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Petitioner did not include the payment as an item of gross
income in his 1993 Federal income tax return. Respondent
determined a deficiency in tax on the basis that petitioner had
omitted the payment as an item of gross income (described as
“wages”) of $115,500. Petitioner timely petitioned this Court,
assigning error to respondent’s determination of a deficiency and
averring in support of that assignment that the payment had been
received in settlement of claims for defamation, fraud,
misrepresentation, emotional distress, and age discrimination
related to petitioner’s wrongful discharge from the employ of
Boehringer. In the petition, petitioner concedes that any
portion of the payment received in settlement of his claim of age
discrimination is an item of gross income and that respondent did
not err in adjusting his income accordingly. Petitioner
describes the issue for decision as one of “apportionment”,
apportioning the payment between “personal tortious injury” and
the age discrimination claim. Respondent denies both
petitioner’s assignment of error and the facts averred in support
thereof.
Discussion
Gross income means all income from whatever source derived,
unless excluded by law. Sec. 61(a); sec. 1.61-1(a), Income Tax
Regs. Generally, compensation for services, including
termination or severance pay, is an item of gross income. Sec.
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