[House Report 114-762]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-762
======================================================================
UNITED STATES APPRECIATION FOR OLYMPIANS AND PARALYMPIANS ACT OF 2016
_______
September 20, 2016.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 5946]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 5946) to amend the Internal Revenue Code of 1986 to
exclude from gross income any prizes or awards won in
competition in the Olympic Games or the Paralympic Games,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND............................................2
A. Purpose and Summary................................... 2
B. Background and Need for Legislation................... 2
C. Legislative History................................... 2
II. EXPLANATION OF THE BILL...........................................3
A. Exclusion from Gross Income for the Value of Medals
Awarded at Olympic or Paralympic Games for Certain
Prizes or Awards Paid by the U.S. Olympic Committee
to Competitors (sec. 2 of the bill and sec. 74 of the
Code)................................................ 3
III.VOTES OF THE COMMITTEE............................................5
IV. BUDGET EFFECTS OF THE BILL........................................5
A. Committee Estimate of Budgetary Effects............... 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 5
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........7
A. Committee Oversight Findings and Recommendations...... 7
B. Statement of General Performance Goals and Objectives. 7
C. Information Relating to Unfunded Mandates............. 7
D. Applicability of House Rule XXI 5(b).................. 7
E. Tax Complexity Analysis............................... 8
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits.............................. 8
G. Duplication of Federal Programs....................... 8
H. Disclosure of Directed Rule Makings................... 8
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``United States Appreciation for
Olympians and Paralympians Act of 2016''.
SEC. 2. OLYMPIC AND PARALYMPIC MEDALS AND USOC PRIZE MONEY EXCLUDED
FROM GROSS INCOME.
(a) In General.--Section 74 of the Internal Revenue Code of 1986 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).''.
(b) Effective Date.--The amendment made by this section shall apply
to prizes and awards received after December 31, 2015.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 5946, as reported by the Committee on Ways
and Means, excludes the value of Olympic medals and prize money
awarded by the U.S. Olympic Committee for competition in the
Olympic or Paralympic Games from gross income.
B. Background and Need for Legislation
While the Committee continues to work on comprehensive tax
reform as a critical means of promoting economic growth and job
creation, the Committee believes it is important to provide
immediate relief from unfair taxes. The Committee believes that
this exclusion of the value of Olympic and Paralympic medals
and prizes from gross income will eliminate an unfair tax
burden.
C. Legislative History
Background
H.R. 5946 was introduced on September 7, 2016, and was
referred to the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 5946, the
``United States Appreciation for Olympians and Paralympians Act
of 2016,'' on September 14, 2016, and ordered the bill, as
amended, favorably reported (with a quorum being present).
Committee hearings
No hearings have been held on H.R. 5946.
II. EXPLANATION OF THE BILL
A. Exclusion from Gross Income for the Value of Medals Awarded at
Olympic or Paralympic Games and for Certain Prizes or Awards Paid by
the U.S. Olympic Committee to Competitors (sec. 2 of the bill and sec.
74 of the Code)
PRESENT LAW
U.S. citizens and residents are subject to U.S. taxation on
their worldwide income, from whatever source derived,\1\ absent
a specific statutory exception. Prizes and awards are
specifically included in income.\2\ If prizes or awards are
provided in the form of goods or services, the fair market
value of the goods or services provided is the amount to be
included in income.\3\
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\1\Sec. 61.
\2\Sec. 74.
\3\Treas. Reg. sec. 1.74-1(a)(2).
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There are three exceptions to the general rule of inclusion
of prizes and awards: First, qualified scholarships described
in section 117; second, certain employee achievement awards;
and third, awards for religious, charitable, scientific,
educational, artistic, literary or civic achievement, provided
that the recipient takes no action to be considered for the
award, requests that the monetary award be transferred to a
designated governmental unit or tax-exempt organization to
which deductible charitable contributions are permitted, and is
not required to render future substantial services as a
condition of the award.\4\ Examples of awards that may qualify
for the third exception if the monies associated with the award
are timely donated include the Nobel and Pulitzer prizes. In
contrast, prizes or awards in recognition of athletic
achievement are generally ineligible for the exception.\5\
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\4\Treas. Reg. sec. 1.74-1(b).
