IRC 101 governs the federal income-tax treatment of amounts received under life insurance contracts. As a general rule, life insurance death benefits are excluded from gross income, subject to important exceptions and special cases. The section addresses transfers for value, interest on proceeds, accelerated death benefits, employer-owned contracts, and other circumstances that can change tax outcomes. Understanding 101's subsections is central to planning with life insurance in business, estate, and charitable contexts.

Advisors design plans assuming death benefits are tax-free, then screen for exceptions-transfers for value, EOLI noncompliance, or interest components-that could create taxable income. Files include notice/consent where needed.