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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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Last modified: May 25, 2011