59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 114–762 

UNITED STATES APPRECIATION FOR OLYMPIANS AND 

PARALYMPIANS ACT OF 2016 

SEPTEMBER 20, 2016.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. BRADY of Texas, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 5946] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 5946) to amend the Internal Revenue Code of 1986 to exclude from gross income any prizes or awards won in competition 

in the Olympic Games or the Paralympic Games, having considered 

the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

I. SUMMARY AND BACKGROUND ................................................................. 2 

A. Purpose and Summary ......................................................................... 2 

B. Background and Need for Legislation ................................................ 2 

C. Legislative History ............................................................................... 2 

II. EXPLANATION OF THE BILL ...................................................................... 3 

A. Exclusion from Gross Income for the Value of Medals Awarded 

at Olympic or Paralympic Games for Certain Prizes or Awards 

Paid by the U.S. Olympic Committee to Competitors (sec. 2 of 

the bill and sec. 74 of the Code) ........................................................ 3 

III. VOTES OF THE COMMITTEE ...................................................................... 5 

IV. BUDGET EFFECTS OF THE BILL ............................................................... 5 

A. Committee Estimate of Budgetary Effects ......................................... 5 

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority ...................................................................... 5 

C. Cost Estimate Prepared by the Congressional Budget Office ........... 6 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE 

HOUSE .......................................................................................................... 7 

A. Committee Oversight Findings and Recommendations .................... 7 

B. Statement of General Performance Goals and Objectives ................ 7 

C. Information Relating to Unfunded Mandates .................................... 7 

D. Applicability of House Rule XXI 5(b) .................................................. 7 


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E. Tax Complexity Analysis ..................................................................... 8 

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 

Benefits ............................................................................................... 8 

G. Duplication of Federal Programs ........................................................ 8 

H. Disclosure of Directed Rule Makings ................................................. 8 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 9 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘United States Appreciation for Olympians and 

Paralympians Act of 2016’’. 

SEC. 2. OLYMPIC AND PARALYMPIC MEDALS AND USOC PRIZE MONEY EXCLUDED FROM 

GROSS INCOME. 

(a) IN GENERAL.—Section 74 of the Internal Revenue Code of 1986 is amended by 

adding at the end the following new subsection: 

‘‘(d) EXCEPTION FOR OLYMPIC AND PARALYMPIC MEDALS AND PRIZES.— ‘‘(1) IN GENERAL.—Gross income shall not include the value of any medal 

awarded in, or any prize money received from the United States Olympic Committee on account of, competition in the Olympic Games or Paralympic Games. 

‘‘(2) LIMITATION BASED ON ADJUSTED GROSS INCOME.— ‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to any taxpayer for any 

taxable year if the adjusted gross income (determined without regard to 

this subsection) of such taxpayer for such taxable year exceeds $1,000,000 

(half of such amount in the case of a married individual filing a separate 

return). 

‘‘(B) COORDINATION WITH OTHER LIMITATIONS.—For purposes of sections 

86, 135, 137, 199, 219, 221, 222, and 469, adjusted gross income shall be 

determined after the application of paragraph (1) and before the application 

of subparagraph (A).’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall apply to prizes 

and awards received after December 31, 2015. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill, H.R. 5946, as reported by the Committee on Ways and 

Means, excludes the value of Olympic medals and prize money 

awarded by the U.S. Olympic Committee for competition in the 

Olympic or Paralympic Games from gross income. 

B. BACKGROUND AND NEED FOR LEGISLATION

While the Committee continues to work on comprehensive tax reform as a critical means of promoting economic growth and job creation, the Committee believes it is important to provide immediate 

relief from unfair taxes. The Committee believes that this exclusion 

of the value of Olympic and Paralympic medals and prizes from 

gross income will eliminate an unfair tax burden. 

C. LEGISLATIVE HISTORY

Background 

H.R. 5946 was introduced on September 7, 2016, and was referred to the Committee on Ways and Means. 

