Uniformed Services Retired Pay Exclusion

§ 122. Certain reduced uniformed services retirement pay(a) General ruleIn 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 incomeIn the case of any individual referred to in subsection (a), all amounts received 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 contractFor 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, § 1(a)(1), Mar. 8, 1966, 80 Stat. 32; amended Pub. L. 93–406, title II, §§ 2005(c)(10), 2007(a), (b)(1), Sept. 2, 1974, 88 Stat. 992, 994; Pub. L. 113–295, div. A, title II, § 221(a)(21), Dec. 19, 2014, 128 Stat. 4040.) Editorial Notes Prior ProvisionsA prior section 122 was renumbered section 140 of this title. Amendments2014—Subsec. (b)(1). Pub. L. 113–295 struck out “after December 31, 1965,” after “all amounts received”. 1974—Subsec. (a). Pub. L. 93–406, § 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, § 2005(c)(10), substituted “72(n)” for “72(o)”. Subsec. (b)(2)(B). Pub. L. 93–406, § 2007(b)(1), inserted reference to section 1452(d) of title 10. Statutory Notes and Related Subsidiaries Effective Date of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.