I.R.C. § 101(a) Proceeds Of Life Insurance Contracts Payable By Reason Of Death
I.R.C. § 101(a)(1) General Rule —
provided in paragraphs (2) and (3), subsection (d), subsection (f), and subsection (j), gross income does not include amounts received (whether in
a single sum or otherwise) under a life insurance contract, if such amounts are paid
by reason of the death of the insured.
I.R.C. § 101(a)(2) Transfer For Valuable Consideration —
In the case of a transfer for a valuable consideration, by assignment or otherwise,
of a life insurance contract or any interest therein, the amount excluded from gross
income by paragraph (1) shall not exceed an
amount equal to the sum of the actual value of such consideration and the premiums
and other amounts subsequently paid by the transferee. The preceding sentence shall
not apply in the case of such a transfer—
I.R.C. § 101(a)(2)(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
I.R.C. § 101(a)(2)(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).
I.R.C. § 101(a)(3) Exception To Valuable Consideration Rules For Commercial Transfers—
I.R.C. § 101(a)(3)(A) In General— —
The second sentence of paragraph (2) shall not apply in the case of a transfer of
a life insurance contract, or any interest therein, which is a reportable policy sale.
I.R.C. § 101(a)(3)(B) Reportable Policy Sale— —
For purposes of this paragraph, the term “reportable policy sale” means
the acquisition of an interest in a life insurance contract, directly or indirectly,
if the acquirer has no substantial family, business, or financial relationship with
the insured apart from the acquirer's interest in such life insurance contract. For
purposes of the preceding sentence, the term “indirectly”
applies to the acquisition of an interest in a partnership, trust, or other entity
that holds an interest in the life insurance contract.
I.R.C. § 101(c) Interest —
If any amount excluded from gross income by subsection (a) is held under an agreement to pay interest thereon, the interest payments shall
be included
in gross income.
I.R.C. § 101(d) Payment Of Life Insurance Proceeds At A Date Later Than Death
I.R.C. § 101(d)(1) General Rule —
The amounts held by an insurer with respect to any beneficiary shall be prorated
(in accordance with such regulations as may be prescribed by the Secretary) over
the period or periods with respect to which such payments are to be made. There shall
be excluded from the gross income of such beneficiary in the taxable year received
any amount determined by such proration. Gross income includes, to the extent not
excluded by the preceding sentence, amounts received under agreements to which this
subsection applies.
I.R.C. § 101(d)(2) Amount Held By An Insurer —
An amount held by an insurer with respect to any beneficiary shall mean an amount
to which subsection (a) applies which is—
I.R.C. § 101(d)(2)(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
I.R.C. § 101(d)(2)(B) —
equal to the value of such agreement to such beneficiary
I.R.C. § 101(d)(2)(B)(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
I.R.C. § 101(d)(2)(B)(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.
I.R.C. § 101(d)(3) Application Of Subsection —
This subsection shall not apply to any amount to which subsection (c) is
applicable.
I.R.C. § 101(e) Repealed. —
[Pub. L. 98-369, div. A, title IV, 421(b)(2), July 18, 1984, 98 Stat. 794]
I.R.C. § 101(f) Proceeds Of Flexible Premium Contracts Issued Before January 1, 1985 Payable By Reason
Of Death
I.R.C. § 101(f)(1) In General —
Any amount paid by reason of the death of the insured under a flexible premium life
insurance contract issued before January 1, 1985 shall be excluded from gross income
only if—
I.R.C. § 101(f)(1)(A) —
under such contract—
I.R.C. § 101(f)(1)(A)(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
I.R.C. § 101(f)(1)(A)(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
I.R.C. § 101(f)(1)(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.
I.R.C. § 101(f)(2) Guideline Premium Limitation —
For purposes of this subsection—
I.R.C. § 101(f)(2)(A) Guideline Premium Limitation —
The term “guideline premium limitation”
means, as of any date, the greater of—
I.R.C. § 101(f)(2)(A)(i) —
the guideline single premium, or
I.R.C. § 101(f)(2)(A)(ii) —
the sum of the guideline level premiums to such date.
I.R.C. § 101(f)(2)(B) Guideline Single Premium —
The term “guideline single premium” means the premium at issue with respect
to future benefits under the contract
(without regard to any qualified additional benefit), and with respect to any charges
for qualified additional benefits, at the time of a determination under subparagraph
(A) or (E) and which is based on—
I.R.C. § 101(f)(2)(B)(i) —
the mortality and other charges guaranteed under the contract, and
I.R.C. § 101(f)(2)(B)(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.
I.R.C. § 101(f)(2)(C) Guideline Level Premium —
The term “guideline level premium” means the level annual amount, payable
over the longest period permitted under the contract (but ending not less than 20
years from date of issue or not later than age 95, if earlier), computed on the same
basis as the guideline single premium, except that subparagraph (B)(ii) shall be applied by substituting “4 percent” for “6 percent”.
I.R.C. § 101(f)(2)(D) Computational Rules —
In computing the guideline single premium or guideline level premium under subparagraph
(B) or (C)—
I.R.C. § 101(f)(2)(D)(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,
I.R.C. § 101(f)(2)(D)(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
I.R.C. § 101(f)(2)(D)(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.
I.R.C. § 101(f)(2)(E) Adjustments —
The guideline single premium and guideline level premium shall be adjusted in the
event of a change in the future benefits or any qualified additional benefit under
the contract which was not reflected in any guideline single premiums or guideline
level premium previously determined.