Committee action 

The Committee on Ways and Means marked up H.R. 5946, the 

‘‘United States Appreciation for Olympians and Paralympians Act 

of 2016,’’ on September 14, 2016, and ordered the bill, as amended, 

favorably reported (with a quorum being present). 


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1Sec. 61. 

2Sec. 74. 

3Treas. Reg. sec. 1.74–1(a)(2). 

4Treas. Reg. sec. 1.74–1(b). 

5Wills v. Commissioner, 48 T.C. 308 (1967), aff’d 411 F.2d 537 (9th Cir. 1969), in which the 

Court held that the value of the S. Rae Hickock Belt, awarded to baseball player Maury Wills 

as outstanding professional athlete of the year, was includible in income as a prize or award 

given for athletic achievement, and ineligible for the exception available for awards based on 

educational, civil, literary, scientific or artistic achievement. 6See generally, 36 U.S.C. secs. 220501 through 220512. The organization does not generally 

receive Federal funding, although specific programs for veterans of U.S. military service receive 

Federal assistance. Instead, the organization raises funds from donors as well as revenue from 

licensing of use of the US Olympic team name and insignia, as well as granting of broadcast 

rights in the United States. The purposes of the organization are enumerated in section 220503, 

and include promotion of physical fitness and sports participation generally, financial assistance 

to athletes or sport federations, development of training facilities and technical support to amateur athletic programs that support sports that are included in the Olympics, Paralympics and 

Pan-Am games. The USOC provides a quadrennial report to Congress on its operations. The 

most recent report, covering the period 2009 through 2012, was issued June 1, 2013, and is 

available at http://www.teamusa.org/Footer/Legal/Governance-Documents. 

Committee hearings 

No hearings have been held on H.R. 5946. 

II. EXPLANATION OF THE BILL 

A. EXCLUSION FROM GROSS INCOME FOR THE VALUE OF MEDALS

AWARDED AT OLYMPIC OR PARALYMPIC GAMES AND FOR CERTAIN

PRIZES OR AWARDS PAID BY THE U.S. OLYMPIC COMMITTEE TO

COMPETITORS (SEC. 2 OF THE BILL AND SEC. 74 OF THE CODE) 

PRESENT LAW

U.S. citizens and residents are subject to U.S. taxation on their 

worldwide income, from whatever source derived,1 absent a specific 

statutory exception. Prizes and awards are specifically included in 

income.2 If prizes or awards are provided in the form of goods or 

services, the fair market value of the goods or services provided is 

the amount to be included in income.3

There are three exceptions to the general rule of inclusion of 

prizes and awards: First, qualified scholarships described in section 

117; second, certain employee achievement awards; and third, 

awards for religious, charitable, scientific, educational, artistic, literary or civic achievement, provided that the recipient takes no action to be considered for the award, requests that the monetary 

award be transferred to a designated governmental unit or tax-exempt organization to which deductible charitable contributions are 

permitted, and is not required to render future substantial services 

as a condition of the award.4 Examples of awards that may qualify 

for the third exception if the monies associated with the award are 

timely donated include the Nobel and Pulitzer prizes. In contrast, 

prizes or awards in recognition of athletic achievement are generally ineligible for the exception.5

The United States Olympic Committee (‘‘USOC’’) is a corporation 

created by statute to serve as a coordinating body for United States 

participation in international competitive amateur sports, in order 

to provide ‘‘the most competent amateur representation possible in 

each event’’ in the Olympic, Paralympic and Pan-American 

Games.6 As part of its activities, the USOC awards each U.S. 

