(e) Alimony, etc., payments. (1) In general. This section shall not apply to so much of any payment as is includible in the gross income of the wife under section 71 (relating to alimony) or section 682 (relating to income of an estate or trust in case of divorce, etc.). (2) Cross reference. For definition of “wife”, see section 7701 (a) (17). (f) Effective date of section. This section shall apply only to amounts received by reason of the death of an insured or an employee occurring after the date of enactment of this title. Section 22 (b) (1) of the Internal Revenue Code of 1939 shall apply to amounts received by reason of the death of an insured or an employee occurring on or before such date. (Aug. 16, 1954, ch. 736, 68A Stat. 26; Sept. 2, 1958, Pub. L. 85-866, title I, § 23(d), 72 Stat. 1622; Oct. 10, 1962, Pub. L. 87-792, § 7(c), 76 Stat. 829.) REFERENCES IN TEXT Date of enactment of this title, referred to in subsec. (f), is Aug. 16, 1954. AMENDMENTS 1962 Subsec. (b)(2)(B). Pub. L. 87-792, § 7(c) (1), substituted "described in section 403(a)" for "which meets the requirements of paragraphs (3), (4), (5), and (6) of section 401(a)" in cl. (ii). Subsec. (b) (3). Pub. L. 87–792, § 7(c) (2), added subsec. (b) (3). 1958 Subsec. (b)(2)(B). Pub. L. 85-866 substituted "This subparagraph shall not apply to total distributions payable (as defined in section 402 (a) (3) which are paid to a distributee within one taxable year of the distributee by reason of the employee's death-" for "(other than total distributions payable, as defined in section 402(a) (3), which are paid to distributee, by a stock bonus, pension, or profit-sharing trust described in section 401(a) which is exempt from tax under section 501(a), or under an annuity contract under a plan which meets the requirements of paragraphs (3), (4), (5), and (6) of section 401(a), within one taxable year of the distributee by reason of the employee's death)", and added clauses (1), (ii), and (iii). EFFECTIVE DATE OF 1962 AMENDMENT Amendment of section by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 37 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Amendment of subsec. (b)(2)(B) by Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1957, see section 23 (g) of Pub. L. 85-866, set out as a note under section 403 of this title. CROSS REFERENCES Basis rules of general application, see section 1011 et seq. of this title. Employee defined, see section 7701 (a) (20) of this title. Limitation on retirement income as inapplicable to amount excluded from gross income under this section relating to life insurance proceeds, see section 37 of this title. Rules and regulations, see section 7805 of this title. § 102. Gifts and inheritances. (a) General rule. Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. (b) Income. Subsection (a) shall not exclude from gross in come (1) the income from any property referred to in subsection (a); or (2) where the gift, bequest, devise, or inheritance is of income from property, the amount of such income. Where, under the terms of the gift, bequest, devise, or inheritance, the payment, crediting, or distribution thereof is to be made at intervals, then, to the extent that it is paid or credited or to be distributed out of income from property, it shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property. Any amount included in the gross income of a beneficiary under subchapter J shall be treated for purposes of paragraph (2) as a gift, bequest, devise, or inheritance of income from property. (Aug. 16, 1954, ch. 736, 68A Stat. 28.) CROSS REFERENCES Estate tax, see section 2001 et seq. of this title. § 103. Interest on certain governmental obligations. (a) General rule. Gross income does not include interest on (1) the obligations of a State, a Territory, or a possession of the United States, or any political subdivision of any of the foregoing, or of the District of Columbia; (2) the obligations of the United States; or (3) the obligations of a corporation organized under Act of Congress, if such corporation is an instrumentality of the United States and if under the respective Act authorizing the issue of the obligations the interest is wholly exempt from the taxes imposed by this subtitle. (b) Exception. Subsection (a) (2) shall not apply to interest on obligations of the United States issued after September 1, 1917 (other than postal savings certificates of deposit, to the extent they represent deposits made before March 1, 1941), unless under the respective Acts authorizing the issuance thereof such interest is wholly exempt from the taxes imposed by this subtitle. (c) Cross references. For provisions relating to the taxable status of(1) Bonds and certificates of indebtedness authorized by the First Liberty Bond Act, see sections 1 and 6 of that Act (40 Stat. 35, 36; 31 U. S. C. 746, 755); (2) Bonds issued to restore or maintain the gold reserve, see section 2 of the Act of March 14, 1900 (31 Stat. 46; 31 U. S. C. 