Taxable Years Taxable Years Taxable Years as amounts and other than amounts amounts and other than amounts other than amounts received received as annuities) under a life received as annuities) under a life annuities) under a life insurance insurance or endowment contract, insurance or endowment contract, or endowment contract, but if such but if such amounts (when added to but if such amounts (when added to amounts (when added to amounts amounts received before the taxable amounts received before the taxable received before the taxable year year under such contract) exceed year under such contract) exceed under such contract) exceed the agthe aggregate premiums or consid- the aggregate premiums or consid-gregate premiums or consideration eration paid (whether or not paid eration paid (whether or not paid paid (whether or not paid during during the taxable year) then the during the taxable year) then the the taxable year) then the excess excess shall be included in gross excess shall be included in gross shall be included in gross income. income. Amounts received as an income. Amounts received as an Amounts received as an annuity annuity under an annuity or endow- annuity under an annuity or endow- under an annuity or endowment ment contract shall be included in ment contract shall be included in contract shall be included in gross gross income; except that there shall gross income; except that there shall income; except that there shall be be excluded from gross income the be excluded from gross income the excluded from gross income the exexcess of the amount received in excess of the amount received in cess of the amount received in the the taxable year over an amount the taxable year over an amount taxable year over an amount equal equal to 3 per centum of the aggre- equal to 3 per centum of the aggre- to 3 per centum of the aggregate gate premiums or consideration gate premiums or consideration premiums or consideration paid for paid for such annuity (whether or paid for such annuity (whether or such annuity (whether or not paid not paid during such year), until not paid during such year), until during such year), until the aggrethe aggregate amount excluded the aggregate amount excluded gate amount excluded from gross from gross income under this chap- from gross income under this chap-income under this chapter or prior ter or prior income tax laws in re- ter or prior income tax laws in re-income tax laws in respect of such spect of such annuity equals the spect of such annuity equals the annuity equals the aggregate preaggregate premiums or considera- aggregate premiums or considera- miums or consideration paid for tion paid for such annuity. In the tion paid for such annuity. In the such annuity. In the case of a case of a transfer for a valuable case of a transfer for a valuable transfer for a valuable consideraconsideration, by assignment or consideration, by assignment or tion, by assignment or otherwise, otherwise, of a life insurance, en- otherwise, of a life insurance, en- of a life insurance, endowment, or dowment, or annuity contract, or dowment, or annuity contract, or annuity contract, or any interest any interest therein, only the actual any interest therein, only the actual therein, only the actual value of value of such consideration and the value of such consideration and the such consideration and the amount amount of the premiums and other amount of the premiums and other of the premiums and other sums sums subsequently paid by the sums subsequently paid by the subsequently paid by the transferee transferee shall be exempt from transferee shall be exempt from shall be exempt from taxation taxation under paragraph (1) or taxation under paragraph (1) or under paragraph (1) or this parathis paragraph. The preceding sen- this paragraph. The preceding sen- graph. The preceding sentence tence shall not apply in the case of tence shall not apply in the case of shall not apply in the case of such such a transfer if such contract or such a transfer if such contract or a transfer if such contract or interinterest therein has a basis for de- interest therein has a basis for de-est therein has a basis for detertermining gain or loss in the hands termining gain or loss in the hands mining gain or loss in the hands of of a transferee determined in whole of a transferee determined in whole a transferee determined in whole or or in part by reference to such basis or in part by reference to such basis in part by reference to such basis of of such contract or interest therein of such contract or interest therein such contract or interest therein in in the hands of the transferor. This in the hands of the transferor. This the hands of the transferor; subparagraph and paragraph (1) subparagraph and paragraph (1) shall not apply with respect to so shall not apply with respect to so much of a payment under a life insurance, endowment, or annuity much of a payment under a life incontract, or any interest therein, as, surance, endowment, or annuity under section 22 (k), is includible contract, or any interest therein, as, in gross income. under section 22 (k), is includible in gross income, Sec. 22 (b) (2), I. R. C., supra, amended by Sec. 120 (d), R. A. of 1942, to read as above. Sec. 120 (g), of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941; except that if the first taxable year beginning after Dec. 31, 1941, of the husband does not begin on the same day as the first taxable year beginning after Dec. 31, 1941, of the wife, said amendment shall Sec. 22 (b) (2), I. R. C.,supra, amended by Sec. 110 (a), R. A. of 1942, by adding language in italics. Sec. 110 (b) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1940. Sec. 22 (b) (2), I. R. C.. supra, amended by Sec. 120 (d), R. A. of 1942, by adding Sec. 22 (b), I. R. C., supra, amended by Sec. 110 (a), R. A. of 1942, by adding language in italics. Sec. 110 (b) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1940. other than amounts received as other than amounts received as Taxable Years Beginning before 1939 Taxable Years first become applicable in the case of the husband on the first day of the wife's first taxable year beginning after Dec. 31, 1941, regardless of the taxable year of the husband in which such day falls. For Sec. 22 (b) (2), prior to amendment, see 1942 col umn. Taxable Years language in underlined ital- For Sec. 22 (b) (2), prior umn. (B) Employees' Annuities.-If (B) Employees' Annuities.