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26 U.S.C. § 123 — Amounts received under insurance contracts for certain living expenses
Federal law — U.S. Code and appendices · legal_authorities
**(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.
**(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—
(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.
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Stable record: federal_law:legal_authorities:record_usc_658e247cf6595457d6ee242a
Source file: Laws/federal/codes/united-states-code/title-26/section-123-amounts-received-under-insurance-contracts-for-certain-living-expenses--e2964fd864.md
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Source location: Title 26, Chapter 1, § 123; chapter-001-normal-taxes-and-surtaxes.md
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**(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.
**(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—
(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.
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** For exemption of—
(1) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see [section 5943 of title 5](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title5-section5943&num=0&edition=prelim), United States Code.
(2) Benefits under laws administered by the Department of Veterans Affairs, see [section 5301 of title 38](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section5301&num=0&edition=prelim), United States Code.
(3) Earnings of ship contractors deposited in special reserve funds, see [section 53507 of title 46](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section53507&num=0&edition=prelim), United States Code.
(4) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act ([12 U.S.C. 531](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section531&num=0&edition=prelim)).
(5) Special pensions of persons on Army and Navy medal of honor roll, see [38 U.S.C. 1562(a)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section1562/a&num=0&edition=prelim)–(c).
**(b)** For extension of military income tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act ([42 U.S.C. 213](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section213&num=0&edition=prelim)).
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 140
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Federal law — U.S. Code and appendices · legal_authorities
Page 581
TITLE 26—INTERNAL REVENUE CODE
§ 123
6012 of this title] shall apply to dispositions after Dec.
31, 1963, in taxable years ending after such date.’’
SENSE
OF CONGRESS CONCERNING TAX TREATMENT
OF
PRINCIPAL
RESIDENCE
OF
MEMBERS
OF
ARMED
FORCES WHILE AWAY FROM HOME ON ACTIVE DUTY
Pub. L. 105–261, div. A, title X, § 1074, Oct. 17, 1998, 112
Stat. 2138, provided that: ‘‘It is the sense of Congress
that a member of the Armed Forces should be treated
for purposes of section 121 of the Internal Revenue Code
of 1986 as using property as a principal residence during
any continuous period that the member is serving on
active duty for 180 days or more with the Armed
Forces, but only if the member used the property as a
principal residence for any period during or imme-
diately before that period of active duty.’’
TRANSITIONAL RULE IN CASE OF SALE OR EXCHANGE OF
RESIDENCE BEFORE JULY 26, 1981
Pub. L. 95–600, title IV, § 404(d)(2), Nov. 6, 1978, 92 Stat.
2870, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100
Stat. 2095, provided that: ‘‘In the case of a sale or ex-
change of a residence before July 26, 1981, a taxpayer
who has attained age 65 on the date of such sale or ex-
change may elect to have section 121 of the Internal
Revenue Code of 1986 [formerly I.R.C. 1954] applied by
substituting ‘8-year period’ for ‘5-year period’ and ‘5
years’ for ‘3 years’ in subsections (a), (d)(2), and (d)(5)
of such section.’’
§ 122. Certain reduced uniformed services retire-
ment pay
(a) General rule
In the case of a member or former member of
the uniformed services of the United States,
gross income does not include the amount of
any reduction in his retired or retainer pay pur-
suant to the provisions of chapter 73 of title 10,
United States Code.
(b) Spe
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 123
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