408); (3) Bonds, notes, certificates of indebtedness, and Treasury bills authorized by the Second Liberty Bond Act, see sections 4, 5 (b) and (d), 7, 18 (b), and 22 (d) of that Act, as amended (40 Stat. 290; 46 Stat. 20, 775; 40 Stat. 291, 1310; 55 Stat. 8; 31 U. S. C. 752a, 754, 747, 753, 757c); (4) Bonds, notes, and certificates of indebtedness of the United States and bonds of the War Finance Corporation owned by certain nonresidents, see section 3 of the Fourth Liberty Bond Act, as amended (40 Stat. 1311, § 4; 31 U. S. C. 750); (5) Certificates of indebtedness issued after February 4, 1910, see section 2 of the Act of that date (36 Stat. 192; 31 U. S. C. 769); (6) Consols of 1930, see section 11 of the Act of March 14, 1900 (31 Stat. 48: 31 U. S. C. 751); (7) Obligations and evidences of ownership issued by the United States or any of its agencies or instrumentalities on or after March 28, 1942, see section 4 of the Public Debt Act of 1941, as amended (c. 147, 61 Stat. 180; 31 U. S. C. 742a); (8) Commodity Credit Corporation obligations, see section 5 of the Act of March 8, 1938 (52 Stat. 108; 15 U. S. C. 713a-5); (9) Debentures issued by Federal Housing Administrator, see sections 204 (d) and 207 (i) of the National Housing Act, as amended (52 Stat. 14, 20; 12 U. S. C. 1710, 1713); (10) Debentures issued to mortgagees by United States Maritime Commission, see section 1105 (c) of the Merchant Marine Act, 1936, as amended (52 Stat. 972; 46 U. S. C. 1275); (11) Federal Deposit Insurance Corporation obligations, see section 15 of the Federal Deposit Insurance Act (64 Stat. 890; 12 U. S. C. 1825); (12) Federal Home Loan Bank obligations, see section 13 of the Federal Home Loan Bank Act, as amended (49 Stat. 295, 8; 12 U. S. C. 1433); (13) Federal savings and loan association loans, see section 5 (h) of the Home Owners' Loan Act of 1933, as amended (48 Stat. 133; 12 U. S. C. 1464); (14) Federal Savings and Loan Insurance Corporation obligations, see section 402 (e) of the National Housing Act (48 Stat. 1257; 12 U. S. C. 1725); (15) Home Owners' Loan Corporation bonds, see section 4 (c) of the Home Owners' Loan Act of 1933, as amended (48 Stat. 644, c. 168; 12 U. S. C. 1463); (16) Obligations of Central Bank for Cooperatives, production credit corporations, production credit associations, and banks for cooperatives, see section 63 of the Farm Credit Act of 1933 (48 Stat. 267; 12 U. S. C. 1138c); (17) Panama Canal bonds, see section 1 of the Act of December 21, 1904 (34 Stat. 5; 31 U. S. C. 743), section 8 of the Act of June 28, 1902 (32 Stat. 484; 31 U. S. C. 744), and section 39 of the Tariff Act of 1909 (36 Stat. 117; 31 U. S. C. 745); (18) Philippine bonds, etc., issued before the independence of the Philippines, see section 9 of the Philippine Independence Act (48 Stat. 463; 48 U. S. C. 1239); (19) Postal savings bonds, see section 10 of the Act of June 25, 1910 (36 Stat. 817; 39 U. S. C. 760); (20) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (50 Stat. 844; 48 U. S. C. 745); (21) Treasury notes issued to retire national bank notes, see section 18 of the Federal Reserve Act (38 Stat. 268; 12 U. S. C. 447); (22) United States Housing Authority obligations, see sections 5 (e) and 20 (b) of the United States Housing Act of 1937 (50 Stat. 890, 898; 42 U. S. C. 1405, 1420); (23) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1949 (63 Stat. 940; 48 U. S. C. 1403). (Aug. 16, 1954, ch. 736, 68A Stat. 29.) REFERENCES IN TEXT Section 7 of the Second Liberty Bond Act (31 U.S.C. 747), referred to in par. (3) of subsec. (c), was repealed by Pub. L. 86-346, title I, § 105(b) (2), Sept. 22, 1959, 73 Stat. 622. See section 742 of Title 31, Money and Finance. Section 4(c) of the Home Owners' Loan Act of 1933, as amended (12 U.S.C. 1463), referred to in par. (15) of subsec. (c), was omitted from the code. See notes under former section 1463 of Title 12, Banks and Banking. Section 9 of the Philippine Independence Act (48 U.S.C. 1239), referred to in par. (18) of subsec. (c), was omitted from the code. See notes under former sections 10101276e of Title 48, Territories and Insular Possessions. Section 10 of the act of June 25, 1910 (39 U.S.C. 760), referred to in par. (19) of subsec. (c), was repealed by Pub. L. 86-682, § 12(c), Sept. 2, 1960, 74 Stat. 708. CROSS REFERENCES Bonds and other evidences of indebtedness having taxfree interest as not subject to special rules for determining capital gains and losses, see section 1232 of this title. Credits against tax of partially tax-exempt interest received by individuals, see section 35 of this title. Estates, trusts and beneficiaries, tax-exempt interest in determining distributable net income, see section 643 of this title. Insurance company taxable income as gross income less, among others, deduction for tax-free interest, see section 832 of this title. Life insurance companies, taxable income as gross income minus, among others, deduction for tax-free interest, see section 803 of this title. Mutual insurance companies, gross amount of income as subject to deduction, among others of interest under this section, see section 821 of this title. Mutual insurance companies, taxable income as gross investment income minus, among others, deduction for tax-free interest, see section 822 of this title. Partially tax-exempt interest deduction for corporations, see section 242 of this title. § 104. Compensation for injuries or sickness. (a) In general. Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness; (2) the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness; (3) amounts received through accident or health insurance for personal injuries or sickness (other than amounts received by an employee, to the extent such amounts (A) are attributable to contributions by the employer which were not includible in the gross income of the employee, or (B) are paid by the employer); and (4) amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the Coast and Geodetic Survey or the Public Health Service, or as a disability annuity payable under the provisions of section 831 of the Foreign Service Act of 1946, as amended (22 U.S.C. 1081; 60 Stat. 1021). For purposes of paragraph (3), in the case of an individual who is, or has been, an employee within the meaning of section 401(c) (1) (relating to self-employed individuals), contributions made on behalf of such individual while he was such an employee to a trust described in section 401(a) which is exempt from tax under section 501(a), or under a plan de-scribed in section 403 (a), shall, to the extent allowed as deductions under section 404, be treated as contributions by the employer which were not includible in the gross income of the employee. (b) Cross references. (1) For exclusion from employee's gross income of employer contributions to accident and health plans, see section 106. (2) For exclusion of part of disability retirement pay from the application of subsection (a) (4) of this section, see section 402 (h) of the Career Compensation Act of 1949 (37 U. S. C. 272 (h)). (Aug. 16, 1954, ch. 736, 68A Stat. 30; Sept. 8, 1960, Pub. L. 86-723, § 51, 74 Stat. 847; Oct. 10, 1962, Pub. L. 87-792, § 7(d), 76 Stat. 829.) REFERENCES IN TEXT Section 402 (h) of Career Compensation Act of 1949 (37 U. S. C. 272 (h)), referred to in par. (2) of subsec. (b), was repealed by act Aug. 10, 1956, ch. 1041, § 53, 70A Stat. 641. See section 1403 of Title 10, Armed Forces. AMENDMENTS 1962 Subsec. (a). Pub. L. 87-792 inserted sentence requiring contributions made on behalf of an individual who is, or has been, an employee within the meaning of section 401 (c) (1), while he was such an employee to a trust which is exempt from tax, or under a plan described in section 403 (a), to be treated as contributions by the employer which were not includible in the gross income of the employee. 1960-Subsec. (a) (4). Pub. L. 86-723 provided for exclusion from gross income of amounts received as a disability annuity payable under the provisions of section 831 of the Foreign Service Act of 1946, as amended. EFFECTIVE DATE OF 1962 AMENDMENT Amendment of section by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 37 of this title. EFFECTIVE DATE OF 1960 AMENDMENT Amendment of subsec. (a) (4) by Pub. L. 86-723 effective with respect to taxable years ending after Sept. 8, 1960, see section 56(e) of Pub. L. 86-723, set out as a note under section 809 of Title 22, Foreign Relations and Intercourse. CROSS REFERENCES Amounts received through accident or health insurance, treatment as, see section 105 of this title. Disability retired pay, treatment under this title, see section 1403 of Title 10, Armed Forces. Employee defined, see section 7701 (a) (20) of this title. Limitation on retirement income inapplicable to exclusions under this section, see section 37 of this title. § 105. Amounts received under accident and health plans. (a) Amounts attributable to employer contributions. Except as otherwise provided in this section, amounts received by an employee through accident or health insurance for personal injuries or sickness shall be included in gross income to the extent such amounts (1) are attributable to contributions by the employer which were not includible in the gross income of the employee, or (2) are paid by the employer. (b) Amounts expended for medical care. Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include amounts referred to in subsection (a) if such amounts are paid, directly or indirectly, to the taxpayer to reimburse the taxpayer for expenses incurred by him for the medical care (as defined in section 213 (e)) of the taxpayer, his spouse, and his dependents (as defined in section 152). (c) Payments unrelated to absence from work. Gross income does not include amounts referred to in subsection (a) to the extent such amounts (1) constitute payment for the permanent loss or loss of use of a member or function of the body, or the permanent disfigurement, of the taxpayer, his spouse, or a dependent (as defined in section 152), and (2) are computed with reference to the nature of the injury without regard to the period the employee is absent from work. (d) Wage continuation plans. Gross income does not include amounts referred to in subsection (a) if such amounts constitute wages or payments in lieu of wages for a period during which the employee is absent from work on account of personal injuries or sickness; but this subsection shall not apply to the extent that such amounts exceed a weekly rate of $100. The preceding sentence shall not apply to amounts attributable to the first 30 calendar days in such period, if such amounts are at a rate which exceeds 75 percent of the regular weekly rate of wages of the employee (as determined under regulations prescribed by the Secretary or his delegate). If amounts attributable to the first 30 calendar days in such period are at a rate which does not exceed 75 percent of the regular weekly rate of wages of the employee, the first sentence of this subsection (1) shall not apply to the extent that such amounts exceed a weekly rate of $75, and (2) shall not apply to amounts attributable to the first 7 calendar days in such period unless the employee is hospitalized on account of personal injuries or sickness for at least one day during such period. If such amounts are not paid on the basis of a weekly pay period, the Secretary or his delegate shall by regulations prescribe the method of determining the weekly rate at which such amounts are paid. (e) Accident and health plans. For purposes of this section and section 104(1) amounts received under an accident or health plan for employees, and (2) amounts received from a sickness and disability fund for employees maintained under the law of a State, a Territory, or the District of Columbia, shall be treated as amounts received through accident or health insurance. (f) Rules for application of section 213. For purposes of section 213 (a) (relating to medical, dental, etc., expenses) amounts excluded from gross income under subsection (c) or (d) shall not be considered as compensation (by insurance or otherwise) for expenses paid for medical care. (g) Self-employed individual not considered an employee. For purposes of this section, the term "employee" does not include an individual who is an employee within the meaning of section 401 (c) (1) (relating to self-employed individuals). (Aug. 16, 1954, ch. 736, 68A Stat. 30; Oct. 10, 1962, Pub. L. 87-792, § 7(e), 76 Stat. 829; Feb. 26, 1964, Pub. L. 88-272, title II, § 205 (a), 78 Stat. 38.) AMENDMENTS 1964 - Subsec. (d). Pub. L. 88-272 substituted provisions stating that "The preceding sentence shall not apply to amounts attributable to the first 30" days if the amounts exceed 75 percent of regular weekly wages, and if they do not exceed said 75 percent, the first sentence of this subsection shall not apply to the extent the amounts exceed $75 weekly and shall not apply to amounts attributable to the first 7 calendar days unless the employee is hospitalized for injury or sickness for at least 1 day in such period, for provisions stating that said "preceding sentence" did not apply in cases of sickness, to amounts attributable to the first 7 days unless the employee was hospitalized for sickness for at least 1 day during such period. 1962-Subsec, (g). Pub. L. 87-792 added subsec. (g). EFFECTIVE DATE OF 1964 AMENDMENT Section 205(b) of Pub. L. 88-272 provided that: "The amendment made by subsection (a) [to subsec. (d) of this section] shall apply to amounts attributable to periods of absence commencing after December 31, 1963." EFFECTIVE DATE OF 1962 AMENDMENT Amendment of section by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 37 of this title. CROSS REFERENCES Employee defined, see section 7701 (a) (20) of this title. Limitation on retirement income inapplicable to exclusions under this section, see section 37 of this title. Rules and regulations, see section 7805 of this title. § 106. Contributions by employer to accident and health plans. Gross income does not include contributions by the employer to accident or health plans for compensation (through insurance or otherwise) to his employees for personal injuries or sickness. (Aug. 16, 1954, ch. 736, 68A Stat. 32.) CROSS REFERENCES Compensation for injuries or sickness, exclusion of, see section 104 of this title. Employee defined, see section 7701 (a) (20) of this title. § 107. Rental value of parsonages. In the case of a minister of the gospel, gross income does not include (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home. (Aug. 16, 1954, ch. 736, 68A Stat. 32.) CROSS REFERENCES Inclusion in gross income, see section 61 of this title. § 108. Income from discharge of indebtedness. (a) Special rule of exclusion. No amount shall be included in gross income by reason of the discharge, in whole or in part, within the taxable year, of any indebtedness for which the taxpayer is liable, or subject to which the