Virgie R. Porter - Page 5




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                                CHARGING PARTY RELIEF                                 
                    [Dobbs] agrees that within 30 days of the effective               
               date of this Agreement it shall:                                       
                    1.   a.  Pay to the Charging Party the sum of twelve              
               thousand dollars ($12,000.00) as back wages, less legal                
               deductions for taxes;[2]                                               
                         b.  Pay to the Charging Party the sum of seventy-            
               one thousand and six hundred dollars ($71,600.00) as                   
               damages.  Charging Party shall be liable for any and all               
               taxes which may be due for this payment.                               
               In preparing her 1998 Federal income tax return, petitioner            
          excluded the $71,600 damage award that she received.  Petitioner            
          argues that the damage award is excludable from her gross income            
          under section 104(a)(2) because it was received on account of her           
          physical personal injury.                                                   
                                     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           




               2  The taxability of the $12,000 petitioner received as back           
          wages is not in dispute.                                                    





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