- 41 - II. Exclusion pursuant to Section 104(a)(2) Respondent determined that the May 1996 payment, the May 1997 payment, and the November 1998 payment are not excludable pursuant to section 104(a)(2). Respondent also denied petitioner’s refund claim (relating to the November 1996 payment) for the same reason. Petitioner challenges respondent’s determination and the denial of his refund claim.21 A. Section 104 As a general rule, the Internal Revenue Code imposes a Federal tax on the taxable income of every individual. Sec. 1. Section 61(a) specifies that, “Except as otherwise provided”, gross income for purposes of calculating such taxable income means “all income from whatever source derived”. The Supreme Court has long reiterated the sweeping scope of section 61. Commissioner v. Schleier, 515 U.S. 323, 327 (1995); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-431 (1955). Section 104, in contrast, provides an exception with respect to compensation for injuries or sickness. Such exclusions from gross income are construed narrowly. Commissioner v. Schleier, supra at 328; United States v. Burke, 504 U.S. 229, 248 (1992) (Souter, J., concurring in judgment); Banaitis v. Commissioner, 340 F.3d 1074, 1079 (9th Cir. 2003), affg. in part and revg. in part T.C. Memo. 2002-5. Before its amendment on August 20, 1996, 21 We note that we have jurisdiction to determine whether there was an overpayment of tax for 1996. Secs. 6512(b), 7422(e).Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Next
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