I.R.C. § 123(a) General Rule
In the case of an individual whose principal residence is damaged or destroyed by
fire, storm, or other casualty, or who is denied access to his principal residence
by governmental authorities because of the occurrence or threat of occurrence of
such a casualty, gross income does not include amounts received by such individual
under an insurance contract which are paid to compensate or reimburse such individual
for living expenses incurred for himself and members of his household resulting
from the loss of use or occupancy of such residence.
I.R.C. § 123(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—
I.R.C. § 123(b)(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
I.R.C. § 123(b)(2)
the normal living expenses which would have been incurred for himself and members
of his household during such period.
(Added by Pub. L. 91-172, title IX, 901(a), Dec. 30, 1969, 83 Stat. 709.)
Section 901(c) of Pub. L. 91-172 provided that: “The amendments made by this section [enacting this section] shall
apply with respect to amounts received on or after January 1, 1969.”
A prior section 123 was renumbered 136.