-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
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