- 3 -
Rockford violated Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991. Petitioner sought
relief in the amount of back pay and prejudgment interest, and
“compensation for past and future non-pecuniary losses resulting
from the unlawful employment practices * * * including
humiliation”.
On January 22, 1998, petitioner and Rockford entered into a
settlement agreement. The agreement stated in pertinent part:
[Rockford] shall pay to * * * [petitioner] the gross sum of
Forty-Five Thousand Dollars ($45,000) in the form of two
checks made payable to * * * [petitioner]. One check, in
settlement of * * * [petitioner’s] claim for back pay
damages, shall be in the gross amount of Ten Thousand
Dollars ($10,000), less all applicable withholdings,
including FICA. The second check, in settlement of * * *
[petitioner’s] claim for compensatory damages for emotional
injuries, shall be in the gross amount of Thirty-Five
Thousand Dollars ($35,000). [Emphasis added.]
In preparing her 1998 Federal income tax return, petitioner
excluded the $35,000 damage award on the grounds that it was
received in compensation of her “emotional distress due to
physical sickness” and was excludable under section 104(a)(2).
The taxability of the $10,000 petitioner received as back pay is
not in dispute.
Discussion
Section 61 provides that “gross income means all income from
whatever source derived”. Gross income is an inclusive term with
broad scope, designed by Congress to “exert * * * ‘the full
measure of its taxing power.’” Commissioner v. Glenshaw Glass
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011