Stanley K. and Sandra B. Evanko - Page 4

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               Upon examination of the return, respondent determined that             
          the entire amount of the compensation received by petitioner                
          constitutes wages that must be included in petitioners' gross               
          income for 1997.                                                            
               Petitioners do not dispute the receipt of the contested                
          income but rather its characterization as taxable compensation.             
          The issue for consideration, therefore, is whether the pay that             
          petitioner received as a JROTC instructor should be treated as              
          including nontaxable military allowances or whether that pay, as            
          argued by respondent, was entirely taxable compensation for                 
          services rendered.                                                          
               Gross income means all income from whatever source derived.            
          Sec. 61(a).  Military pay received by members of the Armed Forces           
          is within the scope of section 61(a).  See sec. 1.61-2(a)(1),               
          Income Tax Regs.  Congress may, if it chooses, specifically                 
          exempt certain items from gross income.  See Commissioner v.                
          Glenshaw Glass Co., 348 U.S. 426, 430 (1955).  For example,                 
          certain military compensation, such as that received by members             
          of the Armed Forces serving in combat zones, is excluded from               
          gross income.  Sec. 112.  Military subsistence, uniform                     
          allowances, and other amounts received as commutation of quarters           
          are excludable from gross income.  See sec. 1.61-2(b), Income Tax           

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