26 U.S.C. § 74 : US Code - Section 74: Prizes and awards

Search 26 U.S.C. § 74 : US Code - Section 74: Prizes and awards

    (a) General rule
      Except as otherwise provided in this section or in section 117
    (relating to qualified scholarships), gross income includes amounts
    received as prizes and awards.
    (b) Exception for certain prizes and awards transferred to
      charities
      Gross income does not include amounts received as prizes and
    awards made primarily in recognition of religious, charitable,
    scientific, educational, artistic, literary, or civic achievement,
    but only if - 
        (1) the recipient was selected without any action on his part
      to enter the contest or proceeding;
        (2) the recipient is not required to render substantial future
      services as a condition to receiving the prize or award; and
        (3) the prize or award is transferred by the payor to a
      governmental unit or organization described in paragraph (1) or
      (2) of section 170(c) pursuant to a designation made by the
      recipient.
    (c) Exception for certain employee achievement awards
      (1) In general
        Gross income shall not include the value of an employee
      achievement award (as defined in section 274(j)) received by the
      taxpayer if the cost to the employer of the employee achievement
      award does not exceed the amount allowable as a deduction to the
      employer for the cost of the employee achievement award.
      (2) Excess deduction award
        If the cost to the employer of the employee achievement award
      received by the taxpayer exceeds the amount allowable as a
      deduction to the employer, then gross income includes the greater
      of - 
          (A) an amount equal to the portion of the cost to the
        employer of the award that is not allowable as a deduction to
        the employer (but not in excess of the value of the award), or
          (B) the amount by which the value of the award exceeds the
        amount allowable as a deduction to the employer.

      The remaining portion of the value of such award shall not be
      included in the gross income of the recipient.
      (3) Treatment of tax-exempt employers
        In the case of an employer exempt from taxation under this
      subtitle, any reference in this subsection to the amount
      allowable as a deduction to the employer shall be treated as a
      reference to the amount which would be allowable as a deduction
      to the employer if the employer were not exempt from taxation
      under this subtitle.
      (4) Cross reference
          For provisions excluding certain de minimis fringes from
        gross income, see section 132(e).