[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.102-1]

[Page 368-369]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.102-1  Gifts and inheritances.

    (a) General rule. Property received as a gift, or received under a 
will or under statutes of descent and distribution, is not includible in 
gross income, although the income from such property is includible in 
gross income. An amount of principal paid under a marriage settlement is 
a gift. However, see section 71 and the regulations thereunder for rules 
relating to alimony or allowances paid upon divorce or separation. 
Section 102 does not apply to prizes and awards (see section 74 and 
Sec. 1.74-1) nor to scholarships and fellowship grants (see section 117 
and the regulations thereunder).
    (b) Income from gifts and inheritances. The income from any property 
received as a gift, or under a will or statute of descent and 
distribution shall not be excluded from gross income under paragraph (a) 
of this section.
    (c) Gifts and inheritances of income. If the gift, bequest, devise, 
or inheritance is of income from property, it shall not be excluded from 
gross income under paragraph (a) of this section. Section

[[Page 369]]

102 provides a special rule for the treatment of certain gifts, 
bequests, devises, or inheritances which by their terms are to be paid, 
credited, or distributed at intervals. Except as provided in section 
663(a)(1) and paragraph (d) of this section, to the extent any such 
gift, bequest, devise, or inheritance is paid, credited, or to be 
distributed out of income from property, it shall be considered a gift, 
bequest, devise, or inheritance of income from property. Section 102 
provides the same treatment for amounts of income from property which is 
paid, credited, or to be distributed under a gift or bequest whether the 
gift or bequest is in terms of a right to payments at intervals 
(regardless of income) or is in terms of a right to income. To the 
extent the amounts in either case are paid, credited, or to be 
distributed at intervals out of income, they are not to be excluded 
under section 102 from the taxpayer's gross income.
    (d) Effect of Subchapter J. Any amount required to be included in 
the gross income of a beneficiary under sections 652, 662, or 668 shall 
be treated for purposes of this section as a gift, bequest, devise, or 
inheritance of income from property. On the other hand, any amount 
excluded from the gross income of a beneficiary under section 663(a)(1) 
shall be treated for purposes of this section as property acquired by 
gift, bequest, devise, or inheritance.
    (e) Income taxed to grantor or assignor. Section 102 is not intended 
to tax a donee upon the same income which is taxed to the grantor of a 
trust or assignor of income under section 61 or sections 671 through 
677, inclusive.