Paul E. Ballmer - Page 7

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               Petitioner’s argument is quite similar to that asserted                
          before and ultimately rejected by the Court of Appeals for the              
          District of Columbia Circuit.  Murphy v. IRS, 493 F.3d 170 (D.C.            
          Cir. 2007).3  The Court of Appeals held that for the flush                  
          language of section 104(a) to make sense, the definition of gross           
          income in section 61(a) must first include damages for                      
          nonphysical emotional distress injuries.  Id.  Further, this                
          Court has held that compensation for nonphysical emotional                  
          distress injuries is gross income not excluded pursuant to                  
          section 104(a)(2).  See, e.g., Goode v. Commissioner, T.C. Memo.            
          2006-48; Hawkins v. Commissioner, T.C. Memo. 2005-149.                      
               We see no reason to depart from these decisions or the                 
          statutory language.  Accordingly, we conclude petitioner’s award            
          of compensatory damages for emotional distress is gross income              
          under section 61(a) and not excluded under section 104(a)(2).               
          Further, the award of attorney’s fees and litigation costs as               
          well as postjudgment interest are also gross income.  Sec. 61(a);           
          Commissioner v. Banks, 543 U.S. 426, 429-430 (2005); Sinyard v.             

               3At first, the Court of Appeals for the District of Columbia           
          Circuit agreed with a position similar to petitioner’s and held             
          that compensation for the loss of a personal attribute such as              
          well-being was not income within the meaning of the Sixteenth               
          Amendment.  Murphy v. IRS, 460 F.3d 79 (D.C. Cir. 2006).                    
          However, the Court of Appeals then vacated its decision, Murphy             
          v. IRS, 99 AFTR 2d 2007-396, 2007-1 USTC par 50,228 (D.C. Cir.              
          2006), and heard additional arguments before issuing its decision           
          rejecting that position, Murphy v. IRS, 493 F.3d 170 (D.C. Cir.             

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