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upon his termination of employment with IBM.2 Petitioners
attached to their return a Form 8275, Disclosure Statement,
explaining that they had not included the subject $24,060.44 in
their gross income for 1994 because they believed such payment
was:
not taxable under Section 104 of the Internal Revenue
Code because the payment was made as a consideration to
the taxpayer for his release of his employer for any
claim he might have against his employer for age
discrimination and other potential tort claims.
In the notice of deficiency, respondent determined that the
subject $24,060.44 was includable in petitioners' gross income
for 1994. This was the only adjustment in the notice of
deficiency.
The sole issue is whether the $24,060.44 received by
petitioner husband as a result of the termination of his
employment with IBM is excludable from petitioners' 1994 gross
income pursuant to section 104(a)(2) as damages received on
account of personal injury or sickness. Except as otherwise
provided, gross income includes "all income from whatever source
derived". Sec. 61(a); Commissioner v. Glenshaw Glass Co., 348
2
IBM issued to petitioner husband a Form W-2, Wage and Tax
Statement, for 1994 reflecting wages, tips, and other
compensation of $64,432.30, which included the $24,060.44 paid to
petitioner husband upon termination of his employment.
Petitioners attached a copy of this Form W-2 to their 1994
return.
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