 Stat. 4013; Pub. L. 114–113, div. Q, title I, § 151(a), (b), Dec. 18, 2015, 129 Stat. 3065; Pub. L. 115–97, title I, § 11031(a), Dec. 22, 2017, 131 Stat. 2081; Pub. L. 115–123, div. D, title I, § 40201(a), Feb. 9, 2018, 132 Stat. 145; Pub. L. 116–94, div. Q, title I, § 101(a), (b), Dec. 20, 2019, 133 Stat. 3227; Pub. L. 116–260, div. EE, title I, § 114(a), (b), Dec. 27, 2020, 134 Stat. 3050; Pub. L. 117–2, title IX, § 9675(a), Mar. 11, 2021, 135 Stat. 185.)

CITE AS: 26 USC 108

§ 109. Improvements by lessee on lessor’s property

Gross income does not include income (other than rent) derived by a lessor of real property on the termination of a lease, representing the value of such property attributable to buildings erected or other improvements made by the lessee.

(Aug. 16, 1954, ch. 736, 68A Stat. 33.)

CITE AS: 26 USC 109

§ 110. Qualified lessee construction allowances for short-term leases
(a) In general
Gross income of a lessee does not include any amount received in cash (or treated as a rent reduction) by a lessee from a lessor—
(1) under a short-term lease of retail space, and
(2) for the purpose of such lessee’s constructing or improving qualified long-term real property for use in such lessee’s trade or business at such retail space,
but only to the extent that such amount does not exceed the amount expended by the lessee for such construction or improvement.
(b) Consistent treatment by lessor
(c) Definitions
For purposes of this section—
(1) Qualified long-term real property
(2) Short-term lease
(3) Retail space
(d) Information required to be furnished to Secretary
Under regulations, the lessee and lessor described in subsection (a) shall, at such times and in such manner as may be provided in such regulations, furnish to the Secretary—
(1) information concerning the amounts received (or treated as a rent reduction) and expended as described in subsection (a), and
(2) any other information which the Secretary deems necessary to carry out the provisions of this section.
(Added Pub. L. 105–34, title XII, § 1213(a), Aug. 5, 1997, 111 Stat. 1000.)

CITE AS: 26 USC 110

§ 111. Recovery of tax benefit items
(a) Deductions
(b) Credits
(1) In general
If—
(A) a credit was allowable with respect to any amount for any prior taxable year, and
(B) during the taxable year there is a downward price adjustment or similar adjustment,
the tax imposed by this chapter for the taxable year shall be increased by the amount of the credit attributable to the adjustment.
(2) Exception where credit did not reduce tax
(3) Exception for investment tax credit and foreign tax credit
(c) Treatment of carryovers
(d) Special rules for accumulated earnings tax and for personal holding company tax
In applying subsection (a) for the purpose of determining the accumulated earnings tax under section 531 or the tax under section 541 (relating to personal holding companies)—
(1) any excluded amount under subsection (a) allowed for the purposes of this subtitle (other than section 531 or section 541) shall be allowed whether or not such amount resulted in a reduction of the tax under section 531 or the tax under section 541 for the prior taxable year; and
(2) where any excluded amount under subsection (a) was not allowable as a deduction for the prior taxable year for purposes of this subtitle other than of section 531 or section 541 but was allowable for the same taxable year under section 531 or section 541, then such excluded amount shall be allowable if it did not result in a reduction of the tax under section 531 or the tax under section 541.
(Aug. 16, 1954, ch. 736, 68A Stat. 33; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–589, § 2(c), Dec. 24, 1980, 94 Stat. 3396; Pub. L. 98–369, div. A, title I, § 171(a), July 18, 1984, 98 Stat. 698; Pub. L. 99–514, title XVIII, § 1812(a)(1), (2), Oct. 22, 1986, 100 Stat. 2833.)

CITE AS: 26 USC 111

§ 112. Certain combat zone compensation of members of the Armed Forces
(a) Enlisted personnelGross income does not include compensation received for active service as a member below the grade of commissioned officer in the Armed Forces of the United States for any month during any part of which such member—
(1) served in a combat zone, or
(2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
(b) Commissioned officersGross income does not include so much of the compensation as does not exceed the maximum enlisted amount received for active service as a commissioned officer in the Armed Forces of the United States for any month during any part of which such officer—
(1) served in a combat zone, or
(2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
(c) DefinitionsFor purposes of this section—
(1) The term “commissioned officer” does not include a commissioned warrant officer.
(2) The term “combat zone” means any area which the President of the United States by Executive Order designates, for purposes of this section or corresponding provisions of prior income tax laws, as an area in which Armed Forces of the United States are or have engaged in combat.
(3) Service is performed in a combat zone only if performed on or after the date designated by the President by Executive Order as the date of the commencing of combatant activities in such zone, and on or before the date designated by the President by Executive Order as the date of the termination of combatant activities in such zone.
(4) The term “compensation” does not include pensions and retirement pay.
(5) The term “maximum enlisted amount” means, for any month, the sum of—
(A) the highest rate of basic pay payable for such month to any enlisted member of the Armed Forces of the United States at the highest pay grade applicable to enlisted members, and
(B) in the case of an officer entitled to special pay under section 310, or paragraph (1) or (3) of section 351(a), of title 37, United States Code, for such month, the amount of such special pay payable to such officer for such month.
(d) Prisoners of war, etc.
(1) Members of the Armed Forces
(2) Civilian employees
(3) Period of conflict
(Aug. 16, 1954, ch. 736, 68A Stat. 34; Pub. L. 89–739, § 1, Nov. 2, 1966, 80 Stat. 1165; Pub. L. 92–279, § 1, Apr. 26, 1972, 86 Stat. 124; Pub. L. 93–597, § 2(a), (b), Jan. 2, 1975, 88 Stat. 1950; Pub. L. 94–569, § 3(b), Oct. 20, 1976, 90 Stat. 2699; Pub. L. 104–117, § 1(d), Mar. 20, 1996, 110 Stat. 828; Pub. L. 104–188, title I, § 1704(t)(4)(A), Aug. 20, 1996, 110 Stat. 1887; Pub. L. 113–295, div. A, title II, § 221(a)(18), Dec. 19, 2014, 128 Stat. 4039; Pub. L. 114–328, div. A, title VI, § 618(k), Dec. 23, 2016, 130 Stat. 2161.)

CITE AS: 26 USC 112

[§ 113. Repealed. Pub. L. 101–508, title XI, § 11801(a)(7), Nov. 5, 1990, 104 Stat. 1388–520]

CITE AS: 26 USC 113

[§ 114. Repealed. Pub. L. 108–357, title I, § 101(a), Oct. 22, 2004, 118 Stat. 1423]

CITE AS: 26 USC 114

§ 115. Income of States, municipalities, etc.
Gross income does not include—
(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or
(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.
(Aug. 16, 1954, ch. 736, 68A Stat. 35; Pub. L. 94–455, title XIX, § 1901(a)(19), Oct. 4, 1976, 90 Stat. 1766.)

CITE AS: 26 USC 115

[§ 116. Repealed. Pub. L. 99–514, title VI, § 612(a), Oct. 22, 1986, 100 Stat. 2250]

CITE AS: 26 USC 116

§ 117. Qualified scholarships
(a) General rule
(b) Qualified scholarship
For purposes of this section—
(1) In general
(2) Qualified tuition and related expenses
For purposes of paragraph (1), the term “qualified tuition and related expenses” means—
(A) tuition and fees required for the enrollment or attendance of a student at an educational organization described in section 170(b)(1)(A)(ii), and
(B) fees, books, supplies, and equipment required for courses of instruction at such an educational organization.
(c) Limitation
(1) In general
(2) Exceptions
Paragraph (1) shall not apply to any amount received by an individual under—
(A) the National Health Service Corps Scholarship Program under section 338A(g)(1)(A) of the Public Health Service Act,
(B) the Armed Forces Health Professions Scholarship and Financial Assistance program under subchapter I of chapter 105 of title 10, United States Code, or
(C) a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in such section).
(d) Qualified tuition reduction
(1) In general
(2) Qualified tuition reduction
(A) such employee, or
(B) any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132(h).
(3) Reduction must not discriminate in favor of highly compensated, etc.
[(4) Repealed. Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830]
(5) Special rules for teaching and research assistants
(Aug. 16, 1954, ch. 736, 68A Stat. 38; Pub. L. 87–256, § 110(a), Sept. 21, 1961, 75 Stat. 535; Pub. L. 94–455, title XIX, § 1901(b)(8)(A), (c)(3), Oct. 4, 1976, 90 Stat. 1794, 1803; Pub. L. 96–541, § 5(a)(1), Dec. 17, 1980, 94 Stat. 3205; Pub. L. 98–369, div. A, title V, § 532(a), July 18, 1984, 98 Stat. 887; Pub. L. 99–514, title I, § 123(a), title XI, §§ 1114(b)(2), 1151(g)(2), Oct. 22, 1986, 100 Stat. 2112, 2450, 2506; Pub. L. 100–647, title I, § 1011B(a)(31)(B), title IV, § 4001(b)(2), Nov. 10, 1988, 102 Stat. 3488, 3643; Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 104–188, title I, § 1703(n)(14), Aug. 20, 1996, 110 Stat. 1878; Pub. L. 107–16, title IV, § 413(a), June 7, 2001, 115 Stat. 64; Pub. L. 114–113, div. Q, title III, § 301(a), Dec. 18, 2015, 129 Stat. 3086.)

