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Discussion
The Commissioner’s determinations are presumed correct, and
taxpayers generally bear the burden of proving otherwise. Welch
v. Helvering, 290 U.S. 111, 115 (1933). Petitioners did not
argue that section 7491 is applicable in this case, nor did they
establish that the burden of proof should shift to the
respondent. Moreover, the issue involved in this case, inclusion
of items in gross income, is a legal one to be decided on the
record without regard to the burden of proof. Petitioners,
therefore, bear the burden of proving that respondent’s
determination in the notice of deficiency is erroneous. See Rule
142(a); Welch v. Helvering, supra at 115.
Section 61(a) provides that gross income means all income
from whatever source derived, including “Interest” and “Income
from life insurance.” Sec. 61(a)(4), (10). The sole exception
to the inclusion of income from life insurance lies in section
101, which specifically excludes from gross income amounts
received “under a life insurance contract, if such amounts are
paid by reason of the death of the insured.” Sec. 101(a)(1).
Section 72(a) provides that gross income includes any amount
received as an annuity under a life insurance contract. Given
these statutory predicates, there is no authority upon which we
may declare the distributions at issue in this case exempt from
inclusion in gross income and accordingly, exempt from taxation.
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