IRS Revenue Ruling
1998-19

Code Sec. 61

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26 CFR 1.61-1: Gross income.

Relocation payments; Housing and Community Development Act. A
relocation payment, authorized by section 105(a)(11) of the Housing and
Community Development Act and funded under the 1997 Emergency Supplemental
Appropriations Act for Recovery From Natural Disasters, made by a local
jurisdiction to an individual moving from a flood-damaged residence to
another residence, is not includible in the individual's gross income.


REV. RUL. 98-19

ISSUE

Is a relocation payment authorized pursuant to section 105(a)(11) of
Title I of the Housing and Community Development Act of 1974 (Act), 42
U.S.C. section 5305(a)(11), funded under the 1997 Emergency Supplemental
Appropriations Act for Recovery From Natural Disasters (Supplemental Act),
Pub. L. No. 105-18, 111 Stat. 158, 198-199, and made by a local
jurisdiction to an individual moving from a flood-damaged residence to
another residence, includible in the individual's gross income under
section 61 of the Internal Revenue Code?


FACTS

Pursuant to the Act and the Supplemental Act, a resident of a local
jurisdiction, within a Presidentially-declared disaster area in the upper
Midwest, received a relocation payment from the local jurisdiction to help
defray the expenses of moving from the resident's flood-damaged residence
to another residence.

According to section 101(c) of the Act, the primary objective of Title
I "is the development of viable urban communities, by providing decent
housing and a suitable living environment and expanding economic
opportunities, principally for persons of low and moderate income." 42
U.S.C. section 5301(c). Section 105(a)(11) of the Act provides, in part,
that a community development program may provide relocation payments and
assistance for displaced individuals and families as authorized under the
Act. 42 U.S.C. section 5305(a)(11).

The Supplemental Act provides funding, for displaced individuals and
families as authorized under the Act, to certain communities affected by
the flooding in the upper Midwest and other Presidentially-declared
disasters occurring during the federal government's fiscal year ending
September 30, 1997.


LAW AND ANALYSIS

Section 61 and the Income Tax Regulations thereunder provide that,
except as otherwise provided by law, gross income means all income from
whatever source derived.

The Service has 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. 76-373, 1976-2
C.B. 16, which holds that relocation payments received by individuals
pursuant to section 105(a)(11) of the Act are in the nature of general
welfare and are not includible in the gross incomes of recipients.


HOLDING

A relocation payment authorized pursuant to section 105(a)(11) of the
Act, funded under the Supplemental Act, and made by a local jurisdiction
to an individual moving from a flood-damaged residence to another
residence, is in the nature of general welfare and is not includible in
the individual's gross income under section 61.


DRAFTING INFORMATION

The principal author of this revenue ruling is Sheldon A. Iskow of the
Office of Assistant Chief Counsel (Income Tax and Accounting). For further
information regarding this revenue ruling, contact Mr. Iskow on (202)
622-4920 (not a toll-free call).

<<END RULING>>

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