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240 U.S. 1 (1916); secs. 1.61-1 and 1.61-2(a)(1), Income Tax
Regs.
The argument that compensation received in exchange for
labor is nontaxable has been rejected by this Court and others on
myriad occasions. See, e.g., Coleman v. Commissioner, 791 F.2d
68, 70 (7th Cir. 1986), ("Wages are income, and the tax on wages
is constitutional".); Rowlee v. Commissioner, 80 T.C. 1111, 1120-
1122 (1983); Reading v. Commissioner, 70 T.C. 730 (1978), affd.
614 F.2d 159 (8th Cir. 1980); Janus v. Commissioner, T.C. Memo.
1996-195; see also Rice v. Commissioner, T.C. Memo. 1982-129, in
which we held that "whether or not wages can be characterized as
the product of an exchange, they are still income within the
Constitutional embrace."
Despite this overwhelming body of law, petitioner asserts
that section 83 provides the specific exclusion from gross income
for compensation that section 61 requires. As stated by the
Court of Appeals for the Seventh Circuit, "Some people believe
with great fervor preposterous things that just happen to
coincide with their self-interest." Coleman v. Commissioner,
supra at 69. Petitioner claims that section 83 entitles him to
deduct the fair market value of his services from the amount he
receives in exchange therefor, unless he elects otherwise.
However, income tax deductions are a matter of legislative grace,
and are set forth in specific statutory provisions. New Colonial
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