PRIA, Government Policy, Made Personal

Summary

Property you get as a gift, inheritance, or under a will is not counted as taxable income. Money that comes from that property — like rent, interest, dividends, or regular payments — is taxable. If the gift calls for payments at intervals and those payments come from the property’s earnings, they count as that taxable income. Amounts treated as income to a beneficiary under trust/estate rules (subchapter J) are also treated as income from the property. Money given by an employer to an employee is not excluded from taxable income, though some small awards or minor fringe benefits can be excluded under section 74(c) or section 132(e).

Title 26, §102

Internal Revenue Code, Source: USLM XML via OLRC

(a)General rule

Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.

(b)Income

Subsection (a) shall not exclude from gross income—

(1)the income from any property referred to in subsection (a); or

(2)where the gift, bequest, devise, or inheritance is of income from property, the amount of such income.

Where, under the terms of the gift, bequest, devise, or inheritance, the payment, crediting, or distribution thereof is to be made at intervals, then, to the extent that it is paid or credited or to be distributed out of income from property, it shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property. Any amount included in the gross income of a beneficiary under subchapter J shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property.

(c)Employee gifts

(1)In general

Subsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee.

(2)Cross references

For provisions excluding certain employee achievement awards from gross income, see section 74(c). For provisions excluding certain de minimis fringes from gross income, see section 132(e).

Notes & Related Subsidiaries

Editorial Notes

Amendments

1986—Subsec. (c). Pub. L. 99–514 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 1986 AmendmentAmendment by Pub. L. 99–514 applicable to prizes and awards granted after Dec. 31, 1986, see section 151(c) of Pub. L. 99–514, set out as a note under section 1 of this title.

§102 Gifts and Inheritances