I.R.C. § 101(f)(3) Other Definitions And Special Rules —
For purposes of this subsection—
I.R.C. § 101(f)(3)(A) Flexible Premium Life Insurance Contract —
The terms “flexible premium life insurance contract”
and “contract” mean a life insurance contract (including any qualified
additional benefits) which provides for the payment of one or more premiums which
are not fixed by the insurer as to both timing and amount. Such terms do not include
that portion of any contract which is treated under State law as providing any annuity
benefits other than as a settlement option.
I.R.C. § 101(f)(3)(B) Premiums Paid —
The term “premiums paid” means the premiums paid under the contract less
any amounts (other than amounts includible in gross income) to which section 72(e) applies. If, in order to comply with the requirements of paragraph (1)(A), any portion of any premium paid during any contract year is returned by the insurance
company (with interest) within 60 days after the end of a contract year—
I.R.C. § 101(f)(3)(B)(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
I.R.C. § 101(f)(3)(B)(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.
I.R.C. § 101(f)(3)(C) Applicable Percentage —
The term “applicable percentage” means—
I.R.C. § 101(f)(3)(C)(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
I.R.C. § 101(f)(3)(C)(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.
I.R.C. § 101(f)(3)(D) Cash Value —
The cash value of any contract shall be determined without regard to any deduction
for any surrender charge or policy loan.
I.R.C. § 101(f)(3)(E) Qualified Additional Benefits —
The term “qualified additional benefits”
means any—
I.R.C. § 101(f)(3)(E)(i) —
guaranteed insurability,
I.R.C. § 101(f)(3)(E)(ii) —
accidental death benefit,
I.R.C. § 101(f)(3)(E)(iii) —
family term coverage, or
I.R.C. § 101(f)(3)(E)(iv) —
waiver of premium.
I.R.C. § 101(f)(3)(F) Premium Payments Not Disqualifying Contract —
The payment of a premium which would result in the sum of the premiums paid exceeding
the guideline premium limitation shall be disregarded for purposes of paragraph (1)(A)(i) if the amount of such premium does not exceed the amount necessary to prevent the
termination of the contract without cash value on or before the end of the contract
year.
I.R.C. § 101(f)(3)(G) Net Single Premium —
In computing the net single premium under paragraph (1)(B)—
I.R.C. § 101(f)(3)(G)(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),
I.R.C. § 101(f)(3)(G)(ii) —
interest shall be based on the greater of—
I.R.C. § 101(f)(3)(G)(ii)(I) —
an annual effective rate of 4 percent
(3 percent for contracts issued before July 1, 1983), or
I.R.C. § 101(f)(3)(G)(ii)(II) —
the minimum rate or rates guaranteed upon issue of the contract, and
I.R.C. § 101(f)(3)(G)(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.
I.R.C. § 101(f)(3)(H) Correction Of Errors —
If the taxpayer establishes to the satisfaction of the Secretary that—
I.R.C. § 101(f)(3)(H)(i) —
the requirements described in paragraph (1) for any contract year was not satisfied due to reasonable error, and
I.R.C. § 101(f)(3)(H)(ii) —
reasonable steps are being taken to remedy the error, the Secretary may waive the
failure to satisfy such requirements.
I.R.C. § 101(f)(3)(I) Regulations —
The Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this subsection.
I.R.C. § 101(g) Treatment Of Certain Accelerated Death Benefits
I.R.C. § 101(g)(1) In General —
For purposes of this section, the following amounts shall be treated as an amount
paid by reason of the death of an insured:
I.R.C. § 101(g)(1)(A) —
Any amount received under a life insurance contract on the life of an insured who
is a terminally ill individual.
I.R.C. § 101(g)(1)(B) —
Any amount received under a life insurance contract on the life of an insured who
is a chronically ill individual.
I.R.C. § 101(g)(2) Treatment Of Viatical Settlements
I.R.C. § 101(g)(2)(A) In General —
If any portion of the death benefit under a life insurance contract on the life
of an insured described in paragraph (1) is sold or assigned to a viatical settlement provider, the amount paid for the sale
or assignment
of such portion shall be treated as an amount paid under the life
insurance contract by reason of the death of such insured.
I.R.C. § 101(g)(2)(B) Viatical Settlement Provider
I.R.C. § 101(g)(2)(B)(i) In General —
The term “viatical settlement provider”
means any person regularly engaged in the trade or business of purchasing, or taking
assignments of, life insurance contracts on the lives of insureds described in paragraph
(1)
if—
I.R.C. § 101(g)(2)(B)(i)(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
I.R.C. § 101(g)(2)(B)(i)(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.
I.R.C. § 101(g)(2)(B)(ii) Terminally Ill Insureds —
A person meets the requirements of this clause with respect to an insured who is
a terminally ill individual if such person—
I.R.C. § 101(g)(2)(B)(ii)(I) —
meets the requirements of sections 8 and 9 of the Viatical Settlements Model Act
of the National Association of Insurance Commissioners, and
I.R.C. § 101(g)(2)(B)(ii)(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.
I.R.C. § 101(g)(2)(B)(iii) Chronically Ill Insureds —
A person meets the requirements of this clause with respect to an insured who is
a chronically ill individual if such person—
I.R.C. § 101(g)(2)(B)(iii)(I) —
meets requirements similar to the requirements referred to in clause (ii)(I),
and
I.R.C. § 101(g)(2)(B)(iii)(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.
