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return for 1989, the $56,921 that petitioner received from
College Park in 1989 to make improvements to Store 6 was not
reflected as taxable income. Similarly, on petitioners’ joint
Federal income tax return for 1990, the $8,465 that petitioner
received from College Park in 1990 to make improvements to Store
6 was not reflected as taxable income.
On audit, respondent treated the $99,946 received by the
partnership from Peoria in 1989, $39,788 of the $56,9212 received
by petitioner from College Park in 1989, and the $8,465 received
by petitioner from College Park in 1990 as specific items of
unreported taxable income.
Under section 61, gross income includes all income from
whatever source derived. See Commissioner v. Glenshaw Glass Co.,
348 U.S. 426, 431 (1955). Respondent relies on this general
proposition in treating as taxable income the funds the
partnership and petitioner received in 1989 and 1990 from Peoria
and College Park.
Generally, however, gross income does not include funds
received by a taxpayer in reimbursement for expenses paid on
behalf of another. See Gray v. Commissioner, 10 T.C. 590, 596-
2 Respondent treated $17,133 of the funds received by
petitioner from College Park in 1989 as a nontaxable
reimbursement for leasehold improvements.
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