- 13 -
Petitioner’s next argument is that “The totality of the
circumstances in this matter points to the nature of the action
as a tortlike action and the nature of the money as damages13 and
not backpay.” We disagree.
Gross income does not include the amount of any damages
received on account of personal injuries or sickness. See sec.
104(a)(2).14 “The term ‘damages received (whether by suit or
agreement)’ means an amount received * * * through prosecution of
a legal suit or action based upon tort or tort type rights, or
12(...continued)
Withheld income taxes are deemed paid on Apr. 15 of the year
following the taxable year. See sec. 6513(b)(1); Baral v. United
States, U.S. , 68 U.S.L.W. 4119 (Feb. 22, 2000). Thus,
petitioner is deemed to have paid income tax for 1992 on Apr. 15,
1993, which is more than 2 years before Aug. 28, 1997.
If petitioner did not constructively receive the income for
backpay and interest on backpay in 1992, then she would have
overpaid her 1992 taxes but would be time barred to claim credit
for any overpayment. Furthermore, when petitioner actually or
constructively receives the $62,275.62 plus interest from the
interest-bearing account with Dauphin Deposit Bank and Trust Co.,
she will presumably have received taxable income, owe tax on that
income, and might be unable to get any credit for the taxes
previously paid.
13Petitioner seems to be arguing that the backpay was really
a damage award and thus under sec. 104(a) is excluded from gross
income.
14The Small Business Job Protection Act of 1996, Pub. L.
104-188, sec. 1605(a), 110 Stat. 1838, amended sec. 104(a)(2) to
limit the exclusion, inter alia, to “personal physical injuries
or physical sickness.” The amendment does not apply to damages
collected before the date of its enactment and has no bearing
here.
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