§123 — Title 26 Internal Revenue Code | U.S. Code

Summary

You do not have to count as taxable income insurance money paid for living expenses when your main home is damaged, destroyed, or you are kept out by government officials because of the damage or its threat. This covers living costs for you and members of your household while you cannot use the home. The tax-free amount is limited. It only covers the extra living costs you actually had during that period — in other words, the insurance exclusion cannot exceed the difference between your disaster-related living expenses and your normal living expenses.

Title 26, §123

Internal Revenue Code — Source: USLM XML via OLRC

(a)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.

(b)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.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 123 was renumbered section 140 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 91–172, title IX, § 901(c), Dec. 30, 1969, 83 Stat. 709, provided that: “The

Amendments

made by this section [enacting this section] shall apply with respect to amounts received on or after January 1, 1969.”

§123 Amounts Received Under Insurance Contracts for Certain Living Expenses