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State Farm reported $283,117.69 of the amount on a Form
1099-MISC and reported $425.31 on a Form W-2. Petitioner
reported $283,118 of the settlement proceeds as gross receipts on
Schedule C (Profit or Loss From Business) of her 1992 Federal
income tax return but then excluded this amount from her reported
gross income. In a Form 8275 (Disclosure Statement) attached to
her return, petitioner stated that the proceeds represented
damages received on account of personal injuries within the
meaning of section 104(a)(2). Respondent determined that the
entire amount of the settlement award should have been included
in petitioner's gross income. In the notice of deficiency,
respondent allowed petitioner a deduction for the $57,897 paid to
her attorneys.
OPINION
Except as otherwise provided, gross income includes income
received from all sources. Sec. 61(a); Commissioner v. Glenshaw
Glass Co., 348 U.S. 426, 429-430 (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).
Pursuant to 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
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