- 4 -
Dana issued petitioner a Form 1099-MISC, Miscellaneous
Income, reporting a payment of $30,211.66 of “nonemployee
compensation”. Petitioners did not report the $30,211.66 damage
award on their 1999 Federal income tax return. Respondent
determined that the damage award should have been included in
petitioners’ gross income. Petitioners have stipulated that “No
portion of the settlement proceeds was paid to petitioner-husband
on account of personal physical injuries or physical sickness.”
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
Co., 348 U.S. 426, 429 (1955) (quoting Helvering v. Clifford, 309
U.S. 331, 334 (1940)). Conversely, statutory exceptions from
income shall be narrowly construed. Commissioner v. Schleier,
515 U.S. 323, 328 (1995). Furthermore, “exemptions from taxation
are not to be implied; they must be unambiguously proved.”
United States v. Wells Fargo Bank, 485 U.S. 351, 354 (1988).
Section 104(a)(2) excludes from gross income “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”. Section 1.104-1(c), Income Tax Regs., defines
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011