CITE AS: 26 USC 117

§ 118. Contributions to the capital of a corporation
(a) General rule
(b) ExceptionsFor purposes of subsection (a), except as provided in subsection (c), the term “contribution to the capital of the taxpayer” does not include—
(1) any contribution in aid of construction or any other contribution as a customer or potential customer, and
(2) any contribution by any governmental entity or civic group (other than a contribution made by a shareholder as such).
(c) Special rules for water and sewerage disposal utilities
(1) General ruleFor purposes of this section, the term “contribution to the capital of the taxpayer” includes any amount of money or other property received from any person (whether or not a shareholder) by a regulated public utility which provides water or sewerage disposal services if—
(A) such amount is—
(i) a contribution in aid of construction, or
(ii) a contribution to the capital of such utility by a governmental entity providing for the protection, preservation, or enhancement of drinking water or sewerage disposal services,
(B) in the case of a contribution in aid of construction which is property other than water or sewerage disposal facilities, such amount meets the requirements of the expenditure rule of paragraph (2), and
(C) such amount (or any property acquired or constructed with such amount) is not included in the taxpayer’s rate base for ratemaking purposes.
(2) Expenditure ruleAn amount meets the requirements of this paragraph if—
(A) an amount equal to such amount is expended for the acquisition or construction of tangible property described in section 1231(b)—
(i) which is the property for which the contribution was made or is of the same type as such property, and
(ii) which is used predominantly in the trade or business of furnishing water or sewerage disposal services,
(B) the expenditure referred to in subparagraph (A) occurs before the end of the second taxable year after the year in which such amount was received, and
(C) accurate records are kept of the amounts contributed and expenditures made, the expenditures to which contributions are allocated, and the year in which the contributions and expenditures are received and made.
(3) DefinitionsFor purposes of this subsection—
(A) Contribution in aid of construction
(B) Predominantly
(C) Regulated public utility
(4) Disallowance of deductions and credits; adjusted basis
(d) Statute of limitationsIf the taxpayer for any taxable year treats an amount as a contribution to the capital of the taxpayer described in subsection (c)(1)(A)(i), then—
(1) the statutory period for the assessment of any deficiency attributable to any part of such amount shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of—
(A) the amount of the expenditure referred to in subparagraph (A) of subsection (c)(2),
(B) the taxpayer’s intention not to make the expenditures referred to in such subparagraph, or
(C) a failure to make such expenditure within the period described in subparagraph (B) of subsection (c)(2), and
(2) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
(e) Cross references
(1) For basis of property acquired by a corporation through a contribution to its capital, see section 362.
(2) For special rules in the case of contributions of indebtedness, see section 108(e)(6).
(Aug. 16, 1954, ch. 736, 68A Stat. 39; Pub. L. 94–455, title XXI, § 2120(a), Oct. 4, 1976, 90 Stat. 1912; Pub. L. 95–600, title III, § 364(a), Nov. 6, 1978, 92 Stat. 2854; Pub. L. 96–589, § 2(e)(2), Dec. 24, 1980, 94 Stat. 3396; Pub. L. 98–369, div. A, title I, § 163(a), July 18, 1984, 98 Stat. 697; Pub. L. 99–514, title VIII, § 824(a), Oct. 22, 1986, 100 Stat. 2374; Pub. L. 104–188, title I, § 1613(a)(1), (2), Aug. 20, 1996, 110 Stat. 1848–1850; Pub. L. 115–97, title I, § 13312(a), Dec. 22, 2017, 131 Stat. 2132; Pub. L. 117–58, div. H, title VI, § 80601(a), Nov. 15, 2021, 135 Stat. 1337.)

CITE AS: 26 USC 118

§ 119. Meals or lodging furnished for the convenience of the employer
(a) Meals and lodging furnished to employee, his spouse, and his dependents, pursuant to employmentThere shall be excluded from gross income of an employee the value of any meals or lodging furnished to him, his spouse, or any of his dependents by or on behalf of his employer for the convenience of the employer, but only if—
(1) in the case of meals, the meals are furnished on the business premises of the employer, or
(2) in the case of lodging, the employee is required to accept such lodging on the business premises of his employer as a condition of his employment.
(b) Special rulesFor purposes of subsection (a)—
(1) Provisions of employment contract or State statute not to be determinative
(2) Certain factors not taken into account with respect to meals
(3) Certain fixed charges for meals
(A) In generalIf—
(i) an employee is required to pay on a periodic basis a fixed charge for his meals, and
(ii) such meals are furnished by the employer for the convenience of the employer,
there shall be excluded from the employee’s gross income an amount equal to such fixed charge.
(B) Application of subparagraph (A)Subparagraph (A) shall apply—
(i) whether the employee pays the fixed charge out of his stated compensation or out of his own funds, and
(ii) only if the employee is required to make the payment whether he accepts or declines the meals.
(4) Meals furnished to employees on business premises where meals of most employees are otherwise excludable
(c) Employees living in certain camps
(1) In general
(2) CampFor purposes of this section, a camp constitutes lodging which is—
(A) provided by or on behalf of the employer for the convenience of the employer because the place at which such individual renders services is in a remote area where satisfactory housing is not available on the open market,
(B) located, as near as practicable, in the vicinity of the place at which such individual renders services, and
(C) furnished in a common area (or enclave) which is not available to the public and which normally accommodates 10 or more employees.
(d) Lodging furnished by certain educational institutions to employees
(1) In general
(2) Exception in cases of inadequate rentParagraph (1) shall not apply to the extent of the excess of—
(A) the lesser of—
(i) 5 percent of the appraised value of the qualified campus lodging, or
(ii) the average of the rentals paid by individuals (other than employees or students of the educational institution) during such calendar year for lodging provided by the educational institution which is comparable to the qualified campus lodging provided to the employee, over
(B) the rent paid by the employee for the qualified campus lodging during such calendar year.
The appraised value under subparagraph (A)(i) shall be determined as of the close of the calendar year in which the taxable year begins, or, in the case of a rental period not greater than 1 year, at any time during the calendar year in which such period begins.
(3) Qualified campus lodgingFor purposes of this subsection, the term “qualified campus lodging” means lodging to which subsection (a) does not apply and which is—
(A) located on, or in the proximity of, a campus of the educational institution, and
(B) furnished to the employee, his spouse, and any of his dependents by or on behalf of such institution for use as a residence.
(4) Educational institution, etc.For purposes of this subsection—
(A) In generalThe term “educational institution” means—
(i) an institution described in section 170(b)(1)(A)(ii) (or an entity organized under State law and composed of public institutions so described), or
(ii) an academic health center.
(B) Academic health centerFor purposes of subparagraph (A), the term “academic health center” means an entity—
(i) which is described in section 170(b)(1)(A)(iii),
(ii) which receives (during the calendar year in which the taxable year of the taxpayer begins) payments under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (relating to graduate medical education), and
(iii) which has as one of its principal purposes or functions the providing and teaching of basic and clinical medical science and research with the entity’s own faculty.
(Aug. 16, 1954, ch. 736, 68A Stat. 39; Pub. L. 95–427, § 4(a), Oct. 7, 1978, 92 Stat. 997; Pub. L. 95–615, title II, § 205, Nov. 8, 1978, 92 Stat. 3107; Pub. L. 96–222, title I, § 108(a)(1)(G), Apr. 1, 1980, 94 Stat. 225; Pub. L. 97–34, title I, § 113, Aug. 13, 1981, 95 Stat. 195; Pub. L. 99–514, title XI, § 1164(a), Oct. 22, 1986, 100 Stat. 2511; Pub. L. 100–647, title I, § 1011B(d), Nov. 10, 1988, 102 Stat. 3489; Pub. L. 104–188, title I, § 1123(a), Aug. 20, 1996, 110 Stat. 1768; Pub. L. 105–206, title V, § 5002(a), July 22, 1998, 112 Stat. 788.)

CITE AS: 26 USC 119

[§ 120. Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(19)(A), Dec. 19, 2014, 128 Stat. 4039]

CITE AS: 26 USC 120

§ 121. Exclusion of gain from sale of principal residence
(a) Exclusion
(b) Limitations
(1) In general
(2) Special rules for joint returnsIn the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property—
(A) $500,000 Limitation for certain joint returnsParagraph (1) shall be applied by substituting “$500,000” for “$250,000” if—
(i) either spouse meets the ownership requirements of subsection (a) with respect to such property;
(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and
(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3).
(B) Other joint returns
(3) Application to only 1 sale or exchange every 2 years
(4) Special rule for certain sales by surviving spouses
(5) Exclusion of gain allocated to nonqualified use
(A) In general
(B) Gain allocated to periods of nonqualified useFor purposes of subparagraph (A), gain shall be allocated to periods of nonqualified use based on the ratio which—
(i) the aggregate periods of nonqualified use during the period such property was owned by the taxpayer, bears to
(ii) the period such property was owned by the taxpayer.
(C) Period of nonqualified useFor purposes of this paragraph—
(i) In general
(ii) ExceptionsThe term “period of nonqualified use” does not include—(I) any portion of the 5-year period described in subsection (a) which is after the last date that such property is used as the principal residence of the taxpayer or the taxpayer’s spouse,(II) any period (not to exceed an aggregate period of 10 years) during which the taxpayer or the taxpayer’s spouse is serving on qualified official extended duty (as defined in subsection (d)(9)(C)) described in clause (i), (ii), or (iii) of subsection (d)(9)(A), and(III) any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the Secretary.
(D) Coordination with recognition of gain attributable to depreciationFor purposes of this paragraph—
(i) subparagraph (A) shall be applied after the application of subsection (d)(6), and
(ii) subparagraph (B) shall be applied without regard to any gain to which subsection (d)(6) applies.
(c) Exclusion for taxpayers failing to meet certain requirements
(1) In generalIn the case of a sale or exchange to which this subsection applies, the ownership and use requirements of subsection (a), and subsection (b)(3), shall not apply; but the dollar limitation under paragraph (1) or (2) of subsection (b), whichever is applicable, shall be equal to—
(A) the amount which bears the same ratio to such limitation (determined without regard to this paragraph) as
(B)
(i) the shorter of—(I) the aggregate periods, during the 5-year period ending on the date of such sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence; or(II) the period after the date of the most recent prior sale or exchange by the taxpayer to which subsection (a) applied and before the date of such sale or exchange, bears to
(ii) 2 years.
(2) Sales and exchanges to which subsection appliesThis subsection shall apply to any sale or exchange if—
(A) subsection (a) would not (but for this subsection) apply to such sale or exchange by reason of—
(i) a failure to meet the ownership and use requirements of subsection (a), or
(ii) subsection (b)(3), and
(B) such sale or exchange is by reason of a change in place of employment, health, or, to the extent provided in regulations, unforeseen circumstances.
(d) Special rules
(1) Joint returns
(2) Property of deceased spouse
(3) Property owned by spouse or former spouseFor purposes of this section—
(A) Property transferred to individual from spouse or former spouse
(B) Property used by former spouse pursuant to divorce decree, etc.
(C) Divorce or separation instrumentFor purposes of this paragraph, the term “divorce or separation instrument” means—
(i) a decree of divorce or separate maintenance or a written instrument incident to such a decree,
(ii) a written separation agreement, or
(iii) a decree (not described in clause (i)) requiring a spouse to make payments for the support or maintenance of the other spouse.
(4) Tenant-stockholder in cooperative housing corporationFor purposes of this section, if the taxpayer holds stock as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), then—
(A) the holding requirements of subsection (a) shall be applied to the holding of such stock, and
(B) the use requirements of subsection (a) shall be applied to the house or apartment which the taxpayer was entitled to occupy as such stockholder.
(5) Involuntary conversions
(A) In general
(B) Application of section 1033
(C) Property acquired after involuntary conversion
(6) Recognition of gain attributable to depreciation
(7) Determination of use during periods of out-of-residence careIn the case of a taxpayer who—
(A) becomes physically or mentally incapable of self-care, and
(B) owns property and uses such property as the taxpayer’s principal residence during the 5-year period described in subsection (a) for periods aggregating at least 1 year,
then the taxpayer shall be treated as using such property as the taxpayer’s principal residence during any time during such 5-year period in which the taxpayer owns the property and resides in any facility (including a nursing home) licensed by a State or political subdivision to care for an individual in the taxpayer’s condition.
(8) Sales of remainder interestsFor purposes of this section—
(A) In general
(B) Exception for sales to related parties
(9) Uniformed services, Foreign Service, and intelligence community
(A) In generalAt the election of an individual with respect to a property, the running of the 5-year period described in subsections (a) and (c)(1)(B) and paragraph (7) of this subsection with respect to such property shall be suspended during any period that such individual or such individual’s spouse is serving on qualified official extended duty—
(i) as a member of the uniformed services,
(ii) as a member of the Foreign Service of the United States, or
(iii) as an employee of the intelligence community.
(B) Maximum period of suspension
(C) Qualified official extended dutyFor purposes of this paragraph—
(i) In general
(ii) Uniformed services
(iii) Foreign Service of the United States
(iv) Employee of intelligence communityThe term “employee of the intelligence community” means an employee (as defined by section 2105 of title 5, United States Code) of—(I) the Office of the Director of National Intelligence,(II) the Central Intelligence Agency,(III) the National Security Agency,(IV) the Defense Intelligence Agency,(V) the National Geospatial-Intelligence Agency,(VI) the National Reconnaissance Office,(VII) any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs,(VIII) any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard,(IX) the Bureau of Intelligence and Research of the Department of State, or(X) any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information.
(v) Extended duty
(D) Special rules relating to election
(i) Election limited to 1 property at a time
(ii) Revocation of election
(10)
[(11) Repealed. Pub. L. 111–312, title III, § 301(a), Dec. 17, 2010, 124 Stat. 3300]
(12) Peace Corps
(A) In generalAt the election of an individual with respect to a property, the running of the 5-year period described in subsections (a) and (c)(1)(B) and paragraph (7) of this subsection with respect to such property shall be suspended during any period that such individual or such individual’s spouse is serving outside the United States—
(i) on qualified official extended duty (as defined in paragraph (9)(C)) as an employee of the Peace Corps, or
(ii) as an enrolled volunteer or volunteer leader under section 5 or 6 (as the case may be) of the Peace Corps Act (22 U.S.C. 2504, 2505).
(B) Applicable rules
(e) Denial of exclusion for expatriates
(f) Election to have section not apply
(g) Residences acquired in rollovers under section 1034
(Added Pub. L. 88–272, title II, § 206(a), Feb. 26, 1964, 78 Stat. 38; amended Pub. L. 94–455, title XIV, § 1404(a), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1733, 1834; Pub. L. 95–600, title IV, § 404(a)–(c)(2), Nov. 6, 1978, 92 Stat. 2869, 2870; Pub. L. 97–34, title I, § 123(a), Aug. 13, 1981, 95 Stat. 197; Pub. L. 100–647, title VI, § 6011(a), Nov. 10, 1988, 102 Stat. 3691; Pub. L. 105–34, title III, § 312(a), Aug. 5, 1997, 111 Stat. 836; Pub. L. 105–206, title VI, § 6005(e)(1), (2), July 22, 1998, 112 Stat. 805; Pub. L. 107–16, title V, § 542(c), June 7, 2001, 115 Stat. 84; Pub. L. 108–121, title I, § 101(a), Nov. 11, 2003, 117 Stat. 1336; Pub. L. 108–357, title VIII, § 840(a), Oct. 22, 2004, 118 Stat. 1597; Pub. L. 109–135, title IV, §§ 402(a)(3), 403(ee), Dec. 21, 2005, 119 Stat. 2610, 2631; Pub. L. 109–432, div. A, title IV, § 417(a)–(d), Dec. 20, 2006, 120 Stat. 2965, 2966; Pub. L. 110–142, § 7(a), Dec. 20, 2007, 121 Stat. 1806; Pub. L. 110–172, § 11(a)(11)(A), Dec. 29, 2007, 121 Stat. 2485; Pub. L. 110–245, title I, §§ 110(a), 113(a), (b), June 17, 2008, 122 Stat. 1633, 1635; Pub. L. 110–289, div. C, title III, § 3092(a), July 30, 2008, 122 Stat. 2911; Pub. L. 111–312, title III, § 301(a), Dec. 17, 2010, 124 Stat. 3300; Pub. L. 113–295, div. A, title II, §§ 212(c), 213(c)(1), 221(a)(20), Dec. 19, 2014, 128 Stat. 4033, 4040; Pub. L. 115–97, title I, § 11051(b)(3)(A), Dec. 22, 2017, 131 Stat. 2089.)