I.R.C. § 101(g)(3) Special Rules For Chronically Ill Insureds —
In the case of an insured who is a chronically ill individual—
I.R.C. § 101(g)(3)(A) In General —
Paragraphs (1) and (2) shall not apply to any payment received for any period unless—
I.R.C. § 101(g)(3)(A)(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
I.R.C. § 101(g)(3)(A)(ii) —
the terms of the contract giving rise to such payment satisfy—
I.R.C. § 101(g)(3)(A)(ii)(I) —
the requirements of section 7702B(b)(1)(B), and
I.R.C. § 101(g)(3)(A)(ii)(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.
I.R.C. § 101(g)(3)(B) Other Requirements —
The requirements applicable under this subparagraph are—
I.R.C. § 101(g)(3)(B)(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
I.R.C. § 101(g)(3)(B)(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).
I.R.C. § 101(g)(3)(C) Per Diem Payments —
A payment shall not fail to be described in subparagraph (A) by reason of being made on a per diem or other periodic basis without regard to
the
expenses incurred during the period to which the payment relates.
I.R.C. § 101(g)(3)(D) Limitation On Exclusion For Periodic Payments —
For limitation on amount of periodic payments which are treated as described in
paragraph (1), see section 7702B(d).
I.R.C. § 101(g)(4) Definitions —
For purposes of this subsection—
I.R.C. § 101(g)(4)(A) Terminally Ill Individual —
The term “terminally ill individual” means an individual who has been
certified by a physician as having an illness or physical condition which can reasonably
be expected to result in death in 24 months or less after the date of the certification.
I.R.C. § 101(g)(4)(B) Chronically Ill Individual —
The term “chronically ill individual” has the meaning given such term
by section 7702B(c)(2); except that such term shall not include a terminally ill individual.
I.R.C. § 101(g)(4)(C) Qualified Long-Term Care Services —
The term “qualified long-term care services”
has the meaning given such term by section 7702B(c).
I.R.C. § 101(g)(4)(D) Physician —
The term “physician” has the meaning given to such term by section 1861(r)(1)
of the Social Security Act (42 U.S.C. 1395x(r)(1)).
I.R.C. § 101(g)(5) Exception For Business-Related Policies —
This subsection shall not apply in the case of any amount paid to any taxpayer other
than the insured if such taxpayer has an insurable interest with respect to the life
of the insured by reason of the insured being a director, officer, or employee of
the taxpayer or by reason of the insured being financially interested in any trade
or business carried on by the taxpayer.
I.R.C. § 101(h) Survivor Benefits Attributable To Service By A Public Safety Officer Who Is Killed
In The Line Of Duty
I.R.C. § 101(h)(1) In General —
Gross income shall not include any amount paid as a survivor annuity on account
of the death of a public safety officer
(as such term is defined in section 1204 of the Omnibus Crime Control and Safe Streets
Act of 1968, as in effect immediately before the enactment of the National Defense
Authorization Act for Fiscal Year 2013) killed in the line of duty—
I.R.C. § 101(h)(1)(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
I.R.C. § 101(h)(1)(B) —
to the extent such annuity is attributable to such officer's service as a public
safety officer.
I.R.C. § 101(h)(2) Exceptions —
Paragraph (1) shall not apply with respect to the death of any public safety officer
if, as determined in accordance with the provisions of the Omnibus Crime Control
and Safe Streets Acts of 1968—
I.R.C. § 101(h)(2)(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;
I.R.C. § 101(h)(2)(B) —
the officer was voluntarily intoxicated
(as defined in section 1204 of such Act) at the time of death;
I.R.C. § 101(h)(2)(C) —
the officer was performing such officer's duties in a grossly negligent manner at
the time of death; or
I.R.C. § 101(h)(2)(D) —
the payment is to an individual whose actions were a substantial contributing factor
to the death of the officer.
I.R.C. § 101(i) Certain Employee Death Benefits Payable By Reason Of Death Of Certain Terrorist Victims
Or Astronauts
I.R.C. § 101(i)(1) In General —
Gross income does not include amounts (whether in a single sum or otherwise) paid
by an employer by reason of the death of an employee who is a specified terrorist
victim (as defined in section 692(d)(4)).
I.R.C. § 101(i)(2) Limitation
I.R.C. § 101(i)(2)(A) In General —
Subject to such rules as the Secretary may prescribe, paragraph (1) shall not apply to amounts which would have been payable after death if the individual
had died other than as a specified terrorist victim
(as so defined).
I.R.C. § 101(i)(2)(B) Exception —
I.R.C. § 101(i)(3) Treatment Of Self-Employed Individuals —
For purposes of paragraph (1), the term “employee”
includes a self-employed individual (as defined in section 401(c)(1)).
I.R.C. § 101(i)(4) Relief With Respect To Astronauts —
The provisions of this subsection shall apply to any astronaut whose death occurs
in the line of duty.
I.R.C. § 101(j) Treatment Of Certain Employer-Owned Life Insurance Contracts
I.R.C. § 101(j)(1) General Rule —
In the case of an employer-owned life insurance contract, the amount excluded from
gross income of an applicable policyholder by reason of paragraph (1) of subsection (a) shall not exceed an amount equal to the sum of the premiums and other amounts paid
by the policyholder for the contract.
