61 STAT.] 80H CONG. , 18T SESS.-CH. 258-JULY 16, 1947 individual or shareholder, and (2) 85 per centum or more of the income consists of amounts collected from members for the sole purpose of making such payments and meeting expenses. (k) Voluntary employees' beneficiary associations providing for the payment of life, sick, or accident benefits to the members of such association or their dependents or their designated beneficiaries, if (1) admission to membership in such association is limited to individuals who are officers or employees of the United States Gov- ernment or the Government of the District of Columbia, and (2) no part of the net earnings of such association inures (other than through such payments) to the benefit of any private individual or shareholder. TITLE III-NET INCOME, GROSS INCOME AND EXCLUSIONS THEREFROM, AND DEDUCTIONS SEC. 1 . NrT INCOME. - For the purposes of this article and wher- ever appearing herein, unless otherwise required by the context, the words "net income" mean the gross income of a taxpayer less the deductions allowed by this article. SEC. 2. GRoss INCOME AND EXCLUSIONS THiEEFRoiM. - (a) The words "gross income" include gains, profits, and income derived from salaries, wages, or compensation for personal services of what- ever kind and in whatever form paid, including salaries, wages, and compensation paid by the United States to its officers and employees to the extent the same is not exempt under this article, or income derived from any trade or business or sales or dealings in property, whether real or personal, other than capital assets as defined in this article, growing out of the ownership, or sale of, or interest in, such property; also from rent, royalties, interest, dividends, securities, or transactions of any trade or business carried on for gain or profit, or gains or profits, and income derived from any source whatever. (b) The words "gross income" shall not include the following: (1) PROCEEDS OF LIFE-INSURANCE POLICIES.-The proceeds of life- insurance policies paid by reason of the death of the insured, whether in a single sum or otherwise (but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest pay- ments shall be included in gross income). (2) ANNUITIES, AND so FORTH.- (A) Amounts received (other than amounts paid by reason of the death of the insured and interest pay- ments on such amounts and other than amounts received as annuities) under a life-insurance or endowment contract, but if such amounts (when added to amounts received before the taxable year under such contract) exceed the aggregate premiums or consideration paid (whether or not paid during the taxable year), then the excess shall be included in gross income. Amounts received as an annuity under an annuity or endowment contract shall be included in gross income; except that there shall be excluded from gross income the excess of the amount received in the taxable year over an amount equal to 3 per centum of the aggregate premiums or consideration paid for such annuity (whether or not paid during such year), until the aggregate amount excluded from gross income under this title in respect to such annuity equals the aggregate premiums or consideration paid for such annuity. In the case of a transfer for a valuable consideration, by assignment or otherwise, of a life-insurance, endowment, or annuity contract, or any interest therein, only the actual value of such con- sideration and the amount of the premiums and other sums subse- quently paid by the transferee shall be exempt from taxation under subsection (1) or this subsection. This subsection and subsection 2 (b) (1) of this title shall not apply with respect to so much of a 335 "Net income." !'Grossincome." Exclusions. Transfer for a val- uable consideration
�
