Rev. Rul. 76-373

Advice has been requested concerning the treatment for Federal income tax purposes of "relocation payments" received by individuals pursuant to the Housing and Community Development Act of 1974, section 105(a)(11), Pub. L. No. 93-383, 93rd Cong., 2d Sess. (August 22, 1974).

The stated objective of Title I (Community Development) of the Housing and Community Development Act of 1974 is the development of viable urban communities, by providing decent housing and a suitable living environment and expanding opportunities, principally for persons of low and moderate incomes. Section 105(a)(11) of the Act and the regulations thereunder provide, in part, that a community development program may provide for relocation payments and assistance for individuals displaced by activities assisted under Title I. These payments and assistance include all benefits at least equal to the minimum levels established under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, section 202, 1971-1 C.B. 540.

Section 202 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 provides, in pertinent part, for payment to any displaced person for actual reasonable expenses in moving such persons, such person's family or such person's personal property and payment for actual direct losses of tangible personal property as a result of moving.

Section 61(a) of the Internal Revenue Code of 1954 and the Income Tax Regulations thereunder provide that, except as otherwise provided by law, gross income means all income from whatever source derived.

The Internal Revenue Service has consistently held that payments made under legislatively provided social benefit programs for the promotion of general welfare are not includible in a recipient's gross income. See Rev. Rul. 74-205, 1974-1 C.B. 20, which holds that replacement housing payments received by individuals prior to January 2, 1971, pursuant to the Housing and Urban Development Act of 1968, 1968-2 C.B. 734, and the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970, are not includible in the gross incomes of the recipients.

Accordingly, relocation payments received by individuals pursuant to section 105(a)(11) of the Housing and Community Development Act of 1974 are in the nature of general welfare and, as such, are not includible in the gross incomes of the recipients.