I.R.C. § 101(j)(2) Exceptions —
In 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:
I.R.C. § 101(j)(2)(A) Exceptions Based On Insured's Status —
Any amount received by reason of the death of an insured who, with respect to an
applicable policyholder—
I.R.C. § 101(j)(2)(A)(i) —
was an employee at any time during the 12-month period before the insured's death,
or
I.R.C. § 101(j)(2)(A)(ii) —
is, at the time the contract is issued—
I.R.C. § 101(j)(2)(A)(ii)(I) —
a director,
I.R.C. § 101(j)(2)(A)(ii)(II) —
a highly compensated employee within the meaning of section 414(q) (without regard to paragraph (1)(B)(ii) thereof), or
I.R.C. § 101(j)(2)(B) Exception For Amounts Paid To Insured's Heirs —
Any amount received by reason of the death of an insured to the extent—
I.R.C. § 101(j)(2)(B)(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
I.R.C. § 101(j)(2)(B)(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).
I.R.C. § 101(j)(3) Employer-Owned Life Insurance Contract
I.R.C. § 101(j)(3)(A) In General —
For purposes of this subsection, the term “employer-owned life insurance contract”
means a life insurance contract which—
I.R.C. § 101(j)(3)(A)(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
I.R.C. § 101(j)(3)(A)(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.
I.R.C. § 101(j)(3)(B) Applicable Policyholder —
For purposes of this subsection—
I.R.C. § 101(j)(3)(B)(i) In General —
The term “applicable policyholder” means, with respect to any employer-owned
life insurance contract, the person described in subparagraph (A)(i) which owns the contract.
I.R.C. § 101(j)(3)(B)(ii) Related Persons —
The term “applicable policyholder” includes any person which—
I.R.C. § 101(j)(4) Notice And Consent Requirements —
The notice and consent requirements of this paragraph are met if, before the issuance
of the contract, the employee—
I.R.C. § 101(j)(4)(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,
I.R.C. § 101(j)(4)(B) —
provides written consent to being insured under the contract and that such coverage
may continue after the insured terminates employment, and
I.R.C. § 101(j)(4)(C) —
is informed in writing that an applicable policyholder will be a beneficiary of any
proceeds payable upon the death of the employee.
I.R.C. § 101(j)(5) Definitions —
For purposes of this subsection—
I.R.C. § 101(j)(5)(A) Employee —
The term “employee” includes an officer, director, and highly compensated
employee (within the meaning of section 414(q)).
I.R.C. § 101(j)(5)(B) Insured —
The term “insured” means, with respect to an employer-owned life insurance
contract, an individual covered by the contract who is a United States citizen or
resident. In the case of a contract covering the joint lives of 2 individuals, references
to an insured include both of the individuals.
(Aug. 16, 1954, ch. 736, 68A Stat. 26; Sept. 2, 1958,
Pub. L. 85-866, title I, 23(d), 72 Stat. 1622; Oct. 10, 1962, Pub. L. 87-792, 7(c), 76 Stat. 829; Mar. 8, 1966, Pub. L. 89-365, 1(c), 80 Stat. 32;
Dec. 30, 1969, Pub. L. 91-172, title I, 101(j)(l), 83 Stat. 526; Sept. 2, 1974, Pub. L. 93-406, title II, 2005(c)(15), 2007(b)(3), 88 Stat. 992, 994; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(16), 1906(b)(13)(A), 90 Stat. 1765, 1834; Sept. 3, 1982, Pub. L. 97-248, title II, 239, 266(a),
(b), 96 Stat. 514, 547, 550; July 18, 1984, Pub. L. 98-369, div. A, title II, 221(b)(2), title IV, 421(b)(2), title VII, 713(e), 98 Stat. 772, 794,
958; Oct. 22, 1986, Pub. L. 99-514, title X, 1001(a)-(c), 100 Stat. 2387; Aug. 20, 1996, Pub. L. 104-188, title I, 1402(a),
(b)(1), 110 Stat. 1755; Aug. 21, 1996, Pub. L. 104-191, title III, 331(a), 110 Stat. 1936; Pub. L. 105-34, title X, XV, Sec. 1084(b)(2), 1528(a), Aug. 5, 1997, 111 Stat 788; Pub. L. 107-134, title I, Sec. 102(a), Jan. 23, 2002, 115 Stat. 2427; Pub.
L. 108-121, title I, Sec. 110(b), Nov. 11, 2003, 117 Stat. 1335; Pub. L. 109-280, title VIII, Sec. 863, Aug. 17, 2006, 120 Stat. 780; Pub. L. 112-239, Sec. 1086(b)(3)(B), Jan. 2, 2013; Pub. L. 115-97, title I, Sec. 13522(a), (b); Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
Amendments to Part
1988--Pub. L. 100-647, title I, 1013(a)(37), title VI, 6009(c)(4), Nov. 10, 1988, 102 Stat. 3544, 3690, substituted “Interest on State and local bonds” for “Interest
on certain governmental obligations” in item 103, struck out item 103A “Mortgage
subsidy bonds”, added item 135 and redesignated former item 135 “Cross
references to other Acts” as item 136.
1986--Pub. L. 99-514, title I, 123(b)(4), title VI, 612(b)(8), title XI, 1168(b), Oct. 22, 1986, 100 Stat. 2113, 2251, 2512, struck out item 116 “Partial exclusion of dividends received by
individuals”, substituted in item 117 “Qualified scholarships” for
“Scholarships and fellowship grants”, added item 134, and redesignated
former item 134 as 135.
