Question

Section 139, Disaster Relief Payment, was enacted by Congress in 2001 to ensure that victims of a qualified disaster would not be required to include in gross income payments received for funeral expenses resulting from a terrorist attack.

A. True
B. False

Answer 1

The statement incorrectly suggests that Section 139 of the Revenue Act of 1942 pertains to victims of disasters like the 9/11 attacks; however, Section 139 is actually a result of legislation from 2001 designed to assist victims of terrorism and should not be confused with the 1942 Act.

Step-by-step explanation:

The statement regarding Section 139, part of the Revenue Act of 1942, claims that Congress enacted this provision to ensure that victims of qualified disasters, such as terrorist attacks, would not be required to include in gross income payments received for funeral expenses.

However, the statement contains a factual inaccuracy. Section 139 was not enacted in 1942; it was enacted as part of the Victims of Terrorism Tax Relief Act of 2001, which followed the September 11 attacks. The intention behind Section 139 is indeed to exclude certain disaster relief payments from taxable income, but the connection to events of 2001 rather than 1942 is crucial for accuracy. Understanding the changes in tax laws and distributions according to different Acts, like the American Recovery and Reinvestment Act and the American Rescue Plan Act, exemplifies how different circumstances and periods have led to tailored fiscal responses by the U.S. government.