- 8 -
excludable from petitioner’s gross income under section
104(a)(1). We agree with respondent.
Section 61(a) broadly defines gross income as “all income
from whatever source derived”. Compensation for services is
expressly included within this broad definition. See sec.
61(a)(1).
Under section 104(a)(1), amounts received as worker’s
compensation are excluded from gross income. However, the Court
has held that “statutes granting tax exemptions should be
strictly construed.” Kane v. United States, 43 F.3d 1446, 1449
(Fed. Cir. 1994); see Commissioner v. Jacobson, 336 U.S. 28, 39
(1949). A taxpayer seeking a deduction or exclusion from gross
income “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).
Section 104(a)(1) excludes from gross income “amounts
received under workmen's compensation acts as compensation for
personal injuries or sickness”. Section 1.104-1(b), Income Tax
Regs., includes amounts received by an employee “under a statute
in the nature of a workmen’s compensation act which provides
compensation to employees for personal injuries or sickness
incurred in the course of employment.” Therefore, in order to
resolve this matter, we must consider the relevant provisions of
the worker’s compensation act under Michigan law and determine
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011