Title 26 — Internal Revenue Code
Part II · Chapter 1 — Normal Taxes and Surtaxes
§ 74. Prizes and awards
Statutory text
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.
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—
the recipient was selected without any action on his part to enter the contest or proceeding;
the recipient is not required to render substantial future services as a condition to receiving the prize or award; and
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.
Exception for certain employee achievement awards
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.
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—
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
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.
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.
Cross reference
For provisions excluding certain de minimis fringes from gross income, see section 132(e).
Exception for Olympic and Paralympic medals and prizes
In general
Gross income shall not include the value of any medal awarded in, or any prize money received from the United States Olympic Committee on account of, competition in the Olympic Games or Paralympic Games.
Limitation based on adjusted gross income
In general
Paragraph (1) shall not apply to any taxpayer for any taxable year if the adjusted gross income (determined without regard to this subsection) of such taxpayer for such taxable year exceeds $1,000,000 (half of such amount in the case of a married individual filing a separate return).
Coordination with other limitations
For purposes of sections 85(c), 86, 135, 137, 219, 221, and 469, adjusted gross income shall be determined after the application of paragraph (1) and before the application of subparagraph (A).
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Aug. 16, 1954, ch. 736, 68A Stat. 24 · 68A Stat. 24
Enacted · 26 U.S.C. § 74
Aug. 16, 1954, ch. 736, 68A Stat. 24
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 24Tax Reform Act of 1986
Pub. L. 99–514 § 123(b)(1) · 100 Stat. 2085
Substituted · 26 U.S.C. § 74(a)
Pub. L. 99–514, § 123(b)(1), which directed that subsec. (a) be amended by substituting “(relating to qualified scholarships)” for “(relating to scholarship and fellowship grants)”, was executed by making the substitution for “(relating to scholarships and fellowship grants)” to reflect the probable intent of Congress
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–514, § 123(b)(1), which directed that subsec. (a) be amended by substituting “(relating to qualified scholarships)” for “(relating to scholarship and fellowship grants)”, was executed by making the substitution for “(relating to scholarships and fellowship grants)” to reflect the probable intent of Congress.Enacted provision · exact public law section
(1) Subsection (a) of section 74 is amended by striking out “(relating to scholarship and fellowship grants)” and inserting in lieu thereof “(relating to qualified scholarships)”.Tax Reform Act of 1986
Pub. L. 99–514 § 122(a)(1)(A) · 100 Stat. 2085
Substituted · 26 U.S.C. § 74(a)
Pub. L. 99–514, § 122(a)(1)(A), substituted “Except as otherwise provided in this section or” for “Except as provided in subsection (b) and”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 99–514, § 122(a)(1)(A), substituted “Except as otherwise provided in this section or” for “Except as provided in subsection (b) and”.Enacted provision · exact public law section
(A) by striking out “Except as provided in subsection (b) and” in subsection (a) and inserting in lieu thereof “Except as otherwise provided in this section or”,Tax Reform Act of 1986
Pub. L. 99–514 § 122(a)(1)(B) · 100 Stat. 2085
Inserted · 26 U.S.C. § 74(b)
Pub. L. 99–514, § 122(a)(1)(B), (C), inserted “for certain prizes and awards transferred to charities” in heading
Added · 26 U.S.C. § 74(b)
Pub. L. 99–514, § 122(a)(1)(B), (C), added par. (3)
Source evidence
Code amendment note
Subsec. (b). Pub. L. 99–514, § 122(a)(1)(B), (C), inserted “for certain prizes and awards transferred to charities” in heading and added par. (3).Enacted provision · exact public law section
(B) by striking out “Exception” in the heading for subsection (b) and inserting in lieu thereof “Exception for Certain Prizes and Awards Transferred to Charities”,Tax Reform Act of 1986
Pub. L. 99–514 § 122(a)(1)(D) · 100 Stat. 2085
Added · 26 U.S.C. § 74(c)
Pub. L. 99–514, § 122(a)(1)(D), added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 99–514, § 122(a)(1)(D), added subsec. (c).Enacted provision · exact public law section