CITE AS: 26 USC 121

§ 122. Certain reduced uniformed services retirement pay
(a) General rule
(b) Special rule
(1) Amount excluded from gross income
(2) Consideration for the contract
For purposes of paragraph (1) and section 72(n), the term “consideration for the contract” means, in respect of any individual, the sum of—
(A) the total amount of the reductions before January 1, 1966, in his retired or retainer pay by reason of an election under chapter 73 of title 10 of the United States Code, and
(B) any amounts deposited at any time by him pursuant to section 1438 or 1452(d) of such title 10.
(Added Pub. L. 89–365, § 1(a)(1), Mar. 8, 1966, 80 Stat. 32; amended Pub. L. 93–406, title II, §§ 2005(c)(10), 2007(a), (b)(1), Sept. 2, 1974, 88 Stat. 992, 994; Pub. L. 113–295, div. A, title II, § 221(a)(21), Dec. 19, 2014, 128 Stat. 4040.)

CITE AS: 26 USC 122

§ 123. Amounts received under insurance contracts for certain living expenses
(a) General rule
(b) Limitation
Subsection (a) shall apply to amounts received by the taxpayer for living expenses incurred during any period only to the extent the amounts received do not exceed the amount by which—
(1) the actual living expenses incurred during such period for himself and members of his household resulting from the loss of use or occupancy of their residence, exceed
(2) the normal living expenses which would have been incurred for himself and members of his household during such period.
(Added Pub. L. 91–172, title IX, § 901(a), Dec. 30, 1969, 83 Stat. 709.)

CITE AS: 26 USC 123

[§ 124. Repealed. Pub. L. 101–508, title XI, § 11801(a)(9), Nov. 5, 1990, 104 Stat. 1388–520]

CITE AS: 26 USC 124

§ 125. Cafeteria plans
(a) General rule
(b) Exception for highly compensated participants and key employees
(1) Highly compensated participantsIn the case of a highly compensated participant, subsection (a) shall not apply to any benefit attributable to a plan year for which the plan discriminates in favor of—
(A) highly compensated individuals as to eligibility to participate, or
(B) highly compensated participants as to contributions and benefits.
(2) Key employees
(3) Year of inclusion
(c) Discrimination as to benefits or contributions
(d) Cafeteria plan definedFor purposes of this section—
(1) In generalThe term “cafeteria plan” means a written plan under which—
(A) all participants are employees, and
(B) the participants may choose among 2 or more benefits consisting of cash and qualified benefits.
(2) Deferred compensation plans excluded
(A) In general
(B) Exception for cash and deferred arrangements
(C) Exception for certain plans maintained by educational institutionsSubparagraph (A) shall not apply to a plan maintained by an educational organization described in section 170(b)(1)(A)(ii) to the extent of amounts which a covered employee may elect to have the employer pay as contributions for post-retirement group life insurance if—
(i) all contributions for such insurance must be made before retirement, and
(ii) such life insurance does not have a cash surrender value at any time.
For purposes of section 79, any life insurance described in the preceding sentence shall be treated as group-term life insurance.
(D) Exception for health savings accounts
(e) Highly compensated participant and individual definedFor purposes of this section—
(1) Highly compensated participantThe term “highly compensated participant” means a participant who is—
(A) an officer,
(B) a shareholder owning more than 5 percent of the voting power or value of all classes of stock of the employer,
(C) highly compensated, or
(D) a spouse or dependent (within the meaning of section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of an individual described in subparagraph (A), (B), or (C).
(2) Highly compensated individual
(f) Qualified benefits definedFor purposes of this section—
(1) In general
(2) Long-term care insurance not qualified
(3) Certain exchange-participating qualified health plans not qualified
(A) In general
(B) Exception for exchange-eligible employers
(g) Special rules
(1) Collectively bargained plan not considered discriminatory
(2) Health benefitsFor purposes of subparagraph (B) of subsection (b)(1), a cafeteria plan which provides health benefits shall not be treated as discriminatory if—
(A) contributions under the plan on behalf of each participant include an amount which—
(i) equals 100 percent of the cost of the health benefit coverage under the plan of the majority of the highly compensated participants similarly situated, or
(ii) equals or exceeds 75 percent of the cost of the health benefit coverage of the participant (similarly situated) having the highest cost health benefit coverage under the plan, and
(B) contributions or benefits under the plan in excess of those described in subparagraph (A) bear a uniform relationship to compensation.
(3) Certain participation eligibility rules not treated as discriminatoryFor purposes of subparagraph (A) of subsection (b)(1), a classification shall not be treated as discriminatory if the plan—
(A) benefits a group of employees described in section 410(b)(2)(A)(i), and
(B) meets the requirements of clauses (i) and (ii):
(i) No employee is required to complete more than 3 years of employment with the employer or employers maintaining the plan as a condition of participation in the plan, and the employment requirement for each employee is the same.
(ii) Any employee who has satisfied the employment requirement of clause (i) and who is otherwise entitled to participate in the plan commences participation no later than the first day of the first plan year beginning after the date the employment requirement was satisfied unless the employee was separated from service before the first day of that plan year.
(4) Certain controlled groups, etc.
(h) Special rule for unused benefits in health flexible spending arrangements of individuals called to active duty
(1) In general
(2) Qualified reservist distributionFor purposes of this subsection, the term “qualified reservist distribution” means any distribution to an individual of all or a portion of the balance in the employee’s account under such arrangement if—
(A) such individual was (by reason of being a member of a reserve component (as defined in section 101 of title 37, United States Code)) ordered or called to active duty for a period in excess of 179 days or for an indefinite period, and
(B) such distribution is made during the period beginning on the date of such order or call and ending on the last date that reimbursements could otherwise be made under such arrangement for the plan year which includes the date of such order or call.
(i) Limitation on health flexible spending arrangements
(1) In general
(2) Adjustment for inflationIn the case of any taxable year beginning after December 31, 2013, the dollar amount in paragraph (1) shall be increased by an amount equal to—
(A) such amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting “calendar year 2012” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If any increase determined under this paragraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.
(j) Simple cafeteria plans for small businesses
(1) In general
(2) Simple cafeteria planFor purposes of this subsection, the term “simple cafeteria plan” means a cafeteria plan—
(A) which is established and maintained by an eligible employer, and
(B) with respect to which the contribution requirements of paragraph (3), and the eligibility and participation requirements of paragraph (4), are met.
(3) Contribution requirements
(A) In generalThe requirements of this paragraph are met if, under the plan the employer is required, without regard to whether a qualified employee makes any salary reduction contribution, to make a contribution to provide qualified benefits under the plan on behalf of each qualified employee in an amount equal to—
(i) a uniform percentage (not less than 2 percent) of the employee’s compensation for the plan year, or
(ii) an amount which is not less than the lesser of—(I) 6 percent of the employee’s compensation for the plan year, or(II) twice the amount of the salary reduction contributions of each qualified employee.
(B) Matching contributions on behalf of highly compensated and key employees
(C) Additional contributions
(D) DefinitionsFor purposes of this paragraph—
(i) Salary reduction contribution
(ii) Qualified employee
(iii) Highly compensated employee
(iv) Key employee
(4) Minimum eligibility and participation requirements
(A) In generalThe requirements of this paragraph shall be treated as met with respect to any year if, under the plan—
(i) all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate, and
(ii) each employee eligible to participate in the plan may, subject to terms and conditions applicable to all participants, elect any benefit available under the plan.
(B) Certain employees may be excludedFor purposes of subparagraph (A)(i), an employer may elect to exclude under the plan employees—
(i) who have not attained the age of 21 before the close of a plan year,
(ii) who have less than 1 year of service with the employer as of any day during the plan year,
(iii) who are covered under an agreement which the Secretary of Labor finds to be a collective bargaining agreement if there is evidence that the benefits covered under the cafeteria plan were the subject of good faith bargaining between employee representatives and the employer, or
(iv) who are described in section 410(b)(3)(C) (relating to nonresident aliens working outside the United States).
A plan may provide a shorter period of service or younger age for purposes of clause (i) or (ii).
(5) Eligible employerFor purposes of this subsection—
(A) In general
(B) Employers not in existence during preceding year
(C) Growing employers retain treatment as small employer
(i) In generalIf—(I) an employer was an eligible employer for any year (a “qualified year”), and(II) such employer establishes a simple cafeteria plan for its employees for such year,
 then, notwithstanding the fact the employer fails to meet the requirements of subparagraph (A) for any subsequent year, such employer shall be treated as an eligible employer for such subsequent year with respect to employees (whether or not employees during a qualified year) of any trade or business which was covered by the plan during any qualified year.
(ii) Exception
(D) Special rules
(i) Predecessors
(ii) Aggregation rules
(6) Applicable nondiscrimination requirement
(7) Compensation
(k) Cross reference
(l) Regulations
(Added Pub. L. 95–600, title I, § 134(a), Nov. 6, 1978, 92 Stat. 2783; amended Pub. L. 96–222, title I, § 101(a)(6)(A), Apr. 1, 1980, 94 Stat. 196; Pub. L. 96–605, title II, §§ 201(b)(2), 226(a), Dec. 28, 1980, 94 Stat. 3527, 3529; Pub. L. 96–613, § 5(b)(2), Dec. 28, 1980, 94 Stat. 3581; Pub. L. 98–369, div. A, title V, § 531(b)(1)–(4)(A), July 18, 1984, 98 Stat. 881, 882; Pub. L. 98–611, § 1(d)(3)(A), Oct. 31, 1984, 98 Stat. 3177; Pub. L. 98–612, § 1(b)(3)(B), Oct. 31, 1984, 98 Stat. 3181; Pub. L. 99–514, title XI, § 1151(d)(1), title XVIII, § 1853(b)(1), Oct. 22, 1986, 100 Stat. 2504, 2870; Pub. L. 100–647, title I, §§ 1011B(a)(11)–(13), 1018(t)(6), title IV, § 4002(b)(2), title VI, § 6051(b), Nov. 10, 1988, 102 Stat. 3484, 3485, 3589, 3643, 3696; Pub. L. 101–140, title II, § 203(a)(1), (3), (b)(2), Nov. 8, 1989, 103 Stat. 830, 831; Pub. L. 101–239, title VII, § 7814(b), Dec. 19, 1989, 103 Stat. 2413; Pub. L. 101–508, title XI, § 11801(c)(3), Nov. 5, 1990, 104 Stat. 1388–523; Pub. L. 104–191, title III, §§ 301(d), 321(c)(1), Aug. 21, 1996, 110 Stat. 2051, 2058; Pub. L. 108–173, title XII, § 1201(i), Dec. 8, 2003, 117 Stat. 2479; Pub. L. 108–311, title II, § 207(11), Oct. 4, 2004, 118 Stat. 1177; Pub. L. 110–172, § 11(a)(12), Dec. 29, 2007, 121 Stat. 2485; Pub. L. 110–245, title I, § 114(a), June 17, 2008, 122 Stat. 1636; Pub. L. 111–148, title I, § 1515(a), (b), title IX, §§ 9005(a), 9022(a), title X, § 10902(a), Mar. 23, 2010, 124 Stat. 258, 854, 874, 1016; Pub. L. 111–152, title I, § 1403(b), Mar. 30, 2010, 124 Stat. 1063; Pub. L. 113–295, div. A, title II, §§ 213(b), 220(f), (g), Dec. 19, 2014, 128 Stat. 4033, 4036; Pub. L. 115–97, title I, § 11002(d)(1)(L), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 115–141, div. U, title IV, § 401(a)(37), Mar. 23, 2018, 132 Stat. 1186.)