1984--Pub. L. 98-369, div. A, title I, 171(b), title V, 531(a)(2), 543(b), July 18, 1984, 98 Stat. 699, 881, 892, substituted “Recovery of tax benefit items"
for “Recovery of bad debts, prior taxes, and delinquency amounts"
in item 111, added items 132 (relating to certain fringe benefits)
and 133 (relating to interest on certain loans used to acquire employer securities),
and redesignated former item 132 (relating to cross references to other Acts) as item
134.
Pub. L. 98-369, div. A, title I, 16(a), July 18, 1984, 98 Stat. 505, repealed an amendment made by Pub. L. 97-34, 302(c). See 1981 Amendment note below.
1983--Pub. L. 97-473, title I, 101(b)(2), Jan. 14, 1983, 96 Stat. 2606, purported to strike out the item relating to section 130, and added items 130 (relating
to certain personal injury liability assignments) and 131 (relating to cross references
to other Acts).
Pub. L. 97-473, title I, 102(b), Jan. 14, 1983, 96 Stat. 2607, struck out item 131
(relating to cross references to other Acts) and added items 131 (relating to certain
foster care payments) and 132 (relating to cross references to other Acts).
1981--Pub. L. 97-34, title III, 301(b)(1), 302(c)(1), (d)(1), Aug. 13, 1981, 95 Stat. 270, 272, 274, effective with regard to taxable years beginning after Sept. 30, 1981,
redesignated item 128 “Cross References to other Acts” as 129 and added
item 128 “Interest on certain savings certificates"
and, section 302(c)(1), with regard to taxable years beginning after Dec. 31, 1984,
provided that “Partial exclusion of interest” is substituted for “Interest
on certain savings certificates” in item 128. Section 16(a) of Pub. L. 98-369, repealed section 302(c) of Pub. L. 97-34, and provided that this title shall be applied and administered as if section 302(c),
and the amendments made by section 302(c), had not been enacted.
1980--Pub. L. 96-499, title XI, 1102(b), Dec. 5, 1980, 94 Stat. 2669, added item 103A.
Pub. L. 96-223, title IV, 404(b)(1), Apr. 2, 1980, 94 Stat. 306, inserted “and interest"
after “dividends” in item 116.
1978--Pub. L. 95-618, title II, 242(b), Nov. 9, 1978, 92 Stat. 3194, redesignated former item 124 as 125 and added item 124.
Pub. L. 95-600, title I, 134(b), 164(c), title IV, 404(c)(3), title V, 543(b), Nov. 6, 1978, 92 Stat. 2785, 2814, 2870, 2890, in item 121 substituted
“One-time exclusion of gain from sale of principal residence by individual who
has attained age 55” for “Gain from sale of exchange of residence of individual
who has attained age 65”, redesignated former item 124 as 128, and added items
125 to 127.
1976--Pub. L. 94-455, title XXI, 2134(c), Oct. 4, 1976, 90 Stat. 1928, added item 120.
1969--Pub. L. 91-172, title IX, 901(b), Dec. 30, 1969, 83 Stat. 709, redesignated former item 123 as 124, and added item 123.
1966--Pub. L. 89-365, 1(a)(2), Mar. 8, 1966, 80 Stat. 32, redesignated former item 122 as 123, and added item 122.
1964--Pub. L. 88-272, title II, 206(b)(2), Feb. 26, 1964, 78 Stat. 40, redesignated former item 121 as 122, and added item 121.
1958--Pub. L. 85-866, title I, 3(b), Sept. 2, 1958, 72 Stat. 1607, struck out item 120 “Statutory subsistence allowance received by police”.
AMENDMENTS
2017-Subsec.
(a)(1). Pub. L. 115-97, Sec. 13522(b), amended par. (1) by striking “paragraph (2)” and inserting “paragraphs
(2) and (3)”.
Subsec. (a)(3). Pub. L. 115-97, Sec. 13522(a), amended subsec. (a) by adding par. (3).
2013-Subsec. (h)(1). Pub. L. 112-239, Sec. 1086(b)(3)(B), amended par. (1) by inserting “, as in effect immediately before the enactment
of the national Defense Authorization Act for Fiscal Year 2013” after “1986”.
2006-Subsec.
(a)(1). Pub. L. 109-280, Sec. 863(c)(1), amended par. (1) by substituting
“subsection (f), and subsection (j)” for “and subsection (f)”.
Subsec. (j). Pub. L. 109-280, Sec. 863(a), added subsec. (j).
2003--Subsec. (i)(4). Pub. L. 108-121, Sec. 110(b)(1), added par. (4).
Subsec. (i). Pub. L. 108-121, Sec. 110(b)(2), amended the heading of subsec. (i) by inserting “Or Astronauts” after
“Victims”.
2002--Subsec. (i). Pub. L. 107-134, Sec. 102(a), added new subsec. (i).
1997--Subsec. (a)(2). Pub. L. 105-34, Sec. 1084(b)(2), added a flush sentence at the end of par. (2).
Subsec. (h). Pub. L. 105-34, Sec. 1528(a), added subsec. (h).
1996--Subsec. (b). Pub. L. 104-188, 1402(a), repealed subsec. (b), which prior to repeal read as follows:
“(b) Employees' death benefits
“(1) General rule
“Gross income does not include amounts received
(whether in a single sum or otherwise) by the beneficiaries or the estate of an employee,
if such amounts are paid by or on behalf of an employer and are paid by reason of
the death of the employee.
