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Mr. Massot as ‘damages,’ the parties agree that each will be
responsible for its (or his) own tax liability.”
Settlement Payment
In accordance with the agreement, on November 30, 1992,
Millipore transferred (by wire) $600,000 in French francs to
petitioner’s French bank account and deposited $150,000 into an
escrow account at the Bank of Boston.
Treatment of Settlement Proceeds
Millipore did not report the $600,000 settlement proceeds as
“wages, tips, other comp.” on the 1992 Form W-2 it issued to
petitioner; petitioners did not report the $600,000 settlement
proceeds as income on their 1992 tax return.
OPINION
The sole issue for decision is whether the $600,000 petitioner
received as a result of the termination of his employment is
excludable from petitioners' 1992 gross income as section 104(a)(2)
damages received on account of personal injury or sickness.
Except as otherwise provided, gross income includes income from
all sources. See sec. 61; Commissioner v. Glenshaw Glass Co., 348
U.S. 426, 429-430 (1955). Petitioners’ settlement proceeds
constitute gross income unless expressly excepted by another Code
provision. See Commissioner v. Schleier, 515 U.S. 323, 328 (1995);
Rozpad v. Commissioner, 154 F.3d 1, 3 (1st Cir. 1998), affg. T.C.
Memo. 1997-528.
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