CITE AS: 26 USC 125

§ 126. Certain cost-sharing payments
(a) General rule
Gross income does not include the excludable portion of payments received under—
(1) The rural clean water program authorized by section 208(j) of the Federal Water Pollution Control Act (33 U.S.C. 1288(j)).
(2) The rural abandoned mine program authorized by section 406 of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1236).
(3) The water bank program authorized by the Water Bank Act (16 U.S.C. 1301 et seq.).
(4) The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978.
(5) The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590a).
(6) The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act (7 U.S.C. 1010; 16 U.S.C. 590a et seq.).
(7) Any small watershed program administered by the Secretary of Agriculture which is determined by the Secretary of the Treasury or his delegate to be substantially similar to the type of programs described in paragraphs (1) through (8).
(8) Any program of a State, possession of the United States, a political subdivision of any of the foregoing, or the District of Columbia under which payments are made to individuals primarily for the purpose of conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife.
(b) Excludable portion
For purposes of this section—
(1) In general
The term “excludable portion” means that portion (or all) of a payment made to any person under any program described in subsection (a) which—
(A) is determined by the Secretary of Agriculture to be made primarily for the purpose of conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife, and
(B) is determined by the Secretary of the Treasury or his delegate as not increasing substantially the annual income derived from the property.
(2) Payments not chargeable to capital account
(c) Election for section not to apply
(1) In general
(2) Manner and time for making election
(d) Denial of double benefits
(e) Basis of property not increased by reason of excludable payments
(Added Pub. L. 95–600, title V, § 543(a), Nov. 6, 1978, 92 Stat. 2888; amended Pub. L. 96–222, title I, § 105(a)(7)(A), (C), (E), Apr. 1, 1980, 94 Stat. 220, 221; Pub. L. 113–295, div. A, title II, § 221(a)(22), Dec. 19, 2014, 128 Stat. 4040; Pub. L. 115–141, div. U, title IV, § 401(b)(9), Mar. 23, 2018, 132 Stat. 1202.)

CITE AS: 26 USC 126

§ 127. Educational assistance programs
(a) Exclusion from gross income
(1) In general
(2) $5,250 maximum exclusion
(b) Educational assistance program
(1) In general
(2) Eligibility
(3) Principal shareholders or owners
(4) Other benefits as an alternative
(5) No funding required
(6) Notification of employees
(c) Definitions; special rules
For purposes of this section—
(1) Educational assistance
The term “educational assistance” means—
(A) the payment, by an employer, of expenses incurred by or on behalf of an employee for education of the employee (including, but not limited to, tuition, fees, and similar payments, books, supplies, and equipment),
(B) in the case of payments made before January 1, 2026, the payment by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan (as defined in section 221(d)(1)) incurred by the employee for education of the employee, and
(C) the provision, by an employer, of courses of instruction for such employee (including books, supplies, and equipment),
but does not include payment for, or the provision of, tools or supplies which may be retained by the employee after completion of a course of instruction, or meals, lodging, or transportation. The term “educational assistance” also does not include any payment for, or the provision of any benefits with respect to, any course or other education involving sports, games, or hobbies.
(2) Employee
(3) Employer
(4) Attribution rules
(A) Ownership of stock
(B) Interest in unincorporated trade or business
(5) Certain tests not applicable
An educational assistance program shall not be held or considered to fail to meet any requirements of subsection (b) merely because—
(A) of utilization rates for the different types of educational assistance made available under the program; or
(B) successful completion, or attaining a particular course grade, is required for or considered in determining reimbursement under the program.
(6) Relationship to current law
(7) Disallowance of excluded amounts as credit or deduction
(d) Cross reference
(Added Pub. L. 95–600, title I, § 164(a), Nov. 6, 1978, 92 Stat. 2811; amended Pub. L. 98–611, § 1(a)–(c), (d)(3)(B), (e), Oct. 31, 1984, 98 Stat. 3176–3178; Pub. L. 99–514, title XI, §§ 1114(b)(4), 1151(c)(4), (g)(3), 1162(a), Oct. 22, 1986, 100 Stat. 2450, 2503, 2507, 2510; Pub. L. 100–647, title I, § 1011B(a)(31)(B), title IV, § 4001(a), (b)(1), Nov. 10, 1988, 102 Stat. 3488, 3643; Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title VII, §§ 7101(a)(1), 7814(a), Dec. 19, 1989, 103 Stat. 2304, 2413; Pub. L. 101–508, title XI, § 11403(a), (b), Nov. 5, 1990, 104 Stat. 1388–473; Pub. L. 102–227, title I, § 103(a)(1), Dec. 11, 1991, 105 Stat. 1687; Pub. L. 103–66, title XIII, § 13101(a)(1), Aug. 10, 1993, 107 Stat. 420; Pub. L. 104–188, title I, § 1202(a), (b), Aug. 20, 1996, 110 Stat. 1772, 1773; Pub. L. 105–34, title II, § 221(a), Aug. 5, 1997, 111 Stat. 818; Pub. L. 106–170, title V, § 506(a), Dec. 17, 1999, 113 Stat. 1922; Pub. L. 107–16, title IV, § 411(a), (b), June 7, 2001, 115 Stat. 63; Pub. L. 116–136, div. A, title II, § 2206(a), Mar. 27, 2020, 134 Stat. 346; Pub. L. 116–260, div. EE, title I, § 120(a), Dec. 27, 2020, 134 Stat. 3051.)