(D) by adding at the end thereof the following new subsection: “(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. “(3) 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).”United States Appreciation for Olympians and Paralympians Act of 2016
Pub. L. 114–239 § 2(a) · 130 Stat. 973
Added · 26 U.S.C. § 74(d)
Pub. L. 114–239 added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 114–239 added subsec. (d).Enacted provision · exact public law section
(a) In General.— Section 74 of the Internal Revenue Code of 1986 26 USC 74. is amended by adding at the end the following new subsection: “(d) Exception for Olympic and Paralympic Medals and Prizes.— “(1) In general.— Gross income shall not include the value of any medal awarded in, or any prize money received from the United States Olympic Committee on account of, competition in the Olympic Games or Paralympic Games. “(2) Limitation based on adjusted gross income.— “(A) In general.— Paragraph (1) shall not apply to any taxpayer for any taxable year if the adjusted gross income (determined without regard to this subsection) of such taxpayer for such taxable year exceeds $1,000,000 (half of such amount in the case of a married individual filing a separate return). “(B) Coordination with other limitations.— For purposes of sections 86, 135, 137, 199, 219, 221, 222, and 469, adjusted gross income shall be determined after the application of paragraph (1) and before the application of subparagraph (A).” .Pub. L. 115–97 title I § 13305(b)(1) · 131 Stat. 2054
Struck · 26 U.S.C. § 74(d)(2)(B)
Pub. L. 115–97 struck out “199,” after “137,”
Source evidence
Code amendment note
Subsec. (d)(2)(B). Pub. L. 115–97 struck out “199,” after “137,”.Enacted provision · exact public law section
(1) Sections 74(d)(2)(B), 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), 219(g)(3)(A)(ii), 221(b)(2)(C), 222(b)(2)(C), 246(b)(1), and 469(i)(3)(F)(iii) are each amended by striking “199,”.Department of Commerce Appropriations Act, 2021
Pub. L. 116–260 div. EE title I § 104(b)(2)(B) · 134 Stat. 1182
Struck · 26 U.S.C. § 74(d)(2)(B)
Pub. L. 116–260 struck out “222,” after “221,”
Source evidence
Code amendment note
Subsec. (d)(2)(B). Pub. L. 116–260 struck out “222,” after “221,”.Enacted provision · exact public law section
Sec. 104. The Incorporation by reference. Applicability. 33 USC 878a note. requirements set forth by section 105 of the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2012 (Public Law 112–55), as amended by section 105 of title I of division B of Public Law 113–6, are hereby adopted by reference and made applicable with respect to fiscal year 2021: Provided, That the life cycle cost for the Joint Polar Satellite System is $11,322,125,000, the life cycle cost of the Polar Follow On Program is $6,837,900,000, the life cycle cost for the Geostationary Operational Environmental Satellite R-Series Program is $11,700,100,000, and the life cycle cost for the Space Weather Follow On Program is $692,800,000.American Rescue Plan Act of 2021
Pub. L. 117–2 title IX § 9042(b)(1) · 135 Stat. 4
Inserted · 26 U.S.C. § 74(d)(2)(B)
Pub. L. 117–2 inserted “85(c),” before “86”
Source evidence
Code amendment note
Subsec. (d)(2)(B). Pub. L. 117–2 inserted “85(c),” before “86”.Enacted provision · exact public law section
(1) Section 74(d)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting “85(c),” before “86”.Effective date note
Pub. L. 117–2, title IX, § 9042(c), Mar. 11, 2021, 135 Stat. 122, provided that: “The amendments made by this section [amending this section and sections 85, 86, 135, 137, 219, 221, 222, and 469 of this title] shall apply to taxable years beginning after December 31, 2019.”
9 of 10 references resolved to an enrolled provision · 1 partial
Editorial Notes
Amendments1986–2021 · 5 rounds
2021
Subsec. (d)(2)(B). Pub. L. 117–2 inserted “85(c),” before “86”.
2020
Subsec. (d)(2)(B). Pub. L. 116–260 struck out “222,” after “221,”.
2017
Subsec. (d)(2)(B). Pub. L. 115–97 struck out “199,” after “137,”.
2016
Subsec. (d). Pub. L. 114–239 added subsec. (d).
1986
Subsec. (a). Pub. L. 99–514, § 123(b)(1), which directed that subsec. (a) be amended by substituting “(relating to qualified scholarships)” for “(relating to scholarship and fellowship grants)”, was executed by making the substitution for “(relating to scholarships and fellowship grants)” to reflect the probable intent of Congress.
Pub. L. 99–514, § 122(a)(1)(A), substituted “Except as otherwise provided in this section or” for “Except as provided in subsection (b) and”.
Subsec. (b). Pub. L. 99–514, § 122(a)(1)(B), (C), inserted “for certain prizes and awards transferred to charities” in heading and added par. (3).
