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the intention of Congress to tax all gains except those
specifically exempted." Commissioner v. Glenshaw Glass Co., 348
U.S. 426, 430 (1955). Exclusions from income are matters of
legislative grace and are construed narrowly. Commissioner v.
Schleier, 515 U.S. ___, , 115 S. Ct. 2159, 2163 (1995);
Mostowy v. United States, 966 F.2d 668, 671 (Fed. Cir. 1992). A
taxpayer seeking a deduction or exclusion "must be able to point
to an applicable statute and show that he comes within its
terms." New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934); Commissioner v. Schleier, supra.
Generally, section 72(b) excludes from gross income any
amount received as an annuity under an annuity, endowment, or
life insurance contract to the extent such an amount is
attributable to the taxpayer's investment in the contract.
Section 1.72-15(b), Income Tax Regs., provides that, as a general
rule, section 72 does not apply to any amount received as an
accident or health benefit.
Section 104(a) excludes from gross income any amounts
described in paragraphs (1) through (5) of that section.
Paragraphs (4) and (5) of section 104(a) are, on their face,
inapplicable to the facts before us, and we focus our attention
on the remaining paragraphs.5 In addition, section 105(a)
5 Sec. 104(a)(4) applies to taxpayers that have served in the
armed forces or certain other organizations with which petitioner
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