CITE AS: 26 USC 127

[§ 128. Repealed. Pub. L. 101–508, title XI, § 11801(a)(10), Nov. 5, 1990, 104 Stat. 1388–520]

CITE AS: 26 USC 128

§ 129. Dependent care assistance programs
(a) Exclusion
(1) In general
(2) Limitation of exclusion
(A) In general
(B) Year of inclusion
(C) Marital status
(D) Special rule for 2021
(b) Earned income limitation
(1) In generalThe amount excluded from the income of an employee under subsection (a) for any taxable year shall not exceed—
(A) in the case of an employee who is not married at the close of such taxable year, the earned income of such employee for such taxable year, or
(B) in the case of an employee who is married at the close of such taxable year, the lesser of—
(i) the earned income of such employee for such taxable year, or
(ii) the earned income of the spouse of such employee for such taxable year.
(2) Special rule for certain spouses
(c) Payments to related individualsNo amount paid or incurred during the taxable year of an employee by an employer in providing dependent care assistance to such employee shall be excluded under subsection (a) if such amount was paid or incurred to an individual—
(1) with respect to whom, for such taxable year, a deduction is allowable under section 151(c) (relating to personal exemptions for dependents) to such employee or the spouse of such employee, or
(2) who is a child of such employee (within the meaning of section 152(f)(1)) under the age of 19 at the close of such taxable year.
(d) Dependent care assistance program
(1) In general
(2) Discrimination
(3) Eligibility
(4) Principal shareholders or owners
(5) No funding required
(6) Notification of eligible employees
(7) Statement of expenses
(8) Benefits
(A) In general
(B) Salary reduction agreements
(9) Excluded employeesFor purposes of paragraphs (3) and (8), there shall be excluded from consideration—
(A) subject to rules similar to the rules of section 410(b)(4), employees who have not attained the age of 21 and completed 1 year of service (as defined in section 410(a)(3)), and
(B) employees not included in a dependent care assistance program who are included in a unit of employees covered by an agreement which the Secretary finds to be a collective bargaining agreement between employee representatives and 1 or more employees, if there is evidence that dependent care benefits were the subject of good faith bargaining between such employee representatives and such employer or employers.
(e) Definitions and special rulesFor purposes of this section—
(1) Dependent care assistance
(2) Earned income
(3) Employee
(4) Employer
(5) Attribution rules
(A) Ownership of stock
(B) Interest in unincorporated trade or business
(6) Utilization test not applicable
(7) Disallowance of excluded amounts as credit or deduction
(8) Treatment of onsite facilitiesIn the case of an onsite facility maintained by an employer, except to the extent provided in regulations, the amount of dependent care assistance provided to an employee excluded with respect to any dependent shall be based on—
(A) utilization of the facility by a dependent of the employee, and
(B) the value of the services provided with respect to such dependent.
(9) Identifying information required with respect to service providerNo amount paid or incurred by an employer for dependent care assistance provided to an employee shall be excluded from the gross income of such employee unless—
(A) the name, address, and taxpayer identification number of the person performing the services are included on the return to which the exclusion relates, or
(B) if such person is an organization described in section 501(c)(3) and exempt from tax under section 501(a), the name and address of such person are included on the return to which the exclusion relates.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(Added Pub. L. 97–34, title I, § 124(e)(1), Aug. 13, 1981, 95 Stat. 198; amended Pub. L. 97–448, title I, § 101(e), Jan. 12, 1983, 96 Stat. 2366; Pub. L. 98–369, div. A, title IV, § 474(r)(6), July 18, 1984, 98 Stat. 839; Pub. L. 99–514, title I, § 104(b)(1), title XI, §§ 1114(b)(4), 1151(c)(5), (f), (g)(4), 1163(a), (b), Oct. 22, 1986, 100 Stat. 2104, 2450, 2503, 2506, 2507, 2510; Pub. L. 100–485, title VII, § 703(c)(2), Oct. 13, 1988, 102 Stat. 2427; Pub. L. 100–647, title I, § 1011B(a)(14), (15), (18), (30), (31)(A), (c)(1), (2)(A), title III, § 3021(a)(14), Nov. 10, 1988, 102 Stat. 3485, 3487–3489, 3631; Pub. L. 101–140, title II, §§ 203(a)(1), (2), 204(a)(1)–(3)(C), Nov. 8, 1989, 103 Stat. 830, 832; Pub. L. 101–239, title VII, § 7811(h)(2), Dec. 19, 1989, 103 Stat. 2409; Pub. L. 104–188, title I, § 1431(c)(1)(B), Aug. 20, 1996, 110 Stat. 1803; Pub. L. 108–311, title II, § 207(12), Oct. 4, 2004, 118 Stat. 1177; Pub. L. 117–2, title IX, § 9632(a), Mar. 11, 2021, 135 Stat. 160.)

CITE AS: 26 USC 129

§ 130. Certain personal injury liability assignments
(a) In general
(b) Treatment of qualified funding assetIn the case of any qualified funding asset—
(1) the basis of such asset shall be reduced by the amount excluded from gross income under subsection (a) by reason of the purchase of such asset, and
(2) any gain recognized on a disposition of such asset shall be treated as ordinary income.
(c) Qualified assignmentFor purposes of this section, the term “qualified assignment” means any assignment of a liability to make periodic payments as damages (whether by suit or agreement), or as compensation under any workmen’s compensation act, on account of personal injury or sickness (in a case involving physical injury or physical sickness)—
(1) if the assignee assumes such liability from a person who is a party to the suit or agreement, or the workmen’s compensation claim, and
(2) if—
(A) such periodic payments are fixed and determinable as to amount and time of payment,
(B) such periodic payments cannot be accelerated, deferred, increased, or decreased by the recipient of such payments,
(C) the assignee’s obligation on account of the personal injuries or sickness is no greater than the obligation of the person who assigned the liability, and
(D) such periodic payments are excludable from the gross income of the recipient under paragraph (1) or (2) of section 104(a).
The determination for purposes of this chapter of when the recipient is treated as having received any payment with respect to which there has been a qualified assignment shall be made without regard to any provision of such assignment which grants the recipient rights as a creditor greater than those of a general creditor.
(d) Qualified funding assetFor purposes of this section, the term “qualified funding asset” means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States, if—
(1) such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment,
(2) the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
(3) such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
(4) such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.
(Added Pub. L. 97–473, title I, § 101(b)(1), Jan. 14, 1983, 96 Stat. 2605; amended Pub. L. 99–514, title X, § 1002(a), Oct. 22, 1986, 100 Stat. 2388; Pub. L. 100–647, title VI, § 6079(b)(1), Nov. 10, 1988, 102 Stat. 3709; Pub. L. 105–34, title IX, § 962(a), Aug. 5, 1997, 111 Stat. 891.)

CITE AS: 26 USC 130

§ 131. Certain foster care payments
(a) General rule
(b) Qualified foster care payment definedFor purposes of this section—
(1) In generalThe term “qualified foster care payment” means any payment made pursuant to a foster care program of a State or political subdivision thereof—
(A) which is paid by—
(i) a State or political subdivision thereof, or
(ii) a qualified foster care placement agency, and
(B) which is—
(i) paid to the foster care provider for caring for a qualified foster individual in the foster care provider’s home, or
(ii) a difficulty of care payment.
(2) Qualified foster individualThe term “qualified foster individual” means any individual who is living in a foster family home in which such individual was placed by—
(A) an agency of a State or political subdivision thereof, or
(B) a qualified foster care placement agency.
(3) Qualified foster care placement agencyThe term “qualified foster care placement agency” means any placement agency which is licensed or certified by—
(A) a State or political subdivision thereof, or
(B) an entity designated by a State or political subdivision thereof,
for the foster care program of such State or political subdivision to make foster care payments to providers of foster care.
(4) Limitation based on number of individuals over the age of 18
(c) Difficulty of care paymentsFor purposes of this section—
(1) Difficulty of care paymentsThe term “difficulty of care payments” means payments to individuals which are not described in subsection (b)(1)(B)(i), and which—
(A) are compensation for providing the additional care of a qualified foster individual which is—
(i) required by reason of a physical, mental, or emotional handicap of such individual with respect to which the State has determined that there is a need for additional compensation, and
(ii) provided in the home of the foster care provider, and
(B) are designated by the payor as compensation described in subparagraph (A).
(2) Limitation based on number of individualsIn the case of any foster home, difficulty of care payments for any period to which such payments relate shall not be excludable from gross income under subsection (a) to the extent such payments are made for more than—
(A) 10 qualified foster individuals who have not attained age 19, and
(B) 5 qualified foster individuals not described in subparagraph (A).
(Added Pub. L. 97–473, title I, § 102(a), Jan. 14, 1983, 96 Stat. 2606; amended Pub. L. 99–514, title XVII, § 1707(a), Oct. 22, 1986, 100 Stat. 2781; Pub. L. 107–147, title IV, § 404(a)–(c), Mar. 9, 2002, 116 Stat. 41.)