\5\Wills v. Commissioner, 48 T.C. 308 (1967), aff'd 411 F.2d 537
(9th Cir. 1969), in which the Court held that the value of the S. Rae
Hickock Belt, awarded to baseball player Maury Wills as outstanding
professional athlete of the year, was includible in income as a prize
or award given for athletic achievement, and ineligible for the
exception available for awards based on educational, civil, literary,
scientific or artistic achievement.
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The United States Olympic Committee (``USOC'') is a
corporation created by statute to serve as a coordinating body
for United States participation in international competitive
amateur sports, in order to provide ``the most competent
amateur representation possible in each event'' in the Olympic,
Paralympic and Pan-American Games.\6\ As part of its
activities, the USOC awards each U.S. Olympic athlete prize
money for each medal won, in the amounts of $25,000 for each
gold medal, $15,000 for each silver medal, and $10,000 for each
bronze medal. U.S. Paralympic athletes receive $5,000, $3,500
and $2,500 respectively for each gold, silver and bronze medal
awarded.\7\ All U.S. Olympians and U.S. Paralympians are
required to be U.S. citizens.\8\ As a result, these performance
awards from the USOC are includible as prizes and awards,
regardless of whether the athletes derive the income for
activities performed inside, or outside, the United States.\9\
The prize money awarded to U.S. athletes by the USOC, as well
as the fair market value of gold, silver, and bronze medals, is
includible in gross income.
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\6\See generally, 36 U.S.C. secs. 220501 through 220512. The
organization does not generally receive Federal funding, although
specific programs for veterans of U.S. military service receive Federal
assistance. Instead, the organization raises funds from donors as well
as revenue from licensing of use of the US Olympic team name and
insignia, as well as granting of broadcast rights in the United States.
The purposes of the organization are enumerated in section 220503, and
include promotion of physical fitness and sports participation
generally, financial assistance to athletes or sport federations,
development of training facilities and technical support to amateur
athletic programs that support sports that are included in the
Olympics, Paralympics and Pan-Am games. The USOC provides a quadrennial
report to Congress on its operations. The most recent report, covering
the period 2009 through 2012, was issued June 1, 2013, and is available
at http://www.teamusa.org/Footer/Legal/Governance-Documents.
\7\Based solely on recent metal prices, the values of the medals
awarded at the Rio games are bear the following approximate values of
$565 for the gold, $305 for the silver and $5 for the bronze. See, Reid
Carlson, ``The Monetary Worth of the 2016 Rio Olympic Medals,''
SwimSwam, available at https://swimswam.com/monetary-worth-rio-medals.
\8\The international governing bodies of the Olympic and Paralympic
games permit certain exceptions for athletes from countries that do not
have national organizations eligible to enter teams in the games. See,
Rule 41 and related by-laws, The International Olympic Committee
Charter, available at http://www.teamusa.org/About-the-USOC/Inside-the-
USOC/Olympic-Movement/Structure, and Chapter 3.1, The International
Paralympic Committee Handbook, available at https://www.paralympic.org/
sites/default/files/document/160523070735592_Rio%2BQG_23_May_2016.pdf.
Peter Spiro, ``Citizenship and the Olympics,'' 5 Insights, (Spring
2016), published by American Bar Association, http://
www.americanbar.org/publications/insights_on_law_/16/spring-2016/
citizenship-and-the-olympics.
\9\A credit may be allowed for any foreign income tax imposed on
awards for games held outside the United States. Many Olympic host
countries (including the United States) exempt nonresident athletes
from income tax on awards. As in the United States, these exemptions
may be part of a host country's tax law, and some contracts between the
International Olympic Committee and Olympic host cities confirm the
exemption. Under a typical contract, the host city and the host city's
Organizing Committee promise either that the host country will not tax
performance awards or, if the host country does tax performance awards,
that the host city or Organizing Committee will reimburse athletes for
the amount of the tax. For example, Rio de Janeiro entered into a Host
City Contract containing this clause. A draft contract corresponding to
the 2022 Olympics in China also contains this clause.
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REASONS FOR CHANGE
The Committee believes that the athletes who represent the
United States on the global stage at the Olympic and Paralympic
games perform a valuable patriotic service. The athletes do so
only after years of personal sacrifice to attain the level of
excellence required to compete at the Olympic and Paralympic
games. The Committee also believes that during their years of
training and preparation, many athletes representing the United
States in the games earn little or no money from participation
in their chosen sports and often defer pursuit of careers
outside sports. Monetary prizes awarded by the USOC to
medalists on the U.S. teams are intended to reward such
sacrifices and to provide incentives to other athletes who seek
to represent the United States on a global stage. The Committee
believes that providing this exclusion for the receipt of an
Olympic or Paralympic medal and other prizes awarded by the
USOC generally should be without tax consequences.
