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Typically, amounts paid directly or indirectly by employers to employees for services rendered are taxable
Except as otherwise provided in this section or in section 117 (relating to qualified scholarships), gross income includes amounts received as prizes and awards The prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or (2) of section 170 (c) pursuant to a designation made by the recipient. Generally, all awards, prizes, and gifts given to employees are subject to taxation and withholding pursuant to internal revenue code § 74
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