(a) Inclusion in gross income. (1) Section 74(a) requires the inclusion in gross income of all amounts received as prizes and awards, unless such prizes or awards qualify as an exclusion from gross income under subsection (b), or unless such prize or award is a scholarship or fellowship grant excluded from gross income by section 117. Prizes and awards which are includible in gross income include (but are not limited to) amounts received from radio and television giveaway shows, door prizes, and awards in contests of all types, as well as any prizes and awards from an employer to an employee in recognition of some achievement in connection with his employment.
(2) If the prize or award is not made in money but is made in goods or services, the fair market value of the goods or services is the amount to be included in income.
(b) Exclusion from gross income. Section 74(b) provides an exclusion from gross income of any amount received as a prize or award, if (1) such prize or award was made primarily in recognition of past achievements of the recipient in religious, charitable, scientific, educational, artistic, literary, or civic fields; (2) the recipient was selected without any action on his part to enter the contest or proceedings; and (3) the recipient is not required to render substantial future services as a condition to receiving the prize or award. Thus, such awards as the Nobel prize and the Pulitzer prize would qualify for the exclusion. Section 74(b) does not exclude prizes or awards from an employer to an employee in recognition of some achievement in connection with his employment.
(c) Scholarships and fellowship grants. See section 117 and the regulations thereunder for provisions relating to scholarships and fellowship grants.
Notes of Decisions
Cited in
16
cases, 1962–2001 · leading case:
Haeder v. Comm'r, 2001 T.C. Memo. 7 (Tax Ct. 2001).
Haeder v. Comm'r, 2001 T.C. Memo. 7 (Tax Ct. 2001).
· cites it 4× “When the prize awarded is not money but goods or services, the fair market value of those goods or services is the amount to be included in income.”
Auborn v. Comm'r, 93 T.C. 612 (Tax Ct. 1989).
· cites it 12× “Respondent contends that the award was given to petitioner in connection with his employment at Bell Labs, and is thus includable in gross income under section 1.”
Spiegelman v. Comm'r, 102 T.C. 394 (Tax Ct. 1994).
· cites it 2× “74-1(a)(1), Income Tax Regs. The regulations indicate that "The exclusion from gross income of an amount which is a scholarship or fellowship grant is controlled solely by section 117 "; thus, scholars and fellows could not avail themselves of the exclusions under sec.”
Denniston v. Comm'r, 41 T.C. 667 (Tax Ct. 1964).
· cites it 2× “74-1 of the Income Tax Regulations , which provides in part as follows: Prizes and awards -- (a) Inclusion in gross income .”
Cass v. Comm'r, 86 T.C. 1275 (Tax Ct. 1986).
· cites it 2× “74-1(b), Income Tax Regs ; H. Rept. 1337, to accompany H.”
Crowell v. Comm'r, 57 T.C.M. 596 (Tax Ct. 1989).
· cites it 6× “) The regulations under section 74 provide that gross income includes awards by an employer to an employee in recognition of some achievement in connection with employment.”
Lynch v. Comm'r, 45 T.C.M. 1125 (Tax Ct. 1983).
· cites it 2× “74), and if such prize or award is not made in cash, the amount to be included in income is the fair market value of the award.”
McCoy v. Comm'r, 38 T.C. 841 (Tax Ct. 1962).
· cites it 2× “74-1(a)(2) of the Income Tax Regulations , promulgated pursuant to that section, provides that if the award is not made in money but is made in goods or services then the fair market value of such goods or services is the amount to be included in income.”
Burg v. Comm'r, 58 T.C.M. 728 (Tax Ct. 1989).
· cites it 12× “Respondent contends that the awards were given to petitioner in connection *629 with his employment at Bell Labs, and are thus includable in gross income under section 1.”
Zorc v. Comm'r, 60 T.C.M. 1399 (Tax Ct. 1990).
· cites it 2× “Except for certain exceptions not herein applicable, gross income includes amounts received as prizes and awards. Sec. 74(a) ; Sec.”
Macri Corp. v. Comm'r, 35 T.C.M. 1190 (Tax Ct. 1976).
· cites it 2× “The automobile was clearly a prize within the meaning of section 74(a). When a prize is not made in money but is made in goods, the fair market value of the goods is the amount to be included in income.”
Wade v. Comm'r, 55 T.C.M. 413 (Tax Ct. 1988).
· cites it 6× “In his notices of deficiency, respondent treated as taxable income to petitioners the value of the trips as computed by the television stations.”
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