-9-
this case to place upon respondent the burden of proof as to the
deficiency.
We agree with respondent that section 104(a)(2) does not
exclude the $132,000 payment from petitioners’ 2000 gross income.
We do so, however, for reasons different than the burden of proof
grounds upon which respondent relies. We decide the legal issue
at hand on the basis of the record, without regard to which party
bears the burden of proof.
Section 61(a) provides that gross income includes all income
from whatever source derived. Section 61(a) is construed broadly
to reach any accession to wealth. Exclusions from gross income
are construed narrowly. Commissioner v. Schleier, 515 U.S. 323,
328 (1995); United States v. Burke, 504 U.S. 229, 233 (1992).
The parties disagree over the applicability of section
104(a)(2) to this case. That section as applicable here excludes
from gross income “the amount of any damages (other than punitive
damages) received (whether by suit or agreement and whether as
lump sums or as periodic payments) on account of personal
physical injuries or physical sickness”. In this context, the
terms “physical injury” and “physical sickness” do not include
emotional distress, except to the extent of damages not in excess
of the amount paid for medical care described in section
213(d)(1)(A) and (B) attributable to emotional distress. See
sec. 104(a) (flush language).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011