CITE AS: 26 USC 131

§ 132. Certain fringe benefits
(a) Exclusion from gross incomeGross income shall not include any fringe benefit which qualifies as a—
(1) no-additional-cost service,
(2) qualified employee discount,
(3) working condition fringe,
(4) de minimis fringe,
(5) qualified transportation fringe,
(6) qualified moving expense reimbursement,
(7) qualified retirement planning services, or
(8) qualified military base realignment and closure fringe.
(b) No-additional-cost service definedFor purposes of this section, the term “no-additional-cost service” means any service provided by an employer to an employee for use by such employee if—
(1) such service is offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services, and
(2) the employer incurs no substantial additional cost (including forgone revenue) in providing such service to the employee (determined without regard to any amount paid by the employee for such service).
(c) Qualified employee discount definedFor purposes of this section—
(1) Qualified employee discountThe term “qualified employee discount” means any employee discount with respect to qualified property or services to the extent such discount does not exceed—
(A) in the case of property, the gross profit percentage of the price at which the property is being offered by the employer to customers, or
(B) in the case of services, 20 percent of the price at which the services are being offered by the employer to customers.
(2) Gross profit percentage
(A) In generalThe term “gross profit percentage” means the percent which—
(i) the excess of the aggregate sales price of property sold by the employer to customers over the aggregate cost of such property to the employer, is of
(ii) the aggregate sale price of such property.
(B) Determination of gross profit percentageGross profit percentage shall be determined on the basis of—
(i) all property offered to customers in the ordinary course of the line of business of the employer in which the employee is performing services (or a reasonable classification of property selected by the employer), and
(ii) the employer’s experience during a representative period.
(3) Employee discount definedThe term “employee discount” means the amount by which—
(A) the price at which the property or services are provided by the employer to an employee for use by such employee, is less than
(B) the price at which such property or services are being offered by the employer to customers.
(4) Qualified property or services
(d) Working condition fringe defined
(e) De minimis fringe definedFor purposes of this section—
(1) In general
(2) Treatment of certain eating facilitiesThe operation by an employer of any eating facility for employees shall be treated as a de minimis fringe if—
(A) such facility is located on or near the business premises of the employer, and
(B) revenue derived from such facility normally equals or exceeds the direct operating costs of such facility.
The preceding sentence shall apply with respect to any highly compensated employee only if access to the facility is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees. For purposes of subparagraph (B), an employee entitled under section 119 to exclude the value of a meal provided at such facility shall be treated as having paid an amount for such meal equal to the direct operating costs of the facility attributable to such meal.
(f) Qualified transportation fringe
(1) In generalFor purposes of this section, the term “qualified transportation fringe” means any of the following provided by an employer to an employee:
(A) Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.
(B) Any transit pass.
(C) Qualified parking.
(D) Any qualified bicycle commuting reimbursement.
(2) Limitation on exclusionThe amount of the fringe benefits which are provided by an employer to any employee and which may be excluded from gross income under subsection (a)(5) shall not exceed—
(A) $175 per month in the case of the aggregate of the benefits described in subparagraphs (A) and (B) of paragraph (1),
(B) $175 per month in the case of qualified parking, and
(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.
(3) Cash reimbursements
(4) No constructive receipt
(5) DefinitionsFor purposes of this subsection—
(A) Transit passThe term “transit pass” means any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if such transportation is—
(i) on mass transit facilities (whether or not publicly owned), or
(ii) provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).
(B) Commuter highway vehicleThe term “commuter highway vehicle” means any highway vehicle—
(i) the seating capacity of which is at least 6 adults (not including the driver), and
(ii) at least 80 percent of the mileage use of which can reasonably be expected to be—(I) for purposes of transporting employees in connection with travel between their residences and their place of employment, and(II) on trips during which the number of employees transported for such purposes is at least ½ of the adult seating capacity of such vehicle (not including the driver).
(C) Qualified parking
(D) Transportation provided by employer
(E) Employee
(F) Definitions related to bicycle commuting reimbursement
(i) Qualified bicycle commuting reimbursement
(ii) Applicable annual limitation
(iii) Qualified bicycle commuting monthThe term “qualified bicycle commuting month” means, with respect to any employee, any month during which such employee—(I) regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and(II) does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).
(6) Inflation adjustment
(A) In generalIn the case of any taxable year beginning in a calendar year after 1999, the dollar amounts contained in subparagraphs (A) and (B) of paragraph (2) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) 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 1998” for “calendar year 2016” in subparagraph (A)(ii) thereof.
(B) Rounding
(7) Coordination with other provisions
(8) Suspension of qualified bicycle commuting reimbursement exclusion
(g) Qualified moving expense reimbursementFor purposes of this section—
(1) In general
(2) Suspension for taxable years 2018 through 2025
(h) Certain individuals treated as employees for purposes of subsections (a)(1) and (2)For purposes of paragraphs (1) and (2) of subsection (a)—
(1) Retired and disabled employees and surviving spouse of employee treated as employeeWith respect to a line of business of an employer, the term “employee” includes—
(A) any individual who was formerly employed by such employer in such line of business and who separated from service with such employer in such line of business by reason of retirement or disability, and
(B) any widow or widower of any individual who died while employed by such employer in such line of business or while an employee within the meaning of subparagraph (A).
(2) Spouse and dependent children
(A) In general
(B) Dependent childFor purposes of subparagraph (A), the term “dependent child” means any child (as defined in section 152(f)(1)) of the employee—
(i) who is a dependent of the employee, or
(ii) both of whose parents are deceased and who has not attained age 25.
For purposes of the preceding sentence, any child to whom section 152(e) applies shall be treated as the dependent of both parents.
(3) Special rule for parents in the case of air transportation
(i) Reciprocal agreementsFor purposes of paragraph (1) of subsection (a), any service provided by an employer to an employee of another employer shall be treated as provided by the employer of such employee if—
(1) such service is provided pursuant to a written agreement between such employers, and
(2) neither of such employers incurs any substantial additional costs (including foregone revenue) in providing such service or pursuant to such agreement.
(j) Special rules
(1) Exclusions under subsection (a)(1) and (2) apply to highly compensated employees only if no discrimination
(2) Special rule for leased sections of department stores
(A) In generalFor purposes of paragraph (2) of subsection (a), in the case of a leased section of a department store—
(i) such section shall be treated as part of the line of business of the person operating the department store, and
(ii) employees in the leased section shall be treated as employees of the person operating the department store.
(B) Leased section of department store
(3) Auto salesmen
(A) In general
(B) Qualified automobile demonstration useFor purposes of subparagraph (A), the term “qualified automobile demonstration use” means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located if—
(i) such use is provided primarily to facilitate the salesman’s performance of services for the employer, and
(ii) there are substantial restrictions on the personal use of such automobile by such salesman.
(4) On-premises gyms and other athletic facilities
(A) In general
(B) On-premises athletic facilityFor purposes of this paragraph, the term “on-premises athletic facility” means any gym or other athletic facility—
(i) which is located on the premises of the employer,
(ii) which is operated by the employer, and
(iii) substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).
(5) Special rule for affiliates of airlines
(A) In generalIf—
(i) a qualified affiliate is a member of an affiliated group another member of which operates an airline, and
(ii) employees of the qualified affiliate who are directly engaged in providing airline-related services are entitled to no-additional-cost service with respect to air transportation provided by such other member,
then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.
(B) Qualified affiliate
(C) Airline-related servicesFor purposes of this paragraph, the term “airline-related services” means any of the following services provided in connection with air transportation:
(i) Catering.
(ii) Baggage handling.
(iii) Ticketing and reservations.
(iv) Flight planning and weather analysis.
(v) Restaurants and gift shops located at an airport.
(vi) Such other similar services provided to the airline as the Secretary may prescribe.
(D) Affiliated group
(6) Highly compensated employee
(7) Air cargo
(8) Application of section to otherwise taxable educational or training benefits
(k) Customers not to include employees
(l) Section not to apply to fringe benefits expressly provided for elsewhere
(m) Qualified retirement planning services
(1) In general
(2) Nondiscrimination rule
(3) Qualified employer plan
(n) Qualified military base realignment and closure fringeFor purposes of this section—
(1) In general
(2) Limitation
(o) Regulations
(Added Pub. L. 98–369, div. A, title V, § 531(a)(1), July 18, 1984, 98 Stat. 877; amended Pub. L. 99–272, title XIII, § 13207(a)(1), (b)(1), Apr. 7, 1986, 100 Stat. 319; Pub. L. 99–514, title XI, §§ 1114(b)(5), 1151(e)(2)(A), (g)(5), title XVIII, §§ 1853(a), 1899A(5), Oct. 22, 1986, 100 Stat. 2451, 2506, 2507, 2870, 2958; Pub. L. 100–647, title I, § 1011B(a)(31)(B), title VI, § 6066(a), Nov. 10, 1988, 102 Stat. 3488, 3702; Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title VII, §§ 7101(b), 7841(d)(7), (19), Dec. 19, 1989, 103 Stat. 2304

CITE AS: 26 USC 132

[§ 133. Repealed. Pub. L. 104–188, title I, § 1602(a), Aug. 20, 1996, 110 Stat. 1833]

CITE AS: 26 USC 133

§ 134. Certain military benefits
(a) General rule
(b) Qualified military benefit
For purposes of this section—
(1) In general
The term “qualified military benefit” means any allowance or in-kind benefit (other than personal use of a vehicle) which—
(A) is received by any member or former member of the uniformed services of the United States or any dependent of such member by reason of such member’s status or service as a member of such uniformed services, and
(B) was excludable from gross income on September 9, 1986, under any provision of law, regulation, or administrative practice which was in effect on such date (other than a provision of this title).
(2) No other benefit to be excludable except as provided by this title
Notwithstanding any other provision of law, no benefit shall be treated as a qualified military benefit unless such benefit—
(A) is a benefit described in paragraph (1), or
(B) is excludable from gross income 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.
(3) Limitations on modifications
(A) In general
(B) Exception for certain adjustments to cash benefits
Subparagraph (A) shall not apply to any adjustment to any qualified military benefit payable in cash which—
(i) is pursuant to a provision of law or regulation (as in effect on September 9, 1986), and
(ii) is determined by reference to any fluctuation in cost, price, currency, or other similar index.
(C) Exception for death gratuity adjustments made by law
(4) Clarification of certain benefits
(5) Travel benefits under operation hero miles
(6) Certain State payments
(Added Pub. L. 99–514, title XI, § 1168(a), Oct. 22, 1986, 100 Stat. 2512; amended Pub. L. 100–647, title I, § 1011B(f)(1), (2)(A), (3), Nov. 10, 1988, 102 Stat. 3489, 3490; Pub. L. 108–121, title I, §§ 102(b)(1), (2), 106(a), (b)(1), Nov. 11, 2003, 117 Stat. 1337–1339; Pub. L. 108–375, div. A, title V, § 585(b)(1), (2)(A), Oct. 28, 2004, 118 Stat. 1931, 1932; Pub. L. 110–245, title I, § 112(a), June 17, 2008, 122 Stat. 1635; Pub. L. 115–141, div. U, title IV, § 401(a)(39), Mar. 23, 2018, 132 Stat. 1186.)

CITE AS: 26 USC 134

§ 135. Income from United States savings bonds used to pay higher education tuition and fees
(a) General rule
(b) Limitations
(1) Limitation where redemption proceeds exceed higher education expenses
(A) In general
If—
(i) the aggregate proceeds of qualified United States savings bonds redeemed by the taxpayer during the taxable year exceed
(ii) the qualified higher education expenses paid by the taxpayer during such taxable year,
the amount excludable from gross income under subsection (a) shall not exceed the applicable fraction of the amount excludable from gross income under subsection (a) without regard to this subsection.
(B) Applicable fraction
(2) Limitation based on modified adjusted gross income
(A) In general
(B) Inflation adjustment
In the case of any taxable year beginning in a calendar year after 1990, the $40,000 and $60,000 amounts contained in subparagraph (A) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 1989” for “calendar year 2016” in subparagraph (A)(ii) thereof.
(C) Rounding
(c) Definitions
For purposes of this section—
(1) Qualified United States savings bond
(A) after December 31, 1989,
(B) to an individual who has attained age 24 before the date of issuance, and
(C) at discount under section 3105 of title 31, United States Code.
(2) Qualified higher education expenses
(A) In general
The term “qualified higher education expenses” means tuition and fees required for the enrollment or attendance of—
(i) the taxpayer,
(ii) the taxpayer’s spouse, or
(iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,
at an eligible educational institution.
(B) Exception for education involving sports, etc.
(C) Contributions to qualified tuition program and Coverdell education savings accounts
(3) Eligible educational institution
(4) Modified adjusted gross income
The term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year determined—
(A) without regard to this section and sections 85(c), 137, 221, 911, 931, and 933, and
(B) after the application of sections 86, 469, and 219.
(d) Special rules
(1) Adjustment for certain scholarships and veterans benefits
The amount of qualified higher education expenses otherwise taken into account under subsection (a) with respect to the education of an individual shall be reduced (before the application of subsection (b)) by the sum of the amounts received with respect to such individual for the taxable year as—
(A) a qualified scholarship which under section 117 is not includable in gross income,
(B) an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code,
(C) a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for educational expenses, or attributable to attendance at an eligible educational institution, which is exempt from income taxation by any law of the United States, or
(D) a payment, waiver, or reimbursement of qualified higher education expenses under a qualified tuition program (within the meaning of section 529(b)).
(2) Coordination with other higher education benefits
The amount of the qualified higher education expenses otherwise taken into account under subsection (a) with respect to the education of an individual shall be reduced (before the application of subsection (b)) by—
(A) the amount of such expenses which are taken into account in determining the credit allowed to the taxpayer or any other person under section 25A with respect to such expenses; and
(B) the amount of such expenses which are taken into account in determining the exclusions under sections 529(c)(3)(B) and 530(d)(2).
(3) No exclusion for married individuals filing separate returns
(4) Regulations
(Added Pub. L. 100–647, title VI, § 6009(a), Nov. 10, 1988, 102 Stat. 3688; amended Pub. L. 101–239, title VII, § 7816(c)(2), Dec. 19, 1989, 103 Stat. 2420; Pub. L. 101–508, title XI, §§ 11101(d)(1)(E), 11702(h), Nov. 5, 1990, 104 Stat. 1388–405, 1388–516; Pub. L. 104–188, title I, §§ 1703(d), 1806(b)(1), 1807(c)(2), Aug. 20, 1996, 110 Stat. 1875, 1898, 1902; Pub. L. 105–34, title II, §§ 201(d), 211(c), 213(e)(2), Aug. 5, 1997, 111 Stat. 805, 811, 817; Pub. L. 105–206, title VI, § 6004(c)(1), (d)(4), (9), July 22, 1998, 112 Stat. 793–795; Pub. L. 105–277, div. J, title IV, § 4003(a)(2)(B), Oct. 21, 1998, 112 Stat. 2681–908; Pub. L. 107–16, title IV, §§ 401(g)(2)(B), 402(a)(4)(A), (B), (b)(2)(A), 431(c)(1), June 7, 2001, 115 Stat. 59–62, 68; Pub. L. 107–22, § 1(b)(1)(B), (3)(B), July 26, 2001, 115 Stat. 197; Pub. L. 108–357, title I, § 102(d)(1), Oct. 22, 2004, 118 Stat. 1428; Pub. L. 115–97, title I, §§ 11002(d)(1)(M), 13305(b)(1), Dec. 22, 2017, 131 Stat. 2060, 2126; Pub. L. 116–260, div. EE, title I, § 104(b)(2)(D), Dec. 27, 2020, 134 Stat. 3041; Pub. L. 117–2, title IX, § 9042(b)(3), Mar. 11, 2021, 135 Stat. 122.)