taxpayer holds property, if— (1) the indebtedness was incurred or assumed(A) by a corporation, or (B) by an individual in connection with property used in his trade or business, and (2) such taxpayer makes and files a consent to the regulations prescribed under section 1017 (relating to adjustment of basis) then in effect at such time and in such manner as the Secretary or his delegate by regulations prescribes. In such case, the amount of any income of such taxpayer attributable to any unamortized premium (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be included in gross income, and the amount of the deduction attributable to any unamortized discount (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be allowed as a deduction. (b) Railroad corporations. No amount shall be included in gross income by reason of the discharge, cancellation, or modification, in whole or in part, within the taxable year, of any indebtedness of a railroad corporation, as defined in section 77 (m) of the Bankruptcy Act (11 U.S.C. 205 (m)), if such discharge, cancellation, or modification is effected pursuant to an order of a court (A) in a receivership proceeding, or (B) in a proceeding under section 77 of the Bankruptcy Act, commenced before January 1, 1960. In such cases, the amount of any income of the taxpayer attributable to any unamortized premium (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be included in gross income, and the amount of the deduction attributable to any unamortized discount (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be allowed as a deduction. Subsection (a) of this section shall not apply with respect to any discharge of indebtedness to which this subsection applies. (Aug. 16, 1954, ch. 736, 68A Stat. 32; June 29, 1956, ch. 463, § 5, 70 Stat. 403; June 8, 1960, Pub. L. 86-496, § 1(a), 74 Stat. 164.) AMENDMENTS 1960 Subsec. (b). Pub. L. 86-496 provided that if the discharge, cancellation, or modification of any indebtedness is effected pursuant to a court order in a receivership proceeding or in a proceeding under section 77 of the Bankruptcy Act, commenced before Jan. 1, 1960, then no amount is to be included in gross income with respect to it, and eliminated provisions which made subsection inapplicable to discharges occurring in a taxable year beginning after Dec. 31, 1957. 1956-Subsec. (b) amended by act June 29, 1956, which substituted "December 31, 1957" for "December 31, 1955”. EFFECTIVE Date of 1960 AMENDMENT Section 1(b) of Pub. L. 86-496 provided that: "The amendment made by subsection (a) [to subsec. (b) of this section] shall apply to taxable years ending after December 31, 1959, but only with respect to discharges occurring after such date." § 109. Improvements by lessee on lessor's property. Gross income does not include income (other than rent) derived by a lessor of real property on the termination of a lease, representing the value of such property attributable to buildings erected or other improvements made by the lessee. (Aug. 16, 1954, ch. 736, 68A Stat. 33.) CROSS REFERENCES Basic rule for property on which lessee has made improvements, see section 1019 of this title. § 110. Income taxes paid by lessee corporation. If (1) a lease was entered into before January 1, 1954, (2) both lessee and lessor are corporations, and (3) under the lease, the lessee is obligated to pay, or to reimburse the lessor for, any part of the tax imposed by this subtitle on the lessor with respect to the rentals derived by the lessor from the lessee, then gross income of the lessor does not include such payment or reimbursement, and no deduction for such payment or reimbursement shall be allowed to the lessee. For purposes of the preceding sentence, a lease shall be considered to have been entered into before January 1, 1954, if it is a renewal or continuance of a lease entered into before such date and if such renewal or continuance was made in accordance with an option contained in the lease on December 31, 1953. (Aug. 16, 1954, ch. 736, 68A Stat. 33.) § 111. Recovery of bad debts, prior taxes, and delinquency amounts. (a) General rule. Gross income does not include income attributable to the recovery during the taxable year of a bad debt, prior tax, or delinquency amount, to the extent of the amount of the recovery exclusion with respect to such debt, tax, or amount. (b) Definitions. For purposes of subsection (a) — (1) Bad debt. The term "bad debt" means a debt on account of the worthlessness or partial worthlessness of which a deduction was allowed for a prior taxable year. (2) Prior tax. The term "prior tax" means a tax on account of which a deduction or credit was allowed for a prior taxable year. (3) Delinquency amount. The term "delinquency amount" means an amount paid or accrued on account of which a deduction or credit was allowed for a prior taxable year and which is attributable to failure to file return with respect to a tax, or pay a tax, within the time required by the law under which