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tax attributable to the amount of gross income
Petitioner received from the lawsuit recovery, the
accuracy related penalty provided in I.R.C. � 6662(a)
and (c) shall be computed. The amount of the penalty
imposed and assessed will be reduced by 50% from the
amount computed.
Discussion
I. General Rules
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 compass of
this definition is broad, typically reaching any accretions to
wealth. 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 otherwise 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). Before its amendment on
August 20, 1996, by the Small Business Job Protection Act of 1996
(SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, section 104
read in pertinent part as follows:
SEC. 104. COMPENSATION FOR INJURIES OR SICKNESS.
(a) In General.--Except in the case of amounts
attributable to (and not in excess of) deductions
allowed under section 213 (relating to medical, etc.,
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