EXPLANATION OF PROVISION
The provision creates a new exception to the general rule
requiring inclusion of prizes and awards in gross income. Under
the terms of the exception, neither the value of the medals
awarded to U.S. Olympic or Paralympic athletes nor the cash
prizes given by the USOC are includible in income for Federal
tax purposes. This exclusion does not apply to taxpayers whose
adjusted gross income (determined without regard to the value
of such medals or rewards) is in excess of $1,000,000 (or half
such amount in the case of a married taxpayer filing a separate
return).
EFFECTIVE DATE
The provision applies to prizes and awards received after
December 31, 2015.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 5946, the ``United States Appreciation
for Olympians and Paralympians Act of 2016,'' on September 14,
2016.
An amendment by Mr. Pascrell to the amendment in the nature
of a substitute, which would subject the exclusion for the
value of Olympic or Paralympic prizes and awards to an income
limitation, was agreed to by unanimous consent (with a quorum
being present).
The bill, H.R. 5946, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 5946, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal budget receipts for fiscal years 2017-2026:
FISCAL YEARS
[Millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
-1 [1] [1] [1] -1 [1] [1] [1] -1 [1] -2 -3
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
[1] Loss of less than $500,000.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: The gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the bill enlarges a tax
expenditure.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 16, 2016.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5946, the United
States Appreciation for Olympians and Paralympians Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Jacob Fabian.
Sincerely,
Keith Hall.
Enclosure.
H.R 5946--United States Appreciation for Olympians and Paralympians Act
H.R. 5946 would amend the Internal Revenue Code to exclude
from gross income, for income tax purposes, certain prizes or
awards won in competition in the Olympic Games or the
Paralympic Games. Starting on January 1, 2016, the exclusion
would apply to monetary prizes received from the United States
Olympic Committee and the intrinsic value of the medals
awarded. The exclusion would not apply to individuals with
adjusted gross income above $1 million, or half of that amount
for married individuals filing a separate return.
The staff of the Joint Committee on Taxation (JCT)
estimates that enacting the bill would reduce revenues, thus
increasing federal budget deficits, by about $3 million over
the 2017-2026 period. Specifically, JCT estimates that the bill
would have no effect on revenues in 2016 and would reduce them
by $1 million in 2017, 2021, and 2025, and by less than
$500,000 in the other years of the 2017-2026 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending and revenues. Enacting H.R. 5946 would reduce
revenues; therefore, pay-as-you-go procedures apply. The
estimated increases in the deficit are shown in the following
table. Enacting the bill would not affect direct spending.
JCT and CBO estimate that enacting the bill would not
increase net direct spending in any of the four 10-year periods
beginning in 2027, and would increase on-budget deficits over
those periods by very small amounts.
JCT has determined that H.R. 5946 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Jacob Fabian.
The estimate was approved by John McClelland, Assistant
Director for Tax Analysis.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5946, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON SEPTEMBER 14, 2016
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By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-2021 2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Effects...................... 0 1 0 0 0 1 0 0 0 1 0 2 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 5946 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
further determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
The following statement is made pursuant to clause 3(h)(1)
of rule XIII of the Rules of the House of Representatives.
Section 4022(b) of the Internal Revenue Service Restructuring
and Reform Act of 1998 (``IRS Reform Act'') requires the staff
of the Joint Committee on Taxation (in consultation with the
Internal Revenue Service and the Treasury Department) to
provide a tax complexity analysis. The complexity analysis is
required for all legislation reported by the Senate Committee
on Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code of
1986 and has widespread applicability to individuals or small
businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
TEXT OF EXISTING LAW AMENDED OR REPEALED BY THE BILL, AS REPORTED
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART II--ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
* * * * * * *
SEC. 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).
* * * * * * *
B. Changes in Existing Law Proposed by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italics, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
made by the bill, as reported, are shown as follows (new matter
is printed in italics and existing law in which no change is
proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART II--ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
* * * * * * *
SEC. 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).
(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).
* * * * * * *
[all]