Debra Susan Dickerson - Page 8




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                                       OPINION                                        
          I. Inclusion v. Exclusion of Petitioner’s Settlement Proceeds               
               Except as otherwise provided, gross income includes income             
          derived from all sources.  See sec. 61(a); Commissioner v.                  
          Glenshaw Glass Co., 348 U.S. 426 (1955).  Section 61(a) is to be            
          broadly construed; in contrast, statutory exclusions from income            
          are narrowly construed.  See Commissioner v. Schleier, 515 U.S.             
          323, 336-337 (1995); United States v. Burke, 504 U.S. 229, 233              
          (1992); Kovacs v. Commissioner, 100 T.C. 124, 128 (1993), affd.             
          per curiam without published opinion 25 F.3d 1048 (6th Cir.                 
          1994).                                                                      
               One statutory exclusion appears in section 104(a)(2).  Under           
          section 104(a)(2), gross income does not include “the amount of             
          any damages received (whether by suit or agreement and whether as           
          lump sums or as periodic payments) on account of personal                   
          injuries or sickness”.4  The relevant regulation, sec. 1.104-               
          1(c), Income Tax Regs., provides in pertinent part as follows:              




               4 The Small Business Job Protection Act of 1996, Pub. L.               
          104-188, sec. 1605(a), 110 Stat. 1755, 1838, amended sec.                   
          104(a)(2) to narrow the exclusion for personal injury damages               
          received pursuant to a judgment or a settlement after Aug. 20,              
          1996, for taxable years ending after such date.  As such, under             
          the amendment, personal injury or sickness must be physical in              
          nature.  Moreover, the amendment explicitly excepts punitive                
          damages from the exclusion provided by sec. 104(a)(2).  The                 
          amendment, however, does not apply to the year before us and,               
          therefore, has no bearing on the instant case.                              





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