CITE AS: 26 USC 135

§ 136. Energy conservation subsidies provided by public utilities
(a) Exclusion
(b) Denial of double benefit
(c) Energy conservation measure
(1) In general
(2) Other definitions
For purposes of this subsection—
(A) Dwelling unit
(B) Public utility
(d) Exception
(Added Pub. L. 102–486, title XIX, § 1912(a), Oct. 24, 1992, 106 Stat. 3014; amended Pub. L. 104–188, title I, § 1617(a), (b), Aug. 20, 1996, 110 Stat. 1858.)

CITE AS: 26 USC 136

§ 137. Adoption assistance programs
(a) Exclusion
(1) In general
(2) $10,000 exclusion for adoption of child with special needs regardless of expenses
(b) Limitations
(1) Dollar limitation
(2) Income limitation
The amount excludable from gross income under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so excludable (determined without regard to this paragraph but with regard to paragraph (1)) as—
(A) the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to
(B) $40,000.
(3) Determination of adjusted gross income
For purposes of paragraph (2), adjusted gross income shall be determined—
(A) without regard to this section and sections 85(c) 1
1 So in original. Probably should be followed by a comma.
221, 911, 931, and 933, and
(B) after the application of sections 86, 135, 219, and 469.
(c) Adoption assistance program
For purposes of this section, an adoption assistance program is a separate written plan of an employer for the exclusive benefit of such employer’s employees—
(1) under which the employer provides such employees with adoption assistance, and
(2) which meets requirements similar to the requirements of paragraphs (2), (3), (5), and (6) of section 127(b).
An adoption reimbursement program operated under section 1052 of title 10, United States Code (relating to armed forces) or section 541 2
2 See References in Text note below.
of title 14, United States Code (relating to members of the Coast Guard) shall be treated as an adoption assistance program for purposes of this section.
(d) Qualified adoption expenses
(e) Certain rules to apply
(f) Adjustments for inflation
In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall be increased by an amount equal to—
(1) such dollar amount, multiplied by
(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
(Added Pub. L. 104–188, title I, § 1807(b), Aug. 20, 1996, 110 Stat. 1901; amended Pub. L. 105–34, title XVI, § 1601(h)(2)(C), Aug. 5, 1997, 111 Stat. 1092; Pub. L. 105–277, div. J, title IV, § 4003(a)(2)(C), Oct. 21, 1998, 112 Stat. 2681–908; Pub. L. 107–16, title II, § 202(a)(2), (b)(1)(B), (2)(B), (d)(2), (e)(2), title IV, § 431(c)(1), June 7, 2001, 115 Stat. 47, 48, 68; Pub. L. 107–147, title IV, §§ 411(c)(2), 418(a)(2), Mar. 9, 2002, 116 Stat. 45, 57; Pub. L. 108–311, title IV, § 403(e), Oct. 4, 2004, 118 Stat. 1188; Pub. L. 108–357, title I, § 102(d)(1), Oct. 22, 2004, 118 Stat. 1428; Pub. L. 111–148, title X, § 10909(a)(2), (b)(2)(J), (c), Mar. 23, 2010, 124 Stat. 1022, 1023; Pub. L. 111–312, title I, § 101(b)(1), Dec. 17, 2010, 124 Stat. 3298; Pub. L. 115–97, title I, §§ 11002(d)(1)(N), 13305(b)(1), Dec. 22, 2017, 131 Stat. 2060, 2126; Pub. L. 115–141, div. U, title IV, § 401(a)(40), Mar. 23, 2018, 132 Stat. 1186; Pub. L. 116–260, div. EE, title I, § 104(b)(2)(E), Dec. 27, 2020, 134 Stat. 3041; Pub. L. 117–2, title IX, § 9042(b)(4), Mar. 11, 2021, 135 Stat. 122.)

CITE AS: 26 USC 137

§ 138. Medicare Advantage MSA
(a) Exclusion
(b) Medicare Advantage MSAFor purposes of this section, the term “Medicare Advantage MSA” means an Archer MSA (as defined in section 220(d))—
(1) which is designated as a Medicare Advantage MSA,
(2) with respect to which no contribution may be made other than—
(A) a contribution made by the Secretary of Health and Human Services pursuant to part C of title XVIII of the Social Security Act, or
(B) a trustee-to-trustee transfer described in subsection (c)(4),
(3) the governing instrument of which provides that trustee-to-trustee transfers described in subsection (c)(4) may be made to and from such account, and
(4) which is established in connection with an MSA plan described in section 1859(b)(3) of the Social Security Act.
(c) Special rules for distributions
(1) Distributions for qualified medical expensesIn applying section 220 to a Medicare Advantage MSA—
(A) qualified medical expenses shall not include amounts paid for medical care for any individual other than the account holder, and
(B) section 220(d)(2)(C) shall not apply.
(2) Penalty for distributions from Medicare Advantage MSA not used for qualified medical expenses if minimum balance not maintained
(A) In generalThe tax imposed by this chapter for any taxable year in which there is a payment or distribution from a Medicare Advantage MSA which is not used exclusively to pay the qualified medical expenses of the account holder shall be increased by 50 percent of the excess (if any) of—
(i) the amount of such payment or distribution, over
(ii) the excess (if any) of—(I) the fair market value of the assets in such MSA as of the close of the calendar year preceding the calendar year in which the taxable year begins, over(II) an amount equal to 60 percent of the deductible under the Medicare Advantage MSA plan covering the account holder as of January 1 of the calendar year in which the taxable year begins.
Section 220(f)(4) shall not apply to any payment or distribution from a Medicare Advantage MSA.
(B) ExceptionsSubparagraph (A) shall not apply if the payment or distribution is made on or after the date the account holder—
(i) becomes disabled within the meaning of section 72(m)(7), or
(ii) dies.
(C) Special rulesFor purposes of subparagraph (A)—
(i) all Medicare Advantage MSAs of the account holder shall be treated as 1 account,
(ii) all payments and distributions not used exclusively to pay the qualified medical expenses of the account holder during any taxable year shall be treated as 1 distribution, and
(iii) any distribution of property shall be taken into account at its fair market value on the date of the distribution.
(3) Withdrawal of erroneous contributions
(4) Trustee-to-trustee transfers
(d) Special rules for treatment of account after death of account holder
(e) ReportsIn the case of a Medicare Advantage MSA, the report under section 220(h)—
(1) shall include the fair market value of the assets in such Medicare Advantage MSA as of the close of each calendar year, and
(2) shall be furnished to the account holder—
(A) not later than January 31 of the calendar year following the calendar year to which such reports relate, and
(B) in such manner as the Secretary prescribes in such regulations.
(f) Coordination with limitation on number of taxpayers having Archer MSAs
(Added Pub. L. 105–33, title IV, § 4006(a), Aug. 5, 1997, 111 Stat. 332; amended Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(3), (b)(6), (10)], Dec. 21, 2000, 114 Stat. 2763, 2763A–628, 2763A–629; Pub. L. 108–311, title IV, § 408(a)(5)(A)–(F), Oct. 4, 2004, 118 Stat. 1191.)

CITE AS: 26 USC 138

§ 139. Disaster relief payments
(a) General rule
(b) Qualified disaster relief payment defined
For purposes of this section, the term “qualified disaster relief payment” means any amount paid to or for the benefit of an individual—
(1) to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster,
(2) to reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster,
(3) by a person engaged in the furnishing or sale of transportation as a common carrier by reason of the death or personal physical injuries incurred as a result of a qualified disaster, or
(4) if such amount is paid by a Federal, State, or local government, or agency or instrumentality thereof, in connection with a qualified disaster in order to promote the general welfare,
but only to the extent any expense compensated by such payment is not otherwise compensated for by insurance or otherwise.
(c) Qualified disaster defined
For purposes of this section, the term “qualified disaster” means—
(1) a disaster which results from a terroristic or military action (as defined in section 692(c)(2)),
(2) a federally declared disaster (as defined by section 165(i)(5)(A)),
(3) a disaster which results from an accident involving a common carrier, or from any other event, which is determined by the Secretary to be of a catastrophic nature, or
(4) with respect to amounts described in subsection (b)(4), a disaster which is determined by an applicable Federal, State, or local authority (as determined by the Secretary) to warrant assistance from the Federal, State, or local government or agency or instrumentality thereof.
(d) Coordination with employment taxes
(e) No relief for certain individuals
(f) Exclusion of certain additional payments
(g) Qualified disaster mitigation payments
(1) In general
(2) Qualified disaster mitigation payment defined
(3) No increase in basis
(h) Denial of double benefit
(Added Pub. L. 107–134, title I, § 111(a), Jan. 23, 2002,

CITE AS: 26 USC 139

§ 139A. Federal subsidies for prescription drug plans

Gross income shall not include any special subsidy payment received under section 1860D–22 of the Social Security Act.

(Added Pub. L. 108–173, title XII, § 1202(a), Dec. 8, 2003, 117 Stat. 2480; amended Pub. L. 111–148, title IX, § 9012(a), Mar. 23, 2010, 124 Stat. 868.)

