CODIFICATION OF INTERNAL REVENUE LAWS (b) ExcLUsIoNs FROM GROSS INCOME. -The following items shall not be included in gross income and shall be exempt from taxation under this chapter: (1) LIFE INSURANCE.- Amounts received under a life insurance contract paid by reason of the death of the insured, whether in a single sum or otherwise (but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income); (2) ANNUITIES, ETc. -Amounts received (other than amounts paid by reason of the death of the insured and interest payments on such amounts and other than amounts received as annuities) under a life insurance or endowment contract, but if such amounts (when added to amounts received before the taxable year under such contract) exceed the aggregate premiums or consideration paid (whether or not paid during the taxable year) then the excess shall be included in gross income. Amounts received as an annuity under an annuity or endowment contract shall be included in gross income; except that there shall be excluded from gross income the excess of the amount received in the taxable year over an amount equal to 3 per centum of the aggregate premiums or consideration paid for such annuity (whether or not paid during such year), until the aggregate amount excluded from gross in- come under this chapter or prior income tax laws in respect of such annuity equals the aggregate premiums or consideration paid for such annuity. In the case of a transfer for a valuable considera- tion, by assignment or otherwise, of a life insurance, endowment, or annuity contract, or any interest therein, only the actual value of such consideration and the amount of the premiums and other sums subsequently paid by the transferee shall be exempt from taxation under paragraph (1) or this paragraph; (3) GIFrS, BEQUESTS, AND DEVISES.- The value of property acquired by gift, bequest, devise, or inheritance (but the income from such property shall be included in gross income); (4) TAX-FRE1 INTERESTr. - Interest upon (A) the obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia; or (B) obligations of a corporation organ- ized under Act of Cotngress, if such corporation is an instrunmen- tality of the United States; or (C) the obligations of the United States or its possessions. Every person owning any of the obli- gations enumerated in clause (A), (B), or (C) shall, in the return required by this chapter, submit a statement showing the number and amount of such obligations owned by him and the income received therefrom, in such form and with such informa- tion as the Commissioner may require. In the case of obligations of the United States issued after September 1, 1917 (other than postal savings certificates of deposit) and in the case of obliga- tions of a corporation organized under Act of Congress, the interest shall be exempt only if and to the extent provided in the respective Acts authorizing the issue thereof as amended and supplemented, and shall be excluded from gross income only if and to the extent it is wholly exempt from the taxes imposed by this chapter; (5) COMPENSATION FOR INJURIES OR SICKNESS. -Amounts re- ceived, through accident or health insurance or under workmen's compensation acts, as compensation for personal injuries or sick- ness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness; (6) MINISTERS. -T he rental value of a dwelling house and ap- purtenances thereof furnished to a minister of the gospel as part of his compensation; (7) INCOME EXEMPT UNDER TREATY. -Income of any kind, to the extent required by any treaty obligation of the United States; 10
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