-If an annuity contract is purchased by an annuity contract is purchased by an employer for an employee under an employer for an employee under a plan with respect to which the a plan with respect to which the employer's contribution is deducti- employer's contribution is deductible under section 23 (p) (1) (B), ble under section 23 (p) (1) (B), or if an annuity contract is pur- or if an annuity contract is purchased for an employee by an em- chased for an employee by an employer exempt under section 101 ployer exempt under section 101 (6), the employee shall include in (6), the employee shall include in his income the amounts received his income the amounts received under such contract for the year under such contract for the year received except that if the employee received except that if the employee paid any of the consideration for paid any of the consideration for the annuity, the annuity shall be the annuity, the annuity shall be included in his income as provided included in his income as provided in subparagraph (A) of this para- in subparagraph (A) of this paragraph, the consideration for such graph, the consideration for such annuity being considered the annuity being considered the amount contributed by the em- amount contributed by the ployee. In all other cases, if the ployee. In all other cases, if the employee's rights under the contract employee's rights under the contract are nonforfeitable except for fail- are nonforfeitable except for failure to pay future premiums, the ure to pay future premiums, the amount contributed by the employer amount contributed by the employer for such annuity contract on or for such annuity contract on or after such rights become nonforfeit- after such rights become nonforfeitable shall be included in the income able shall be included in the income of the employee in the year in which of the employee in the year in which the amount is contributed, which the amount is contributed, which amount together with any amounts contributed by the employee shall constitute the consideration paid for the annuity contract in determining the amount of the annuity required to be included in the income of the employee under subparagraph (A) of this paragraph. em amount together with any amounts Sec. 22 (b) (2), I. R. C., supra, amended by Sec. 162 (c), R. A. of 1942, by adding subsection (B). Sec. 162 (d) of said Act makes amendment applicable as to both the employer and employee only with respect to taxable years of the employer beginning after Dec. 31, 1941, with Taxable Years Beginning in 1941 Sec. 22. (b) (3) Gifts, bequests, Taxable Years Sec. 22. (b) (3) Gifts, bequests, Sec. 22. (b) (3) Gifts, bequests, devises, and inheritances. The and devises, and inheritances.-The and devises.-The value of propvalue of property acquired by gift, value of property acquired by gift, erty acquired by gift, bequest, debequest, devise, or inheritance. bequest, devise, or inheritance but vise, or inheritance (but the income the income from such property shall from such property shall be inbe included in gross income). There cluded in gross income); shall not be excluded from gross income under this paragraph, the income from such property, or, in case the gift, bequest, devise, or inheritance is of income from property, the amount of such income. For the purposes of this paragraph, if, under the terms of the gift, bequest, devise or inheritance, payment, crediting, or distribution thereof is to be made at intervals, to the extent that it is paid or credited or to be distributed out of income from property, it shall be considered a gift, bequest, devise, or inheritance of income from property; There shall not be excluded from gross income under this paragraph, the income from such property, or, in case the gift, bequest, devise, or inheritance is of income from property, the amount of such income. For the purposes of this paragraph, if, under the terms of the gift, bequest, devise or inheritance, payment, crediting, or distribution thereof is to be made at intervals, to the extent that it is paid or credited or to be distributed out of income from property, it shall be considered a gift, bequest, devise, or inheritance of income from property; Sec. 22 (b) (3), I. R. C., supra, amended by Sec. 111 (a), R. A. of 1942, to read as above. Sec. 111 (e) of said Act makes amendment applicable only with respect to taxable years beginning after December 31, 1941; except that in the case of income paid, credited or to be distributed or amounts paid, credited or to be distributed by an estate or trust amendments made by this section shall be applicable only with respect to such income and such amounts paid, credited or to be distributed on or after the beginning of the first taxable year of the estate or trust, as the may be, beginning after December 31, 1941. the case For Sec. 23 (b) (3), I. R. C., before amendment, see 1942 column. Sec. 22 (b) (3), I. R. C., Sec. 22. (b) (4) Tax-free inter- Sec. 22. (b) (4) Tax-free inter- Sec. 22. (b) (4) Tax-free interest. Interest upon (A) the obli-est.-Interest upon (A) the obli- est.-Interest upon (A) the obligations of a State, Territory, or gations of a State, Territory, or gations of a State, Territory, or any political subdivision thereof, or any political subdivision thereof, or any political subdivision thereof, or the District of Columbia; or (B) the District of Columbia; or (B) the District of Columbia; or (B) obligations of a corporation organ- obligations of a corporation organ-obligations of a corporation organized under Act of Congress, if such ized under Act of Congress, if such ized under Act of Congress, if such 4 Sec. 162 (d), R. A. of 1942, in referring to amendments made by Sec. 162 (a), (b) and (c), R. A. of 1942, to Sec. 22 (b) (2), Sec. 23 (p), and Sec. 165, I. R. C., provides as follows: Sec. 162. (d) Taxable years to which amendments applicable. The amendments made by this section shall be applicable as to both the employer and employees only with respect to taxable years of the employer beginning after December 31, 1941, except that (1) In the case of a stock bonus, pension, profitsharing, or annuity plan in effect on or before September 1, 1942, (A) such a plan shall not become subject to the requirement of section 165 (a) (3), (4), (5), and (6) until the beginning of the first taxable year beginning after December 31, 1942, (B) such a plan shall be considered as satisfying the requirements of section 165 (a) (3), (4), (5), and (6) for the period beginning with the beginning of the first taxable year following December 31, 1942, and ending December 31, 1944, if the provisions thereof satisfy such requirements by December 31, 1944, and if by that time such provisions are made effective for all purposes as of a date not later than January 1, 1944, 1943, if the plan satisfies such requirements by December 31, 1949, (C) if the contribution of an employer to such a plan in the employer's taxable year beginning in 1942 exceeds the maximum amount deductible for such year under section 23 (p) (1), as amended by this section, |