Olympic athlete prize money for each medal won, in the amounts 

of $25,000 for each gold medal, $15,000 for each silver medal, and 

$10,000 for each bronze medal. U.S. Paralympic athletes receive 


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7 Based solely on recent metal prices, the values of the medals awarded at the Rio games are 

bear the following approximate values of $565 for the gold, $305 for the silver and $5 for the 

bronze. See, Reid Carlson, ‘‘The Monetary Worth of the 2016 Rio Olympic Medals,’’ SwimSwam, 

available at https://swimswam.com/monetary-worth-rio-medals. 8The international governing bodies of the Olympic and Paralympic games permit certain exceptions for athletes from countries that do not have national organizations eligible to enter 

teams in the games. See, Rule 41 and related by-laws, The International Olympic Committee 

Charter, available at http://www.teamusa.org/About-the-USOC/Inside-the-USOC/OlympicMovement/Structure, and Chapter 3.1, The International Paralympic Committee Handbook, 

available at https://www.paralympic.org/sites/default/files/document/ 

160523070735592_Rio%2BQG_23_May_2016.pdf. Peter Spiro, ‘‘Citizenship and the Olympics,’’ 5 

Insights, (Spring 2016), published by American Bar Association, http://www.americanbar.org/ 

publications/insights_on_law_/16/spring-2016/citizenship-and-the-olympics. 9 A credit may be allowed for any foreign income tax imposed on awards for games held outside the United States. Many Olympic host countries (including the United States) exempt nonresident athletes from income tax on awards. As in the United States, these exemptions may 

be part of a host country’s tax law, and some contracts between the International Olympic Committee and Olympic host cities confirm the exemption. Under a typical contract, the host city 

and the host city’s Organizing Committee promise either that the host country will not tax performance awards or, if the host country does tax performance awards, that the host city or Organizing Committee will reimburse athletes for the amount of the tax. For example, Rio de Janeiro 

entered into a Host City Contract containing this clause. A draft contract corresponding to the 

2022 Olympics in China also contains this clause. 

$5,000, $3,500 and $2,500 respectively for each gold, silver and 

bronze medal awarded.7 All U.S. Olympians and U.S. 

Paralympians are required to be U.S. citizens.8 As a result, these 

performance awards from the USOC are includible as prizes and 

awards, regardless of whether the athletes derive the income for 

activities performed inside, or outside, the United States.9 The 

prize money awarded to U.S. athletes by the USOC, as well as the 

fair market value of gold, silver, and bronze medals, is includible 

in gross income. 

REASONS FOR CHANGE

The Committee believes that the athletes who represent the 

United States on the global stage at the Olympic and Paralympic 

games perform a valuable patriotic service. The athletes do so only 

after years of personal sacrifice to attain the level of excellence required to compete at the Olympic and Paralympic games. The Committee also believes that during their years of training and preparation, many athletes representing the United States in the games 

earn little or no money from participation in their chosen sports 

and often defer pursuit of careers outside sports. Monetary prizes 

awarded by the USOC to medalists on the U.S. teams are intended 

to reward such sacrifices and to provide incentives to other athletes 

who seek to represent the United States on a global stage. The 

Committee believes that providing this exclusion for the receipt of 

an Olympic or Paralympic medal and other prizes awarded by the 

USOC generally should be without tax consequences. 

EXPLANATION OF PROVISION

The provision creates a new exception to the general rule requiring inclusion of prizes and awards in gross income. Under the 

terms of the exception, neither the value of the medals awarded to 

U.S. Olympic or Paralympic athletes nor the cash prizes given by 

the USOC are includible in income for Federal tax purposes. This 

exclusion does not apply to taxpayers whose adjusted gross income 

(determined without regard to the value of such medals or rewards) 

is in excess of $1,000,000 (or half such amount in the case of a 

married taxpayer filing a separate return). 


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EFFECTIVE DATE

The provision applies to prizes and awards received after December 31, 2015. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means in its consideration of H.R. 5946, the ‘‘United States Appreciation for Olympians and Paralympians Act of 2016,’’ on September 14, 2016. 

An amendment by Mr. Pascrell to the amendment in the nature 

of a substitute, which would subject the exclusion for the value of 

Olympic or Paralympic prizes and awards to an income limitation, 

was agreed to by unanimous consent (with a quorum being 

present). 

The bill, H.R. 5946, as amended, was ordered favorably reported 

to the House of Representatives by a voice vote (with a quorum 

being present). 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 5946, as reported. 

