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D. The Remaining Three Payments
The remaining dispute between the parties mainly turns upon
which version of section 104 is applicable to the November 1996
payment, the May 1997 payment, and the November 1998 payment (the
three payments). Respondent contends that post-SBJPA section 104
is applicable; petitioner makes two arguments why pre-SBJPA
section 104 is applicable. If post-SBJPA section 104 applies,
the three payments are not excludable from income because
petitioner did not suffer a physical injury.
1. Amount Realized
Petitioner’s first argument is that post-SBJPA section 104
is inapplicable to the three payments because UTA’s obligation to
make the three payments constituted an amount realized for tax
purposes in May 1996 (before the amendment of section 104 by the
SBJPA).26 This argument fails for several reasons.
In construing section 104, our task is to give effect to the
intent of Congress. We begin with the statutory language, which
is the most persuasive evidence of the statutory purpose. United
States v. Am. Trucking Associations, Inc., 310 U.S. 534, 542-543
(1940); Hospital Corp. of Am. v. Commissioner, 107 T.C. 116, 128
(1996) affd 348 F.3d 136 (6th Cir. 2003).
26 Petitioner cites, among other things, private letter
rulings (PLRs) to support this argument. Parties are statutorily
proscribed from citing PLRs as precedent. Sec. 6110(k)(3)
(formerly sec. 6110(j)(3)); Willamette Indus., Inc. v.
Commissioner, 118 T.C. 126, 134 n.10 (2002).
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