Congress allows certain “accessions to wealth” to permanently bypass taxation. These are divided into three general categories:
1. Donative transfers
a. Gifts, life insurance proceeds, and scholarships
2. employee fringe benefits, and
a. employer provided meals and lodging for the employee, employer provided health and life insurance coverage and a broad category of statutorily enumerated employer provided fringes
3. misc. exclusions that reflect public policy concerns
a. compensation for personal injuries, discharge of an insolvent taxpayer’s indebtedness, social security benefits, interest derived from state and municipal obligations, etc.
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