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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.
Discussion
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
Regs.
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