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information and that the seller was unable to transfer certain
business assets to petitioner. After petitioner initiated steps
to rescind the transaction, the seller filed for bankruptcy. In
1990, the bankruptcy court discharged petitioner's claims against
the seller. As a result of the bankruptcy court's decision,
petitioner claimed a long-term capital loss of $357,356 in his
1990 Federal income tax return related to the T.J. Cinnamons
Bakery franchise. The items that constitute the $357,356 were
not separately identified in petitioner's Federal income tax
return. Respondent limited the loss to petitioner's original
basis of $241,058.
OPINION
Exclusions Under Section 104(a)(2)
Petitioner did not report $1,280,331 of the $3,250,071
received from PepsiCo as income on his 1990 Federal income tax
return. Petitioner's C.P.A. advised him that the amount was
excludable, pursuant to section 104(a)(2), as damages received on
account of personal injuries. Respondent argues that petitioner
has failed to establish that any portion of the amount received
is excludable under section 104(a)(2). We disagree with
respondent.
Section 61 provides that "gross income means all income from
whatever source derived". Sec. 61(a). Unless the Internal
Revenue Code specifically provides otherwise, all accessions to
wealth must be included in gross income. Commissioner v. Glen-
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