[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: 26CFR1.61-11]

[Page 45-46]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.61-11  Pensions.

    (a) In general. Pensions and retirement allowances paid either by 
the Government or by private persons constitute gross income unless 
excluded by law. Usually, where the taxpayer did not contribute to the 
cost of a pension and was not taxable on his employer's contributions, 
the full amount of the pension is to be included in his gross income. 
But see sections 72, 402, and 403, and the regulations thereunder. When 
amounts are received from other types of pensions, a portion of the 
payment may be excluded from gross income. Under some circumstances, 
amounts distributed from a pension plan in excess of the employee's 
contributions may constitute long-term capital gain, rather than 
ordinary income.
    (b) Cross references. For the inclusion of pensions in income for 
the purpose of the retirement income credit, see section 37 and the 
regulations thereunder. Detailed rules concerning the extent to which 
pensions and retirement allowances are to be included in

[[Page 46]]

or excluded from gross income are contained in other sections of the 
Code and the regulations thereunder. Amounts received as pensions or 
annuities under the Social Security Act (42 U.S.C. ch. 7) or the 
Railroad Retirement Act (45 U.S.C. ch. 9) are excluded from gross 
income. For other partial and total exclusions from gross income, see 
the following:
    (1) Annuities in general, section 72 and the regulations thereunder;
    (2) Employees' annuities, sections 402 and 403 and the regulations 
thereunder;
    (3) References to other acts of Congress exempting veterans' 
pensions and railroad retirement annuities and pensions, section 122.

[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6856, 30 FR 
13316, Oct. 20, 1965]