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of deficiency (notice) for 1998. In that notice, respondent
determined that petitioners are not allowed to exclude from gross
income the settlement amount at issue that Ms. Nield received
from Goer.
Discussion
We must determine whether the settlement amount at issue is
excludable from petitioners’ gross income for 1998.3
Section 61(a) provides the following sweeping definition of
the term “gross income”: “Except as otherwise provided in this
subtitle, gross income means all income from whatever source
derived”. Not only is section 61(a) broad in its scope, Commis-
sioner v. Schleier, 515 U.S. 323, 328 (1995), exclusions from
gross income must be narrowly construed, id.; United States v.
Burke, 504 U.S. 229, 248 (1992).
Section 104(a)(2) on which petitioners rely provides that
gross income does not include
(2) the amount of any damages (other than
punitive damages) received (whether by suit or
agreement and whether as lump sums or as periodic
payments) on account of personal physical injuries
or physical sickness;
* * * * * * *
For purposes of paragraph (2) [of section 104(a)],
emotional distress shall not be treated as a physical
3The resolution of the issue presented does not depend on
who bears the burden of proof in this case.
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