“(2) Special rules for paragraph (1)
“(A) $5,000 limitation
“The aggregate amounts excludable under paragraph
(1) with respect to the death of any employee shall not exceed $5,000.
“(B) Nonforfeitable rights
“Paragraph (1) shall not apply to amounts with respect to which the employee
possessed, immediately before his death, a nonforfeitable right to receive the amounts
while living. This subparagraph shall not apply to a lump sum distribution (as defined
in section 402(e)(4))--
“(i) by a stock bonus, pension, or profit-sharing trust described in section
401(a) which is exempt from tax under section 501(a),
“(ii) under an annuity contract under a plan described in section 403(a), or
“(iii) under an annuity contract purchased by an employer which is an organization
referred to in section 170(b)(1)(A)
(ii) or (vi) or which is a religious organization (other than a trust)
and which is exempt from tax under section 501(a), but only with respect to the portion
of such total distributions payable which bears the same ratio to the amount of such
total distributions payable which is (without regard to this subsection) includible
in gross income, as the amounts contributed by the employer for such annuity contract
which are excludable from gross income under section 403(b) bear the total amounts
contributed by the employer for such annuity contract.
“(C) Joint and survivor annuities
“Paragraph (1) shall not apply to amounts received by a surviving annuitant
under a joint and survivor's annuity contract after the first day of the first period
for which an amount was received as an annuity by the employee (or would have been
received if the employee had lived).
“(D) Other annuities
“In the case of any amount to which section 72
(relating to annuities, etc.) applies, the amount which is excludable under paragraph
(1) (as modified by the preceding subparagraphs of this paragraph) shall be determined
by reference to the value of such amount as of the day on which the employee died.
Any amount so excludable under paragraph (1) shall, for purposes of section 72, be
treated as additional consideration paid by the employee. Paragraph (1) shall not
apply in the case of an annuity under chapter 73 of title 10 of the United States
Code if the member or former member of the uniformed services by reason of whose death
such annuity is payable died after attaining retirement age.
“(3) Treatment of self-employed individuals
“For purposes of this subsection--
“(A) Self-employed individual not considered employee
“Except as provided in subparagraph (B), the term
“employee” does not include a self-employed individual described in section
401(c)(1).
“(B) Special rule for certain distributions
“In the case of any amount paid or distributed--
“(i) by a trust described in section 401(a) which is exempt from tax under section
501(a), or
“(ii) under a plan described in section 403(a), the term “employee”
includes a self-employed individual described in section 401(c)(1).”
1996--Subsec. (c). Pub. L. 104-188, 1402(b)(1), struck
“subsection (a) or (b)” and inserted “subsection (a)”.
1996--Subsec. (g). Pub. L. 104-191, 331(a), added subsec.
(g).
1986--Subsec. (d)(1). Pub. L. 99-514, 1001(a), amended second sentence generally, which prior to amendment read as follows:
“There shall be excluded from the gross income of such beneficiary in the taxable
year received--
“(A) any amount determined by such proration, and
“(B) in the case of the surviving spouse of the insured, that portion of the
excess of the amounts received under one or more agreements specified in paragraph
(2)(A) (whether or not payment of any part of such amounts is guaranteed by the insurer)
over the amount determined in subparagraph (A) of this paragraph which is not greater
than $1,000 with respect to any insured.”
Subsec. (d)(2)(B). Pub. L. 99-514, 1001(c)(2), substituted “equal” for “is equal” in introductory
provisions.
Subsec. (d)(2)(B)(ii). Pub. L. 99-514, 1001(b), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows:
“as discounted on the basis of the interest rate and mortality tables used by
the insurer in calculating payments under the agreement.”
Subsec. (d)(3), (4). Pub. L. 99-514, 1001(c)(1), redesignated par. (4) as (3), and struck out former par. (3), “Surviving
spouse”, which read as follows: “For purposes of this subsection, the
term ‘surviving spouse’
means the spouse of the insured as of the date of death, including a spouse legally
separated but not under a decree of absolute divorce.”
1984--Subsec. (b)(3)(B). Pub. L. 98-369, 713(e), amended subpar.
(B) generally, substituting “certain distributions” for “certain
lump sum distributions” in heading, substituting “amount paid or distributed"
for “lump sum distribution described in the second sentence of paragraph
(2)(B)” in introductory text and adding cls. (i) and (ii).
Subsec. (e). Pub. L. 98-369, 421(b)(2), repealed subsec. (e) relating to payments of alimony or of income of
an estate or trust in case of divorce, etc.
Subsec. (f). Pub. L. 98-369, 221(b)(2)(B), inserted “issued before January 1, 1985” in heading.
Subsec. (f)(1). Pub. L. 98-369, 221(b)(2)(A), inserted “issued before January 1, 1985” in introductory
text.
1982--Subsec. (a)(1). Pub. L. 97-248, 266(b), substituted
“,subsection (d), and subsection (f)” for “and in subsection (d)”.
Subsec. (b)(3). Pub. L. 97-248, 239, amended par. (3) generally, substituting
“Treatment of self-employed individuals” for “Self-employed individual
not considered an employee” in heading, designating existing provisions as subparagraph
(A) and, as so designated, adding heading and exception for subpar. (B), and adding
subparagraph (B).
