
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC122]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
         PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
 
Sec. 122. Certain reduced uniformed services retirement pay


(a) General rule

    In the case of a member or former member of the uniformed services 
of the United States, gross income does not include the amount of any 
reduction in his retired or retainer pay pursuant to the provisions of 
chapter 73 of title 10, United States Code.

(b) Special rule

                (1) Amount excluded from gross income

        In the case of any individual referred to in subsection (a), all 
    amounts received after December 31, 1965, as retired or retainer pay 
    shall be excluded from gross income until there has been so excluded 
    an amount equal to the consideration for the contract. The preceding 
    sentence shall apply only to the extent that the amounts received 
    would, but for such sentence, be includible in gross income.

                 (2) Consideration for the contract

        For purposes of paragraph (1) and section 72(n), the term 
    ``consideration for the contract'' means, in respect of any 
    individual, the sum of--
            (A) the total amount of the reductions before January 1, 
        1966, in his retired or retainer pay by reason of an election 
        under chapter 73 of title 10 of the United States Code, and
            (B) any amounts deposited at any time by him pursuant to 
        section 1438 or 1452(d) of such title 10.

(Added Pub. L. 89-365, Sec. 1(a)(1), Mar. 8, 1966, 80 Stat. 32; amended 
Pub. L. 93-406, title II, Secs. 2005(c)(10), 2007(a), (b)(1), Sept. 2, 
1974, 88 Stat. 992, 994.)


                            Prior Provisions

    A prior section 122 was renumbered section 139 of this title.


                               Amendments

    1974--Subsec. (a). Pub. L. 93-406, Sec. 2007(a), substituted 
``United States, gross income does not include the amount of any 
reduction in his retired or retainer pay pursuant to the provisions of 
chapter 73 of title 10, United States Code'' for ``United States who has 
made an election under chapter 73 of title 10 of the United States Code 
to receive a reduced amount of retired or retainer pay, gross income 
does not include the amount of any reduction after December 31, 1965, in 
his retired or retainer pay by reason of such election''.
    Subsec. (b)(2). Pub. L. 93-406, Sec. 2005(c)(10), substituted 
``72(n)'' for ``72(o)''.
    Subsec. (b)(2)(B). Pub. L. 93-406, Sec. 2007(b)(1), inserted 
reference to section 1452(d) of title 10.


                    Effective Date of 1974 Amendment

    Amendment by section 2005(c)(10) of Pub. L. 93-406 applicable only 
with respect to distributions or payments made after Dec. 31, 1973, in 
taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. 
L. 93-406, set out as a note under section 402 of this title.
    Section 2007(c) of Pub. L. 93-406 provided that: ``The amendments 
made by this section [amending this section and sections 72, 101, and 
2039 of this title] apply to taxable years ending on or after September 
21, 1972. The amendments made by paragraphs (3) and (4) of subsection 
(b) [amending sections 101 and 2039 of this title] apply with respect to 
individuals dying on or after such date''.


                             Effective Date

    Section 1(d) of Pub. L. 89-365 provided that: ``The amendments made 
by subsections (a) and (b) [enacting this section and amending section 
72 of this title] shall apply with respect to taxable years ending after 
December 31, 1965. The amendment made by subsection (c) [amending 
section 101 of this title] shall apply with respect to individuals 
making an election under chapter 73 of title 10 of the United States 
Code who die after December 31, 1965.''

                  Section Referred to in Other Sections

    This section is referred to in section 72 of this title.