the tax is imposed, or to failure to file return with respect to a tax or pay a tax. (4) Recovery exclusion. The term "recovery exclusion", with respect to a bad debt, prior tax, or delinquency amount, means the amount, determined in accordance with regulations prescribed by the Secretary or his delegate, of the deductions or credits allowed, on account of such bad debt, prior tax, or delinquency amount, which did not result in a reduction of the taxpayer's tax under this subtitle (not including the accumulated earnings tax imposed by section 531 or the tax on personal holding companies imposed by section 541) or corresponding provisions of prior income tax laws (other than subchapter E of chapter 2 of the Internal Revenue Code of 1939, relating to World War II excess profits tax), reduced by the amount excludable in previous taxable years with respect to such debt, tax, or amount under this section. (c) Special rules for accumulated earnings tax and for personal holding company tax. In applying subsections (a) and (b) for the purpose of determining the accumulated earnings tax under section 531 or the tax under section 541 (relating to personal holding companies) · (1) a recovery exclusion allowed for purposes of this subtitle (other than section 531 or section 541) shall be allowed whether or not the bad debt, prior tax, or delinquency amount resulted in a reduction of the tax under section 531 or the tax under section 541 for the prior taxable year; and (2) where a bad debt, prior tax, or delinquency amount was not allowable as a deduction or credit for the prior taxable year for purposes of this subtitle other than of section 531 or section 541 but was allowable for the same taxable year under section 531 or section 541, then a recovery exclusion shall be allowable if such bad debt, prior tax, or delinquency amount did not result in a reduction of the tax under section 531 or the tax under section 541. (Aug. 16, 1954, ch. 736, 68A Stat. 33.) CROSS REFERENCES Additions to the tax and additional amounts- File return, or pay tax, see section 7203 of this title. Pay over tax, see section 7202 of this title. Recovery of bad debts, prior taxes, or delinquency amounts as item of distributor or transferor corporation with respect to carryovers in certain corporate acquisitions, see section 381 of this title. § 112 Rules and regulations, see section 7805 of this title. Tax adjustment measured by prior benefits with respect to war loss recoveries, see section 1333 of this title. § 112. Certain combat pay of members of the Armed Forces. (a) Enlisted personnel. Gross income does not include compensation received for active service as a member below the grade of commissioned officer in the Armed Forces of the United States for any month during any part of which such member (1) served in a combat zone during an induction period, or (2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone during an induction period; but this paragraph shall not apply for any month during any part of which there are no combatant activities in any combat zone as determined under subsection (c) (3) of this section. (b) Commissioned officers. Gross income does not include so much of the compensation as does not exceed $200 received for active service as a commissioned officer in the Armed Forces of the United States for any month during any part of which such officer (1) served in a combat zone during an induction period, or (2) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone during an induction period; but this paragraph shall not apply for any month during any part of which there are no combatant activities in any combat zone as determined under subsection (c) (3) of this section. (c) Definitions. For purposes of this section (1) The term "commissioned officer" does not include a commissioned warrant officer. (2) The term "combat zone" means any area which the President of the United States by Executive Order designates, for purposes of this section or corresponding provisions of prior income tax laws, as an area in which Armed Forces of the United States are or have (after June 24, 1950) engaged in combat. (3) Service is performed in a combat zone only if performed on or after the date designated by the President by Executive Order as the date of the commencing of combatant activities in such zone, and on or before the date designated by the President by Executive Order as the date of the termination of combatant activities in such zone; except that June 25, 1950, shall be considered the date of the commencing of combatant activities in the combat zone designated in Executive Order 10195. (4) The term "compensation" does not include pensions and retirement pay. (5) The term "induction period" means any period during which, under laws heretofore or hereafter enacted relating to the induction of individuals for training and service in the Armed Forces of the United States, individuals (other than individuals liable for induction by reason of |