Subsec. (c). Pub. L. 99–514, § 122(a)(1)(D), added subsec. (c).
Statutory Notes and Related Subsidiaries
Change of Name
References to the United States Olympic Committee deemed to refer to the United States Olympic and Paralympic Committee, see section 220502(c) of Title 36, Patriotic and National Observances, Ceremonies, and Organizations.
Effective Date of 2021 Amendment
Pub. L. 117–2, title IX, § 9042(c), , 135 Stat. 122, provided that: “The amendments made by this section [amending this section and sections 85, 86, 135, 137, 219, 221, 222, and 469 of this title] shall apply to taxable years beginning after .”
Effective Date of 2020 Amendment
Amendment by Pub. L. 116–260 applicable to taxable years beginning after , see section 104(c) of div. EE of Pub. L. 116–260, set out as a note under section 25A of this title.
Effective Date of 2017 Amendment
Pub. L. 115–97, title I, § 13305(c), , 131 Stat. 2126, as amended by Pub. L. 115–141, div. T, § 101(c), , 132 Stat. 1156, provided that:
“(1) In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 86, 135, 137, 170, 172, 219, 221, 222, 246, 469, 613, and 613A of this title and repealing section 199 of this title] shall apply to taxable years beginning after .
“(2) Transition rule for qualified payments of patrons of cooperatives.—
“(A) In general.—
The amendments made by this section shall not apply to a qualified payment received by a taxpayer from a specified agricultural or horticultural cooperative in a taxable year of the taxpayer beginning after , which is attributable to qualified production activities income with respect to which a deduction is allowable to the cooperative under section 199 of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) for a taxable year of the cooperative beginning before . Any term used in this subparagraph which is also used in section 199 of such Code (as so in effect) shall have the same meaning as when used in such section.
“(B) Coordination with section 199a.—
No deduction shall be allowed under section 199A of such Code for any qualified payment to which subparagraph (A) applies.”
[Amendment by Pub. L. 115–141 to section 13305(c) of Pub. L. 115–97, set out above, effective as if included in section 13305 of Pub. L. 115–97, see section 101(d) of Pub. L. 115–141, set out as a note under section 62 of this title.]
Effective Date of 2016 Amendment
Pub. L. 114–239, § 2(b), , 130 Stat. 973, provided that: “The amendment made by this section [amending this section] shall apply to prizes and awards received after .”
Effective Date of 1986 Amendment
Amendment by section 122(a)(1) of Pub. L. 99–514 applicable to prizes and awards granted after , see section 151(c) of Pub. L. 99–514, set out as a note under section 1 of this title.
Amendment by section 123(b)(1) of Pub. L. 99–514 applicable to taxable years beginning after , but only in the case of scholarships and fellowships granted after , see section 151(d) of Pub. L. 99–514, set out as a note under section 1 of this title.
Applicability of Certain Amendments by Public Law 99–514 in Relation to Treaty Obligations of United States
For nonapplication of amendment by section 123(b)(1) of Pub. L. 99–514 to the extent application of such amendment would be contrary to any treaty obligation of the United States in effect on , see section 1012(aa)(3) of Pub. L. 100–647, set out as a note under section 861 of this title.
Credits
1954–2021 · 6 acts
- 1954Aug. 16, 1954, ch. 736, 68A Stat. 24
- 1986Pub. L. 99–514, title I, §§ 122(a)(1), 123(b)(1), , 100 Stat. 2109, 2113
- 2016Pub. L. 114–239, § 2(a), , 130 Stat. 973
- 2017Pub. L. 115–97, title I, § 13305(b)(1), , 131 Stat. 2126
- 2020Pub. L. 116–260, div. EE, title I, § 104(b)(2)(B), , 134 Stat. 3041
- 2021Pub. L. 117–2, title IX, § 9042(b)(1), , 135 Stat. 122.
Show as published
(Aug. 16, 1954, ch. 736, 68A Stat. 24; Pub. L. 99–514, title I, §§ 122(a)(1), 123(b)(1), , 100 Stat. 2109, 2113; Pub. L. 114–239, § 2(a), , 130 Stat. 973; Pub. L. 115–97, title I, § 13305(b)(1), , 131 Stat. 2126; Pub. L. 116–260, div. EE, title I, § 104(b)(2)(B), , 134 Stat. 3041; Pub. L. 117–2, title IX, § 9042(b)(1), , 135 Stat. 122.)