
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: 26USC85]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
          PART II--ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
 
Sec. 85. Unemployment compensation


(a) General rule

    In the case of an individual, gross income includes unemployment 
compensation.

(b) Unemployment compensation defined

    For purposes of this section, the term ``unemployment compensation'' 
means any amount received under a law of the United States or of a State 
which is in the nature of unemployment compensation.

(Added Pub. L. 95-600, title I, Sec. 112(a), Nov. 6, 1978, 92 Stat. 
2777; amended Pub. L. 97-34, title I, Sec. 103(c)(1), Aug. 13, 1981, 95 
Stat. 188; Pub. L. 97-248, title VI, Sec. 611(a), Sept. 3, 1982, 96 
Stat. 706; Pub. L. 98-21, title I, Secs. 121(f)(1), 122(c)(2), Apr. 20, 
1983, 97 Stat. 84, 87; Pub. L. 99-514, title I, Sec. 121, Oct. 22, 1986, 
100 Stat. 2109.)


                               Amendments

    1986--Subsec. (a). Pub. L. 99-514 substituted ``General rule'' for 
``In general'' in heading and amended text generally. Prior to 
amendment, text read as follows: ``If the sum for the taxable year of 
the adjusted gross income of the taxpayer (determined without regard to 
this section, section 86 and section 221) and the unemployment 
compensation exceeds the base amount, gross income for the taxable year 
includes unemployment compensation in an amount equal to the lesser of--
        ``(1) one-half of the amount of the excess of such sum over the 
    base amount, or
        ``(2) the amount of the unemployment compensation.''
    Subsecs. (b), (c). Pub. L. 99-514, in amending section generally, 
redesignated former subsec. (c) as (b) and struck out former subsec. 
(b), ``Base amount defined'', which read as follows: ``For purposes of 
this section, the term `base amount' means--
        ``(1) except as provided in paragraphs (2) and (3), $12,000,
        ``(2) $18,000, in the case of a joint return under section 6013, 
    or
        ``(3) zero, in the case of a taxpayer who--
            ``(A) is married at the close of the taxable year (within 
        the meaning of section 143) but does not file a joint return for 
        such year, and
            ``(B) does not live apart from his spouse at all times 
        during the taxable year.''
    1983--Subsec. (a). Pub. L. 98-21, Sec. 122(c)(2), struck out ``, 
section 105(d),'' after ``section 86''.
    Pub. L. 98-21, Sec. 121(f)(1), inserted ``section 86,'' after ``this 
section,''.
    1982--Subsec. (b)(1). Pub. L. 97-248, Sec. 611(a)(1), substituted 
``$12,000'' for ``$20,000''.
    Subsec. (b)(2). Pub. L. 97-248, Sec. 611(a)(2), substituted 
``$18,000'' for ``$25,000''.
    1981--Subsec. (a). Pub. L. 97-34 substituted ``this section, section 
105(d), and section 221'' for ``this section and without regard to 
section 105(d)'' in parenthetical provision preceding par. (1).


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to amounts received after 
Dec. 31, 1986, in taxable years ending after such date, see section 
151(b) of Pub. L. 99-514, set out as a note under section 1 of this 
title.


                    Effective Date of 1983 Amendment

    Amendment by section 121(f)(1) of Pub. L. 98-21 applicable to 
benefits received after Dec. 31, 1983, in taxable years ending after 
such date, except for any portion of a lump-sum payment of social 
security benefits received after Dec. 31, 1983, if the generally 
applicable payment date for such portion was before Jan. 1, 1984, see 
section 121(g) of Pub. L. 98-21, set out as an Effective Date note under 
section 86 of this title.
    Amendment by section 122(c)(2) of Pub. L. 98-21 applicable to 
taxable years beginning after Dec. 31, 1983, except that if an 
individual's annuity starting date was deferred under section 105(d)(6) 
of this title as in effect on the day before Apr. 20, 1983, such 
deferral shall end on the first day of such individual's first taxable 
year beginning after Dec. 31, 1983, see section 122(d) of Pub. L. 98-21, 
set out as a note under section 22 of this title.


                    Effective Date of 1982 Amendment

    Section 611(b) of Pub. L. 97-248, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) Compensation paid after 1981.--The amendments made by this 
section [amending this section] shall apply to payments of unemployment 
compensation made after December 31, 1981, in taxable years ending after 
such date.
    ``(2) No addition to tax for underpayment of estimated tax 
attributable to application of amendments to compensation paid in 
1982.--No addition to tax shall be made under section 6654 of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to any 
underpayment to the extent such underpayment is attributable to 
unemployment compensation which is received during 1982 and which (but 
for the amendments made by subsection (a)) would not be includable in 
gross income.
    ``(3) Special rule for fiscal year taxpayers.--In the case of a 
taxable year (other than a calendar year) which includes January 1, 
1982--
        ``(A) the amendments made by this section shall be applied by 
    taking into account the entire amount of unemployment compensation 
    received during such taxable year, but
        ``(B) the increase in gross income for such taxable year as a 
    result of such amendments shall not exceed the amount of 
    unemployment compensation paid after December 31, 1981.
    ``(4) Unemployment compensation defined.--For purposes of this 
subsection, the term `unemployment compensation' has the meaning given 
to such term by section 85(c) of the Internal Revenue Code of 1986.''


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-34 applicable to taxable years beginning 
after Dec. 31, 1981, see section 103(d) of Pub. L. 97-34, set out as a 
note under section 62 of this title.


                             Effective Date

    Section 112(d) of Pub. L. 95-600, as amended by Pub. L. 98-369, div. 
A, title X, Sec. 1075(a), July 18, 1984, 98 Stat. 1053, provided that: 
``The amendments made by this section [enacting this section and section 
6050B of this title] shall apply to payments of unemployment 
compensation made after December 31, 1978, in taxable years ending after 
such date, except that such amendments shall not apply to payments made 
for weeks of unemployment ending before December 1, 1978.''


                    Waiver of Statute of Limitations

    Pub. L. 98-369, div. A, title X, Sec. 1075(b), July 18, 1984, 98 
Stat. 1053, provided that: ``If credit or refund of any overpayment of 
tax resulting from the amendment made by subsection (a) [amending 
section 112(d) of Pub. L. 95-600, set out as an Effective Date note 
above] is barred on the date of the enactment of this Act [July 18, 
1984] or at any time during the 1-year period beginning on the date of 
the enactment of this Act by the operation of any law or rule of law 
(including res judicata), refund or credit of such overpayment (to the 
extent attributable to the amendment made by subsection (a)) may, 
nevertheless, be made or allowed if claim therefor is filed before the 
close of such 1-year period.''

                  Section Referred to in Other Sections

    This section is referred to in sections 3402, 6050B of this title; 
title 42 section 5177.
