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Participant Amount
Leslie $48,858
Mattie 14,300
Charles 53,055
Wayne 40,320
In an informational document provided to the participants,
USAA refers to the lump-sum payments as "special transition pay",
and advised the participants that all applicable payroll taxes
would apply to the payments. USAA reported the above amounts on
the participants' respective W-2 wage statements.
Except as otherwise provided, gross income includes income
from all sources. Sec. 61(a); Commissioner v. Glenshaw Glass
Co., 348 U.S. 426 (1955). While section 61(a) is to be broadly
construed, statutory exclusions from income must be narrowly
construed. Commissioner v. Schleier, 515 U.S. , 115 S. Ct.
2159, 2163 (1995); Kovacs v. Commissioner, 100 T.C. 124, 128
(1993), affd. without published opinion 25 F.3d 1048 (6th Cir.
1994).
Under section 104(a)(2), gross income does not include:
the amount of any damages received (whether by suit or
agreement and whether as lump sums or as periodic
payments) on account of personal injuries or sickness.
Section 1.104-1(c), Income Tax Regs, provides:
(c) Damages received on account of personal
injuries or sickness. * * * The term "damages
received (whether by suit or agreement)" means an
amount received * * * through prosecution of a legal
suit or action based upon tort or tort type rights, or
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Last modified: May 25, 2011