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INTERNAL REVENUE CODE OF 1954 (b) E F F E C T
OF ELECTION
ON ADJUSTMENTS
FOE SUBSEQUENT
YEARS.—If a taxpayer exercises the election provided for in subsection (a) for any taxable year, then the method of computing income so adopted shall be adhered to with respect to all subsequent taxable years unless with the approval of the Secretary or his delegate a change to a different method is authorized. PART III—ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.
101. Certain death payments. 102. Gifts and inheritances. 103. Interest on certain governmental obligations. 104. Compensation for injuries or sickness. 105. Amounts received under accident and health plans. 106. Contributions by employer to accident and health plans. 107. Rental value of parsonages. 108. Income from discharge of indebtedness. 109. Improvements by lessee on lessor's property. 110. Income taxes paid by lessee corporation. 111. Recovery of bad debts, prior taxes, and delinquency amounts. 112. Certain combat pay of members of the Armed Forces. 113. Mustering-out payments for members of the Armed Forces. 114. Sports programs conducted for the American National Red Cross. 115. Income of States, municipalities, etc. 116. Partial exclusion of dividends received by individuals. 117. Scholarships and fellowship grants. 118. Contributions to the capital of a corporation. 119. Meals or lodging furnished for convenience of employer. 120. Statutory subsistence allowance received by police. 121. Cross references to other Acts.
SEC. 101. CERTAIN DEATH BENEFITS. (a) PROCEEDS OP L I F E INSURANCE CONTRACTS PAYABLE BY REASON OF D E A T H. — (1) GENERAL RULE.—Except as otherwise provided in paragraph
(2) and in subsection (d), gross income does not include amounts received (whether in a single sum or otherwise) under a life insurance contract, if such amounts are paid by reason of the death of the insured. (2) TRANSFER FOR VALUABLE CONSIDERATION.—In the case of a transfer for a valuable consideration, by assignment or otherwise, of a life insurance contract or any interest therein, the amount excluded from gross income by paragraph (1) shall not exceed an amount equal to the sum of the actual value of such consideration and the premiums and other amounts subsequently paid by the transferee. The preceding sentence shall not apply in the case of such a transfer— (A) if such contract or interest therein has a basis for determining gain or loss in the hands of a transferee determined in whole or in part by reference to such basis of such contract or interest therein in the hands of the transferor, or (B) if such transfer is to the insured, to a partner of the insured, to a partnership in which the insured is a partner, or to a corporation in which the insured is a shareholder or officer. § 77(b)
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