- 8 - using a 1 week's pay per year of service method.) Petitioners provided the following explanation on the last page attached to their return: "Other Disclosure: The taxpayer received 1012233 from Weyerhaeuser Co. as settlement for mental anxiety and injury to personal reputation caused upon termination of employment." Notice of Deficiency In the notice of deficiency, respondent determined that the entire $1,125,000 settlement payment petitioner received from WC is includable in petitioners' 1989 gross income. OPINION The sole issue for decision is whether $1,012,233 ($1,125,000 less $112,767) received by petitioner as a result of the termination of his employment is excludable from petitioners' 1989 gross income pursuant to section 104(a)(2) as damages received on account of personal injury or sickness. Petitioners argue that they are entitled to exclude that amount. Respondent disagrees. Except as otherwise provided, gross income includes income from all sources. Sec. 61; Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-430 (1955). Although section 61(a) is to be broadly construed, statutory exclusions from income must be narrowly construed. Commissioner v. Schleier, 515 U.S. 323, 327-328 (1995). Pursuant to section 104(a)(2), gross income does not include "the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011