The bill, as reported, is estimated to have the following effect on 

Federal budget receipts for fiscal years 2017–2026: 

FISCAL YEARS 

[Millions of dollars] 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017–21 2017–26 

¥1 [1] [1] [1] ¥1 [1] [1] [1] ¥1 [1] ¥2 ¥3 

NOTE: Details do not add to totals due to rounding. 

[1] Loss of less than $500,000. 

Pursuant to clause 8 of rule XIII of the Rules of the House of 

Representatives, the following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: The gross budgetary effect 

(before incorporating macroeconomic effects) in any fiscal year is 

less than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; therefore, the bill is 

not ‘‘major legislation’’ for purposes of requiring that the estimate 

include the budgetary effects of changes in economic output, employment, capital stock and other macroeconomic variables. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee further states that the bill enlarges a tax expenditure. 


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C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, September 16, 2016. 

Hon. KEVIN BRADY, Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5946, the United States 

Appreciation for Olympians and Paralympians Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Jacob Fabian. 

Sincerely, 

KEITH HALL. 

Enclosure. 

H.R 5946—United States Appreciation for Olympians and 

Paralympians Act 

H.R. 5946 would amend the Internal Revenue Code to exclude 

from gross income, for income tax purposes, certain prizes or 

awards won in competition in the Olympic Games or the 

Paralympic Games. Starting on January 1, 2016, the exclusion 

would apply to monetary prizes received from the United States 

Olympic Committee and the intrinsic value of the medals awarded. 

The exclusion would not apply to individuals with adjusted gross 

income above $1 million, or half of that amount for married individuals filing a separate return. 

The staff of the Joint Committee on Taxation (JCT) estimates 

that enacting the bill would reduce revenues, thus increasing federal budget deficits, by about $3 million over the 2017–2026 period. 

Specifically, JCT estimates that the bill would have no effect on 

revenues in 2016 and would reduce them by $1 million in 2017, 

2021, and 2025, and by less than $500,000 in the other years of the 

2017–2026 period. 

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct 

spending and revenues. Enacting H.R. 5946 would reduce revenues; therefore, pay-as-you-go procedures apply. The estimated increases in the deficit are shown in the following table. Enacting the 

bill would not affect direct spending. 

JCT and CBO estimate that enacting the bill would not increase 

net direct spending in any of the four 10-year periods beginning in 

2027, and would increase on-budget deficits over those periods by 

very small amounts. 

JCT has determined that H.R. 5946 contains no intergovernmental or private-sector mandates as defined in the Unfunded 

Mandates Reform Act. 


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The CBO staff contact for this estimate is Jacob Fabian. The estimate was approved by John McClelland, Assistant Director for Tax 

Analysis. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5946, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON WAYS AND MEANS ON SEPTEMBER 14, 2016 

By fiscal year, in millions of dollars— 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016– 

2021 

2016– 

2026 

NET INCREASE IN THE DEFICIT 

Statutory Pay-AsYou-Go Effects ... 0 1 0 0 0 1 0 0 0 1 0 2 3 

Source: Staff of the Joint Committee on Taxation. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee advises that it was as a result of the Committee’s review of 

the provisions of H.R. 5946 that the Committee concluded that it 

is appropriate to report the bill, as amended, favorably to the 

House of Representatives with the recommendation that the bill do 

pass. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has further determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments. 

D. APPLICABILITY OF HOUSE RULE XXI 5(b) 

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that ‘‘A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not 

be considered as passed or agreed to unless so determined by a 

vote of not less than three-fifths of the Members voting, a quorum 

being present.’’ The Committee has carefully reviewed the bill, and 

states that the bill does not involve any Federal income tax rate 

increases within the meaning of the rule. 


