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means “all income from whatever source derived”. The boundary 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 by authorizing
an exclusion 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). As amended on August 20, 1996, by the Small Business
Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605,
110 Stat. 1838, and as applicable to this case, section 104 reads
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.,
expenses) for any prior taxable year, gross income does
not include--
* * * * * * *
(2) 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;
* * * * * * *
* * * For purposes of paragraph (2), emotional distress
shall not be treated as a physical injury or physical
sickness. The preceding sentence shall not apply to an
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