- 5 - petitioner’s legal fees and costs totaling $73,399.25 were deductible as a miscellaneous itemized deduction, subject to the 2-percent floor under section 67. Respondent did not allow the miscellaneous itemized deduction for legal fees in computing petitioner’s alternative minimum taxable income. Thus, under respondent’s determination, petitioner would be subject to alternative minimum tax (AMT), under sections 55 and 56, of $17,402. Petitioner contends that the $150,000 award is excludable from income, or alternatively, if the award is not excludable, the portion of the award paid as attorney’s fees is excludable from income, and petitioner is not liable for AMT. Excludability of Title VII Judgment Proceeds We must first decide whether petitioner’s title VII judgment proceeds are excludable from gross income. Except as otherwise provided, gross income includes income from all sources. See sec. 61(a); Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). Although section 61(a), concerning the inclusion of income, has been broadly construed, statutory exclusions from income have been more narrowly construed. See Commissioner v. Schleier, 515 U.S. 323, 327-328 (1995); Kovacs v. Commissioner, 100 T.C. 124, 128 (1993), affd. without published opinion 25 F.3d 1048 (6th Cir. 1994). One such statutory exclusion appears in section 104(a)(2). Under section 104(a)(2), gross income does not include “thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011