Marcia S. Green - Page 7

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          I.   Burden of Proof                                                        
               In general, the Commissioner’s determinations in the                   
          deficiency notice are presumed correct, and the taxpayer bears              
          the burden of proving that the Commissioner’s determinations are            
          in error.  Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115               
          (1933).  Petitioner did not assert that the burden shifted to               
          respondent under section 7491(a) and did not establish that she             
          fully complied with the requirements of section 7491(a)(2).  We             
          therefore find that the burden of proof remains with petitioner,            
          except as otherwise conceded by respondent.5                                
          II. Exclusion Under Section 104(a)(2)                                       
               We now consider whether petitioner may exclude the jury                
          award from gross income under section 104(a)(2).6  Gross income             
          generally includes all income from whatever source derived.  Sec.           
          61(a).  The definition of gross income is broad in scope.                   
          Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955).               
          Exclusions from gross income, however, are narrowly construed.              
          Commissioner v. Schleier, 515 U.S. 323, 328 (1995).                         


               5Respondent concedes he has the burden of proof with respect           
          to the community property issue because he raised the issue for             
          the first time after petitioner filed the petition.                         
               6We apply sec. 104(a)(2) as amended in 1996 by the Small               
          Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188,               
          sec. 1605(a), 110 Stat. 1838, effective generally for amounts               
          received after Aug. 20, 1996.  That amendment, in relevant part,            
          added the modifier “physical” after “personal” and before                   
          “injuries,” to clarify that amounts received on account of                  
          personal injuries must be received for physical injuries and not            
          solely for emotional distress.  Id.                                         



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