Wilton Earl and Dorothy M. Keel - Page 4

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                 Petitioners thereafter filed an Amended U.S. Individual                              
            Income Tax Return for the taxable year 1992 (the amended return),                         
            which respondent received on February 23, 1994.  On that return,                          
            petitioners claimed that the lump-sum payment was nontaxable.                             
            Petitioners enclosed with the amended return a copy of the                                
            release and an article included in a newsletter entitled the ITO                          
            Newsletter, circulated among IBM employees subject to                                     
                 The article reads as follows:2                                                       
                 An update to the Private Letter Ruling with the                                      
                 question "Is the income from the ITO taxable or not?".                               
                 Section 104(a) (2) [sic] of the Internal Revenue Code                                
                 of 1986 states that , "except as other wise provided,                                
                 gross income means all income from whatever source                                   
                 derived."  Accordingly, the Supreme Court has held that                              
                 any accession to wealth is presumed to be gross income,                              
                 unless the taxpayer can demonstrate that it fits into                                
                 one of the specific exclusions created by other                                      
                 sections of the Code.                                                                
                 Code Sections 104(a) provides in relevant part that                                  
                 "gross income does not include.....(2) the amount of                                 
                 any damages received (whether by suit or agreement and                               
                 whether as lump sums or periodic payments) on account                                
                 of personal injuries or sickness."                                                   
                 Based on this information and the agreement IBM and                                  
                 ITOers signed the settlement amount should be                                        
                 It seems one reader of the ITOers Newsletter                                         
                 submitted his taxes and included Form # 8275.  This                                  
                 form is the one to use to request the lump sum payment                               
                 be declared nontaxable.  The reader included the                                     
                 separation release papers from IBM and guess what?  He                               
                 got his money back!                                                                  
                 You might want to file an update to your taxes.                                      

            2  The excerpt as reproduced retains the original spelling and                            

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