US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 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 85(c), 86, 135, 137, 219, 221, and 469, adjusted gross income shall be determined after the application of paragraph (1) and before the application of subparagraph (A).

Aug. 16, 1954, ch. 73668A Stat. 24Pub. L. 99–514, title I100 Stat. 2109Pub. L. 114–239, § 2(a)130 Stat. 973Pub. L. 115–97, title I, § 13305(b)(1)131 Stat. 2126Pub. L. 116–260, div. EE, title I, § 104(b)(2)(B)134 Stat. 3041Pub. L. 117–2, title IX, § 9042(b)(1)135 Stat. 122(, ; , §§ 122(a)(1), 123(b)(1), , , 2113; , , ; , , ; , , ; , , .)

Editorial Notes

Amendments

Pub. L. 117–22021—Subsec. (d)(2)(B). inserted “85(c),” before “86”.

Pub. L. 116–2602020—Subsec. (d)(2)(B). struck out “222,” after “221,”.

Pub. L. 115–972017—Subsec. (d)(2)(B). struck out “199,” after “137,”.

Pub. L. 114–2392016—Subsec. (d). added subsec. (d).

Pub. L. 99–514, § 123(b)(1)1986—Subsec. (a). , which directed that subsec. (a) be amended by substituting “(relating to qualified scholarships)” for “(relating to scholarship and fellowship grants)”, was executed by making the substitution for “(relating to scholarships and fellowship grants)” to reflect the probable intent of Congress.

Pub. L. 99–514, § 122(a)(1)(A), substituted “Except as otherwise provided in this section or” for “Except as provided in subsection (b) and”.

Pub. L. 99–514, § 122(a)(1)(B)Subsec. (b). , (C), inserted “for certain prizes and awards transferred to charities” in heading and added par. (3).

Pub. L. 99–514, § 122(a)(1)(D)Subsec. (c). , added subsec. (c).

Statutory Notes and Related Subsidiaries

Change of Name

section 220502(c) of Title 36References to the United States Olympic Committee deemed to refer to the United States Olympic and Paralympic Committee, see , Patriotic and National Observances, Ceremonies, and Organizations.

Effective Date of 2021 Amendment

Pub. L. 117–2, title IX, § 9042(c)135 Stat. 122

“The amendments made by this section [amending this section and sections 85, 86, 135, 137, 219, 221, 222, and 469 of this title] shall apply to taxable years beginning after .”
, , , provided that:

Effective Date of 2020 Amendment

Pub. L. 116–260section 104(c) of div. EE of Pub. L. 116–260section 25A of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2017 Amendment

Pub. L. 115–97, title I, § 13305(c)131 Stat. 2126Pub. L. 115–141, div. T, § 101(c)132 Stat. 1156

“(1)

In general .—

section 199 of this titleExcept as provided in paragraph (2), the amendments made by this section [amending this section and sections 86, 135, 137, 170, 172, 219, 221, 222, 246, 469, 613, and 613A of this title and repealing ] shall apply to taxable years beginning after .
“(2)

Transition rule for qualified payments of patrons of cooperatives.—

“(A)

In general .—

The amendments made by this section shall not apply to a qualified payment received by a taxpayer from a specified agricultural or horticultural cooperative in a taxable year of the taxpayer beginning after , which is attributable to qualified production activities income with respect to which a deduction is allowable to the cooperative under section 199 of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) for a taxable year of the cooperative beginning before . Any term used in this subparagraph which is also used in section 199 of such Code (as so in effect) shall have the same meaning as when used in such section.
“(B)

Coordination with section 199a .—

No deduction shall be allowed under section 199A of such Code for any qualified payment to which subparagraph (A) applies.”
, , , as amended by , , , provided that:

Pub. L. 115–141section 13305(c) of Pub. L. 115–97section 13305 of Pub. L. 115–97section 101(d) of Pub. L. 115–141section 62 of this title[Amendment by to , set out above, effective as if included in , see , set out as a note under .]

Effective Date of 2016 Amendment

Pub. L. 114–239, § 2(b)130 Stat. 973

“The amendment made by this section [amending this section] shall apply to prizes and awards received after .”
, , , provided that:

Effective Date of 1986 Amendment

section 122(a)(1) of Pub. L. 99–514section 151(c) of Pub. L. 99–514section 1 of this titleAmendment by applicable to prizes and awards granted after , see , set out as a note under .

section 123(b)(1) of Pub. L. 99–514section 151(d) of Pub. L. 99–514section 1 of this titleAmendment by applicable to taxable years beginning after , but only in the case of scholarships and fellowships granted after , see , set out as a note under .

Public Law 99–514Applicability of Certain Amendments by in Relation to Treaty Obligations of United States

section 123(b)(1) of Pub. L. 99–514section 1012(aa)(3) of Pub. L. 100–647section 861 of this titleFor nonapplication of amendment by to the extent application of such amendment would be contrary to any treaty obligation of the United States in effect on , see , set out as a note under .