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E. TAX COMPLEXITY ANALYSIS

The following statement is made pursuant to clause 3(h)(1) of 

rule XIII of the Rules of the House of Representatives. Section 

4022(b) of the Internal Revenue Service Restructuring and Reform 

Act of 1998 (‘‘IRS Reform Act’’) requires the staff of the Joint Committee on Taxation (in consultation with the Internal Revenue 

Service and the Treasury Department) to provide a tax complexity 

analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House Committee 

on Ways and Means, or any committee of conference if the legislation includes a provision that directly or indirectly amends the Internal Revenue Code of 1986 and has widespread applicability to 

individuals or small businesses. 

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House 

of Representatives, the staff of the Joint Committee on Taxation 

has determined that a complexity analysis is not required under 

section 4022(b) of the IRS Reform Act because the bill contains no 

provisions that amend the Internal Revenue Code of 1986 and that 

have ‘‘widespread applicability’’ to individuals or small businesses, 

within the meaning of the rule. 

F. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND

LIMITED TARIFF BENEFITS

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

G. DUPLICATION OF FEDERAL PROGRAMS

In compliance with Sec. 3(g)(2) of H. Res. 5 (114th Congress), the 

Committee states that no provision of the bill establishes or reauthorizes: (1) a program of the Federal Government known to be duplicative of another Federal program, (2) a program included in any 

report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or (3) a program related 

to a program identified in the most recent Catalog of Federal Domestic Assistance, published pursuant to the Federal Program Information Act (Public Law 95–220, as amended by Public Law 98– 

169). 

H. DISCLOSURE OF DIRECTED RULE MAKINGS

In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), the 

following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 


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VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

A. TEXT OF EXISTING LAW AMENDED OR REPEALED BY THE BILL, AS

REPORTED

In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of 

the House of Representatives, the text of each section proposed to 

be amended or repealed by the bill, as reported, is shown below: 

TEXT OF EXISTING LAW AMENDED OR REPEALED BY THE 

BILL, AS REPORTED 

In compliance with clause 3(e)(1)(A) of rule XIII of the Rules of 

the House of Representatives, the text of each section proposed to 

be amended or repealed by the bill, as reported, is shown below: 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

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. 74. PRIZES AND AWARDS. 

(a) GENERAL RULE.—Except as otherwise provided in this section 

or in section 117(relating to qualified scholarships), gross income 

includes amounts received as prizes and awards. 

(b) EXCEPTION FOR CERTAIN PRIZES AND AWARDS TRANSFERRED

TO CHARITIES.—Gross income does not include amounts received as 

prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement, 

but only if— 

(1) the recipient was selected without any action on his part 

to enter the contest or proceeding; 

(2) the recipient is not required to render substantial future 

services as a condition to receiving the prize or award; and 

(3) the prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or 

(2) of section 170(c) pursuant to a designation made by the recipient. 

(c) EXCEPTION FOR CERTAIN EMPLOYEE ACHIEVEMENT AWARDS.— 


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(1) IN GENERAL.—Gross income shall not include the value of 

an employee achievement award (as defined in section 274(j)) 

received by the taxpayer if the cost to the employer of the employee achievement award does not exceed the amount allowable as a deduction to the employer for the cost of the employee achievement award. 

(2) EXCESS DEDUCTION AWARD.— 

If the cost to the employer of the employee achievement award 

received by the taxpayer exceeds the amount allowable as a deduction to the employer, then gross income includes the greater of— 

(A) an amount equal to the portion of the cost to the employer of the award that is not allowable as a deduction to 

the employer (but not in excess of the value of the award), 

or 

(B) the amount by which the value of the award exceeds 

the amount allowable as a deduction to the employer. 

The remaining portion of the value of such award shall not be 

included in the gross income of the recipient. 

(3) TREATMENT OF TAX-EXEMPT EMPLOYERS.—In the case of 

an employer exempt from taxation under this subtitle, any reference in this subsection to the amount allowable as a deduction to the employer shall be treated as a reference to the 

amount which would be allowable as a deduction to the employer if the employer were not exempt from taxation under 

this subtitle. 

(4) CROSS REFERENCE.—For provisions excluding certain de 

minimis fringes from gross income, see section 132(e). 

