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wages reported by the Township are includable in petitioners’
gross income for the year.
Discussion
Petitioners dispute not the receipt of the contested income,
but rather its characterization as taxable compensation. The
issue for consideration, therefore, is whether the pay that
petitioner received as a JROTC instructor should be treated as
including nontaxable military allowances or whether such pay, as
argued by respondent, was entirely taxable compensation for
services rendered.
The Commissioner’s deficiency determinations are presumed
correct, and taxpayers generally have the burden of proving these
determinations are incorrect. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). Under certain circumstances, however,
section 7491(a) may shift the burden to the Commissioner with
respect to a factual issue affecting liability for tax. The
material facts in this case, however, are not in dispute. The
case is decided by applying the law to the undisputed facts, and
section 7491(a) is inapplicable.
Gross income means all income from whatever source derived.
Sec. 61(a). Military pay received by members of the Armed Forces
is within the scope of section 61(a). See sec. 1.61-2(a)(1),
Income Tax Regs. Congress may, if it chooses, specifically
exempt certain items from gross income. See Commissioner v.
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