Subsec. (f). Pub. L. 97-248, 266(a), added subsec. (f).
1976--Subsec. (d)(1). Pub. L. 94-455, 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (f). Pub. L. 94-455, 1901(a)(16), struck out subsec. (f) relating to effective date of section.
1974--Subsec. (b)(2)(B). Pub. L. 93-406, 2005(c)(15), substituted
“a lump sum distribution (as defined in section 402(e)(4)” for “total
distributions payable (as defined in section 402(a)(3)) which are paid to a distributee
within one taxable year of the distributee by reason of the employee's death”.
Subsec. (b)(2)(D). Pub. L. 93-406, 2007(b)(3), substituted “if the member or former member of the uniformed services
by reason of whose death such annuity is payable” for “if the individual
who made the election under such chapter”.
1969--Subsec. (b)(2)(B)(iii). Pub. L. 91-172 substituted references to section 170(b)(1)(A) (ii) and (vi), and to religious organizations,
for references to section 503(b)(1), (2), or (3).
1966--Subsec. (b)(2)(D). Pub. L. 89-365 provided that par.
(1) shall not apply in the case of an annuity under chapter 73 of title 10 if the
individual who made the election under that chapter died after attaining retirement
age.
1962--Subsec. (b)(2)(B)(ii). Pub. L. 87-792, 7(c)(1), substituted
“described in section 403(a)” for “which meets the requirements
of paragraphs (3), (4), (5), and (6) of section 401(a)”.
Subsec. (b)(3). Pub. L. 87-792, 7(c)(2), added par. (3).
1958--Subsec. (b)(2)(B). Pub. L. 85-866 substituted “This subparagraph shall not apply to total distributions payable
(as defined in section 402(a)(3) which are paid to a distributee within one taxable
year of the distributee by reason of the employee's death--” for “(other
than total distributions payable, as defined in section 402(a)(3), which are paid
to distributee, by a stock bonus, pension, or profit-sharing trust described in section
401(a) which is exempt from tax under section 501(a), or under an annuity contract
under a plan which meets the requirements of paragraphs (3), (4), (5), and (6) of
section 401(a), within one taxable year of the distributee by reason of the employee's
death)”, and added cls. (i), (ii), and (iii).
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments made by Sec. 13522(a), (b) of Pub. L. 115-97 effective for transfers after December 31, 2017.
EFFECTIVE DATE OF 2013 AMENDMENT
Section 1086(d) of Pub. L. 112-239 provided:
“(d) EFFECTIVE DATE.—
“(1) IN GENERAL.—Except as provided in paragraph (1), the amendments made
by this section shall—
“(A) take effect on the date of enactment of this Act; and
“(B) apply to any matter pending, before the Bureau of Justice Assistance or
otherwise, on the date of enactment of this Act, or filed or accruing after that date.
“(2) EXCEPTIONS.—
“(A) RESCUE SQUADS AND AMBULANCE CREWS.—For a member of a rescue squad
or ambulance crew (as defined in section 1204(7) of title I of the Omnibus Crime Control
and Safe Streets Act of 1968, as amended by this section), the amendments made by
this Act shall apply to injuries sustained on or after June 1, 2009.
“(B) HEART ATTACKS, STROKES, AND VASCULAR RUPTURES.—Section 1201(k) of
title I of the Omnibus Crime Control and Safe Streets Act of 1968, as amended by this
section, shall apply to heart attacks, strokes, and vascular ruptures sustained on
or after December 15, 2003.”
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendments made by Sec. 863 of Pub. L. 109-280 applicable to life
insurance contracts issued after the date of the enactment of this Act [Enacted: Aug.
17, 2006], except for a contract issued after such date pursuant to an exchange
described in section 1035 of the Internal Revenue Code of 1986 for a contract issued on or prior to that date. For purposes of the preceding
sentence, any material
increase in the death benefit or other material change shall cause the contract
to be treated as a new contract except that, in the case of a master contract (within
the meaning of section 264(f)(4)(E)
of such Code), the addition of covered lives shall be treated as a new contract
only with respect to such additional covered lives.
EFFECTIVE DATE OF 2003 AMENDMENTS
Amendments made by Sec. 110(b) of Pub. L. 108-121 applicable to amounts paid after December 31, 2002, with respect to deaths occurring
after such date.
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment made by Sec. 102(a) of Pub. L. 107-134 applicable to taxable years ending before, on, or after September 11, 2001.
Sec. 102(b)(2) of Pub. L. 107-134 provided the following rule:
“(2) WAIVER OF LIMITATIONS- If refund or credit of any overpayment of tax resulting
from the amendments made by this section is prevented at any time before the close
of the 1-year period beginning on the date of the enactment of this Act [enacted:
Jan. 23, 2002] by the operation of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or allowed if claim therefor is filed
before the close of such period.”
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment made by Sec. 1084(b)(2) of Pub. L. 105-34, as amended by Pub. L. 105-206, Sec. 6010(o)(3)(B), applicable to contracts issued after June 8, 1997, in taxable years ending after
such date. For purposes of the preceding sentence, any material increase in the death
benefit or other material change in the contract shall be treated as a new contract
except that, in the case of a master contract (within the meaning of section 264(f)(4)(E)
of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with
respect to such additional covered lives.
