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Discussion
Section 61(a) provides that “gross income means all income
from whatever source derived” except as otherwise provided. The
definition of gross income is broad in scope, Commissioner v.
Glenshaw Glass Co., 348 U.S. 426, 429-430 (1955), and exclusions
from gross income are narrowly construed, United States v. Burke,
504 U.S. 229, 248 (1992) (Souter, J., concurring in judgment);
United States v. Centennial Sav. Bank FSB, 499 U.S. 573, 583-584
(1991); Commissioner v. Jacobson, 336 U.S. 28, 49 (1949).
As relevant to the present case, 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”.
Petitioner candidly admits, as he must, that the $20,000
payment was not received on account of personal physical injuries
or physical sickness and that, as a consequence, the payment is
not excludable from income pursuant to section 104(a)(2).
However, petitioner contends that section 104(a)(2), as amended
by the Small Business Job Protection Act of 1996, Pub. L. 104-
4(...continued)
1998-395; Kenseth v. Commissioner, 114 T.C. 399 (2000), affd. 259
F.3d 881 (7th Cir. 2001). Petitioner has never alleged, much
less proven, that the cost incurred in obtaining the $20,000
payment, taken in combination with other allowable deductions,
exceeds the amount of his standard deduction.
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Last modified: May 25, 2011