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petitioner’s 1996 pension was $24,843. See sec. 1.72-4, Income
Tax Regs. Petitioner agrees that the determination of the
taxable portion of $24,843 is in accordance with the regulations.
However, petitioner maintains that the taxable amount should be
reduced by $1,864 for 1996 in order to take into account the
effect of inflation on his contributions.
Petitioner’s contention that he is entitled to adjust the
basis in his annuity pension to account for inflation is
incorrect. Section 61(a) provides that gross income includes all
income from whatever source derived, unless otherwise
specifically excluded. Section 61(a)(9) provides that gross
income includes income from annuities. The Supreme Court has
reasoned that Congress “intended ‘to use the full measure of its
taxing power’” when it created the income tax. Commissioner v.
Kowalski, 434 U.S. 77, 82 (1977) (quoting Helvering v. Clifford,
309 U.S. 331, 334 (1940)). The Court explained that Congress
intended “‘to tax all gains except those specifically exempted.’”
Id. at 82-83 (quoting Commissioner v. Glenshaw Glass Co., 348
U.S. 426, 429-430 (1955)). There is no statutory or regulatory
provision permitting petitioner to exempt gain which may be
attributable solely to inflation by adjusting the basis in his
annuity pension to account for such inflation.2
2We note that when Congress intends for inflation to be
taken into account, it does so by providing for it by statute.
(continued...)
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