CITE AS: 26 USC 139A

§ 139B. Benefits provided to volunteer firefighters and emergency medical responders
(a) In general
In the case of any member of a qualified volunteer emergency response organization, gross income shall not include—
(1) any qualified State and local tax benefit, and
(2) any qualified payment.
(b) Denial of double benefits
In the case of any member of a qualified volunteer emergency response organization—
(1) the deduction under 164 shall be determined with regard to any qualified State and local tax benefit, and
(2) expenses paid or incurred by the taxpayer in connection with the performance of services as such a member shall be taken into account under section 170 only to the extent such expenses exceed the amount of any qualified payment excluded from gross income under subsection (a).
(c) Definitions
For purposes of this section—
(1) Qualified State and local tax benefit
(2) Qualified payment
(A) In general
(B) Applicable dollar limitation
(3) Qualified volunteer emergency response organization
The term “qualified volunteer emergency response organization” means any volunteer organization—
(A) which is organized and operated to provide firefighting or emergency medical services for persons in the State or political subdivision, as the case may be, and
(B) which is required (by written agreement) by the State or political subdivision to furnish firefighting or emergency medical services in such State or political subdivision.
(Added Pub. L. 110–142, § 5(a), Dec. 20, 2007, 121 Stat. 1805; amended Pub. L. 116–94, div. O, title III, § 301(a), (b), Dec. 20, 2019, 133 Stat. 3175; Pub. L. 116–260, div. EE, title I, § 103(a), Dec. 27, 2020, 134 Stat. 3040.)

CITE AS: 26 USC 139B

§ 139C. Certain disability-related first responder retirement payments
(a) In general
(b) Qualified first responder retirement payments
For purposes of this section, the term “qualified first responder retirement payments” means, with respect to any taxable year, any pension or annuity which but for this section would be includible in gross income for such taxable year and which is received—
(1) from a plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B), and
(2) in connection with such individual’s qualified first responder service.
(c) Annualized excludable disability amount
For purposes of this section—
(1) In general
(2) Service-connected excludable disability amount
The term “service-connected excludable disability amount” means periodic payments received by an individual which—
(A) are not includible in such individual’s gross income under section 104(a)(1),
(B) are received in connection with such individual’s qualified first responder service, and
(C) terminate when such individual attains retirement age.
(3) Special rule for partial-year payments
(d) Qualified first responder service
(Added Pub. L. 117–328, div. T, title III, § 309(a), Dec. 29, 2022, 136 Stat. 5345.)

CITE AS: 26 USC 139C

§ 139D. Indian health care benefits
(a) General rule
(b) Qualified Indian health care benefit
For purposes of this section, the term “qualified Indian health care benefit” means—
(1) any health service or benefit provided or purchased, directly or indirectly, by the Indian Health Service through a grant to or a contract or compact with an Indian tribe or tribal organization, or through a third-party program funded by the Indian Health Service,
(2) medical care provided or purchased by, or amounts to reimburse for such medical care provided by, an Indian tribe or tribal organization for, or to, a member of an Indian tribe, including a spouse or dependent of such a member,
(3) coverage under accident or health insurance (or an arrangement having the effect of accident or health insurance), or an accident or health plan, provided by an Indian tribe or tribal organization for medical care to a member of an Indian tribe, include a spouse or dependent of such a member, and
(4) any other medical care provided by an Indian tribe or tribal organization that supplements, replaces, or substitutes for a program or service relating to medical care provided by the Federal government to Indian tribes or members of such a tribe.
(c) Definitions
For purposes of this section—
(1) Indian tribe
(2) Tribal organization
(3) Medical care
(4) Accident or health insurance; accident or health plan
(5) Dependent
(d) Denial of double benefit
(Added Pub. L. 111–148, title IX, § 9021(a), Mar. 23, 2010, 124 Stat. 873.)

CITE AS: 26 USC 139D

§ 139E. Indian general welfare benefits
(a) In general
(b) Indian general welfare benefitFor purposes of this section, the term “Indian general welfare benefit” includes any payment made or services provided to or on behalf of a member of an Indian tribe (or any spouse or dependent of such a member) pursuant to an Indian tribal government program, but only if—
(1) the program is administered under specified guidelines and does not discriminate in favor of members of the governing body of the tribe, and
(2) the benefits provided under such program—
(A) are available to any tribal member who meets such guidelines,
(B) are for the promotion of general welfare,
(C) are not lavish or extravagant, and
(D) are not compensation for services.
(c) Definitions and special rulesFor purposes of this section—
(1) Indian tribal government
(2) Dependent
(3) Lavish or extravagant
(4) Establishment of tribal government program
(5) Ceremonial activities
(Added Pub. L. 113–168, § 2(a), Sept. 26, 2014, 128 Stat. 1883; amended Pub. L. 115–141, div. U, title IV, § 401(a)(42), (43), Mar. 23, 2018, 132 Stat. 1186.)

CITE AS: 26 USC 139E

§ 139F. Certain amounts received by wrongfully incarcerated individuals
(a) Exclusion from gross income
(b) Wrongfully incarcerated individual
For purposes of this section, the term “wrongfully incarcerated individual” means an individual—
(1) who was convicted of a covered offense,
(2) who served all or part of a sentence of imprisonment relating to that covered offense, and
(3)
(A) who was pardoned, granted clemency, or granted amnesty for that covered offense because that individual was innocent of that covered offense, or
(B)
(i) for whom the judgment of conviction for that covered offense was reversed or vacated, and
(ii) for whom the indictment, information, or other accusatory instrument for that covered offense was dismissed or who was found not guilty at a new trial after the judgment of conviction for that covered offense was reversed or vacated.
(c) Covered offense
(Added Pub. L. 114–113, div. Q, title III, § 304(a), Dec. 18, 2015, 129 Stat. 3087.)

CITE AS: 26 USC 139F

§ 139G. Assignments to Alaska Native Settlement Trusts
(a) In general
In the case of a Native Corporation, gross income shall not include the value of any payments that would otherwise be made, or treated as being made, to such Native Corporation pursuant to, or as required by, any provision of the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), including any payment that would otherwise be made to a Village Corporation pursuant to section 7(j) of the Alaska Native Claims Settlement Act (43 U.S.C. 1606(j)), provided that any such payments—
(1) are assigned in writing to a Settlement Trust, and
(2) were not received by such Native Corporation prior to the assignment described in paragraph (1).
(b) Inclusion in gross income
(c) Amount and scope of assignment
(d) Duration of assignment; revocability
Any assignment under subsection (a) shall specify—
(1) a duration either in perpetuity or for a period of time, and
(2) whether such assignment is revocable.
(e) Prohibition on deduction
(f) Definitions
(Added Pub. L. 115–97, title I, § 13821(a)(1), Dec. 22, 2017, 131 Stat. 2178.)

CITE AS: 26 USC 139G

§ 139H. Interest received in action to recover property seized by the Internal Revenue Service based on structuring transaction

Gross income shall not include any interest received from the Federal Government in connection with an action to recover property seized by the Internal Revenue Service pursuant to section 5317(c)(2) of title 31, United States Code, by reason of a claimed violation of section 5324 of such title.

(Added Pub. L. 116–25, title I, § 1202(a), July 1, 2019, 133 Stat. 987.)

CITE AS: 26 USC 139H

§ 139I. Continuation coverage premium assistance

In the case of an assistance eligible individual (as defined in subsection (a)(3) of section 9501 of the American Rescue Plan Act of 2021), gross income does not include any premium assistance provided under subsection (a)(1) of such section.

(Added Pub. L. 117–2, title IX, § 9501(b)(4)(A), Mar. 11, 2021, 135 Stat. 137.)

CITE AS: 26 USC 139I

§ 140. Cross references to other Acts
(a) For exemption of—
(1) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code.
(2) Benefits under laws administered by the Department of Veterans Affairs, see section 5301 of title 38, United States Code.
(3) Earnings of ship contractors deposited in special reserve funds, see section 53507 of title 46, United States Code.
(4) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531).
(5) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 1562(a)–(c).
(b) For extension of military income tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).
(Aug. 16, 1954, ch. 736, 68A Stat. 39, § 121; Aug. 1, 1956, ch. 837, title V, § 501(t), 70 Stat. 885; Pub. L. 85–56, title XXII, § 2201(25), June 17, 1957, 71 Stat. 160; Pub. L. 85–857, § 13(t), Sept. 2, 1958, 72 Stat. 1266; renumbered § 122, Pub. L. 88–272, title II, § 206(a), Feb. 26, 1964, 78 Stat. 38; renumbered § 123, Pub. L. 89–365, § 1(a)(1), Mar. 8, 1966, 80 Stat. 32; renumbered § 124, Pub. L. 91–172, title IX, § 901(a), Dec. 30, 1969, 83 Stat. 709; amended Pub. L. 94–455, title XIX, § 1901(a)(21), Oct. 4, 1976, 90 Stat. 1766; renumbered § 125, Pub. L. 95–618, title II, § 242(a), Nov. 9, 1978, 92 Stat. 3193; renumbered § 126, renumbered § 127, renumbered § 128, Pub. L. 95–600, title I, §§ 134(a), 164(a), title V, 543(a), Nov. 6, 1978, 92 Stat. 2783, 2811, 2888; amended Pub. L. 96–222, title I, § 101(a)(3), Apr. 1, 1980, 94 Stat. 195; Pub. L. 96–589, § 6(i)(1), Dec. 24, 1980, 94 Stat. 3410; renumbered § 129, renumbered § 130, Pub. L. 97–34, title I, § 124(e)(1), title III, § 301(a), Aug. 13, 1981, 95 Stat. 198, 267; renumbered § 131, renumbered § 132, Pub. L. 97–473, title I, §§ 101(b)(1), 102(a), Jan. 14, 1983, 96 Stat. 2605, 2606; renumbered § 133, renumbered § 134 and amended Pub. L. 98–369, div. A, title V, §§ 531(a)(1), 543(a), div. B, title VI, § 2661(o)(2), July 18, 1984, 98 Stat. 877, 891, 1159; renumbered § 135, Pub. L. 99–514, title XI, § 1168(a), Oct. 22, 1986, 100 Stat. 2512; renumbered § 136, Pub. L. 100–647, title VI, § 6009(a), Nov. 10, 1988, 102 Stat. 3688; Pub. L. 102–40, title IV, § 402(d)(2), May 7, 1991, 105 Stat. 239; Pub. L. 102–83, § 5(c)(2), Aug. 6, 1991, 105 Stat. 406; renumbered § 137, Pub. L. 102–486, title XIX, § 1912(a), Oct. 24, 1992, 106 Stat. 3014; renumbered § 138, Pub. L. 104–188, title I, § 1807(b), Aug. 20, 1996, 110 Stat. 1901; renumbered § 139, Pub. L. 105–33, title IV, § 4006(a), Aug. 5, 1997, 111 Stat. 331; renumbered § 140, Pub. L. 107–134, title I, § 111(a), Jan. 23, 2002, 115 Stat. 2432; Pub. L. 109–304, § 17(e)(2), Oct. 6, 2006, 120 Stat. 1708; Pub. L. 115–141, div. U, title IV, § 401(a)(2)(A), (b)(11), Mar. 23, 2018, 132 Stat. 1184, 1202.)

CITE AS: 26 USC 140