Amendment made by Sec. 1528(a) of Pub. L. 105-34, as amended by Pub. L. 107-15, Sec. 2, applicable to amounts received in taxable years beginning after December 31, 1996,
with respect to individuals dying after such date, and to amounts received in tax
years beginning after December 31, 2001, with respect to individuals dying on or
before December 31, 1996.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1402(c) of Pub. L. 104-188 provided that: “The amendments made by this section [repealing subsec. (b)
and amending subsec. (c)] shall apply with respect to decedents dying after the date
of the enactment of this Act [Aug. 20, 1996].”
Section 331(b) of Pub. L. 104-191 provided that: “The amendment made by subsection (a) [adding subsec. (g)] shall
apply to amounts received after Dec. 31, 1996.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1001(d) of Pub. L. 99-514 provided that: “The amendments made by this section [amending this section]
shall apply to amounts received with respect to deaths occurring after the date of
the enactment of this section [Oct. 22, 1986] in taxable years ending after such date.”
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by section 221(b)(2) of Pub. L. 98-369 effective Jan. 1, 1984, see section 221(d)(4) of Pub. L. 98-369, set out as an Effective Date note under section 7702 of this title.
Amendment by section 421(b)(2) of Pub. L. 98-369 applicable to transfers after July 18, 1984, in taxable years ending after such date,
subject to election to have repeal apply to transfers after 1983 or to transfers pursuant
to existing decrees, see section 421(d) of Pub. L. 98-369, set out as an Effective Date note under section 1041 of this title.
Amendment by section 713 of Pub. L. 98-369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility
Act of 1982, Pub. L. 97-248, to which such amendment relates, see section 715 of Pub. L. 98-369, set out as a note under section 31 of this title.
EFFECTIVE DATE OF 1982 AMENDMENTS
Section 266(c)(1) of Pub. L. 97-248, as amended by Pub. L. 98-369, div. A, title II, 221(b)(1), July 18, 1984, 98 Stat. 772, provided that: “The amendments made by this section
[amending this section] shall apply to contracts entered into before January 1, 1985.”
Amendment by section 239 of Pub. L. 97-248 applicable to decedents dying after Dec. 31, 1983, see section 241(b) of Pub. L. 97-248, set out as an Effective Date note under section 416 of this title. Such amendment
is applicable, in the case of amounts received under the plan of an S corporation,
with respect to decedents dying after Dec. 31, 1982, notwithstanding section 241(b)
of Pub. L. 97-248, see section 6(b)(2) of Pub. L. 97-354, Oct. 19, 1982, 96 Stat. 1697, set out as a note under section 1361 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(16) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section
1901(d)
of Pub. L. 94-455, set out as a note under section 2 of this title.
Amendment by section 1906(b)(13)(A) of Pub. L. 94-455 effective Feb. 1, 1977, see section 1906(d)(1) of Pub. L. 94-455, set out as a note under section 6013 of this title.
EFFECTIVE DATE OF 1974 AMENDMENTS
Amendment by section 2005(c)(15) of Pub. L. 93-406 applicable only with respect to distributions and payments made after Dec. 31, 1973,
in taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. L. 93-406, set out as a note under section 402 of this title.
Amendment by section 2007(b)(3) of Pub. L. 93-406 applicable to taxable years ending on or after Sept. 21, 1972, with respect to individuals
dying on or after Sept. 21, 1972, see section 2007(c) of Pub. L. 93-406, set out as a note under section 122 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section 101(k)(1)
of Pub. L. 91-172, set out as an Effective Date note under section 4940 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-365 applicable with respect to individuals making an election under chapter 73 of Title
10 who died after Dec. 31, 1965, see section 1(d) of Pub. L. 89-365, set out as an Effective Date note under section 122 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 22 of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1957, see section 23(g) of Pub. L. 85-866, set out as a note under section 403 of this title.
FLEXIBLE PREMIUM CONTRACTS ISSUED DURING 1984 WHICH MEET REQUIREMENTS OF SECTION 7702
TREATED AS MEETING REQUIREMENTS OF SECTION 101(f)
Flexible premium contracts issued during 1984 which meet requirements of section 7702
of this title treated as meeting requirements of subsec. (f) of this section, see
section 221(b)(3)
of Pub. L. 98-369, as added by Pub. L. 99-514, set out as a note under section 7702 of this title.
SPECIAL RULES FOR CONTRACTS ENTERED INTO BEFORE JANUARY 1, 1983
Section 266(c)(2), (3) of Pub. L. 97-248, as amended by Pub. L. 97-448, title III, 306(a)(13), Jan. 12, 1983, 96 Stat. 2405; Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(2) Special rule for contracts entered into before january 1, 1983.--Any contract
entered into before January 1, 1983, which meets the requirements of section 101(f)
of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]
on the date which is 1 year after the date of the enactment of this Act [Sept. 3,
1982] shall be treated as meeting the requirements of such section for any period
before the date on which such contract meets such requirements. Any death benefits
paid under a flexible premium life insurance contract (within the meaning of section
101(f)(3)(A)
of such Code) before the date which is 1 year after such date of enactment
[Sept. 3, 1982] shall be excluded from gross income.
“(3) Special rule for certain contracts.--Any contract entered into before January
1, 1983, shall be treated as meeting the requirements of subparagraph (A) of section
101(f)(1) of such Code if such contract would meet such requirements if section 101(f)(2)(C)
of such Code were applied by substituting ‘3 percent’ for ‘4 percent’.”