* * * * * * * 

B. CHANGES IN EXISTING LAW PROPOSED BY THE BILL, AS REPORTED

In compliance with clause 3(e)(1)(B) of rule XIII of the Rules of 

the House of Representatives, changes in existing law proposed by 

the bill, as reported, are shown as follows (existing law proposed 

to be omitted is enclosed in black brackets, new matter is printed 

in italics, existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e)(1)(B) of rule XIII of the Rules of 

the House of Representatives, changes in existing law made by the 

bill, as reported, are shown as follows (new matter is printed in 

italics and existing law in which no change is proposed is shown 

in roman): 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle A—Income Taxes 

* * * * * * * 


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CHAPTER 1—NORMAL TAXES AND SURTAXES 

* * * * * * * 

Subchapter B—Computation of Taxable Income 

* * * * * * * 

PART II—ITEMS SPECIFICALLY INCLUDED IN GROSS 

INCOME 

* * * * * * * 

SEC. 74. PRIZES AND AWARDS. 

(a) GENERAL RULE.—Except as otherwise provided in this section 

or in section 117(relating to qualified scholarships), gross income 

includes amounts received as prizes and awards. 

(b) EXCEPTION FOR CERTAIN PRIZES AND AWARDS TRANSFERRED

TO CHARITIES.—Gross income does not include amounts received as 

prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement, 

but only if— 

(1) the recipient was selected without any action on his part 

to enter the contest or proceeding; 

(2) the recipient is not required to render substantial future 

services as a condition to receiving the prize or award; and 

(3) the prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or 

(2) of section 170(c) pursuant to a designation made by the recipient. 

(c) EXCEPTION FOR CERTAIN EMPLOYEE ACHIEVEMENT AWARDS.— 

(1) IN GENERAL.—Gross income shall not include the value of 

an employee achievement award (as defined in section 274(j)) 

received by the taxpayer if the cost to the employer of the employee achievement award does not exceed the amount allowable as a deduction to the employer for the cost of the employee achievement award. 

(2) EXCESS DEDUCTION AWARD.—If the cost to the employer 

of the employee achievement award received by the taxpayer 

exceeds the amount allowable as a deduction to the employer, 

then gross income includes the greater of— 

(A) an amount equal to the portion of the cost to the employer of the award that is not allowable as a deduction to 

the employer (but not in excess of the value of the award), 

or 

(B) the amount by which the value of the award exceeds 

the amount allowable as a deduction to the employer. 

The remaining portion of the value of such award shall not be 

included in the gross income of the recipient. 

(3) TREATMENT OF TAX-EXEMPT EMPLOYERS.—In the case of 

an employer exempt from taxation under this subtitle, any reference in this subsection to the amount allowable as a deduction to the employer shall be treated as a reference to the 

amount which would be allowable as a deduction to the employer if the employer were not exempt from taxation under 

this subtitle. 


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(4) CROSS REFERENCE.—For provisions excluding certain de 

minimis fringes from gross income, see section 132(e). 

(d) EXCEPTION FOR OLYMPIC AND PARALYMPIC MEDALS AND

PRIZES.— 

(1) IN GENERAL.—Gross income shall not include the value of 

any medal awarded in, or any prize money received from the 

United States Olympic Committee on account of, competition in 

the Olympic Games or Paralympic Games. 

(2) LIMITATION BASED ON ADJUSTED GROSS INCOME.— (A) IN GENERAL.—Paragraph (1) shall not apply to any 

taxpayer for any taxable year if the adjusted gross income 

(determined without regard to this subsection) of such taxpayer for such taxable year exceeds $1,000,000 (half of such 

amount in the case of a married individual filing a separate return). 

(B) COORDINATION WITH OTHER LIMITATIONS.—For purposes of sections 86, 135, 137, 199, 219, 221, 222, and 469, 

adjusted gross income shall be determined after the application of paragraph (1) and before the application of subparagraph (A). 

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emcdonald on DSK9F6TC42PROD with HEARING