- 7 - $1,257,500 does not coincide with any of the settlement documents in the record as noted above, petitioners have not contested that this is the amount paid for personal injuries. The transfers of the automobiles are not stated in the Memorandum of Agreement to be part of the personal injury settlement; rather, they are separately listed in that document. OPINION The controversy concerns whether petitioners may exclude from gross income under section 104(a)(2) a portion of the settlement proceeds they received from MEC, a corporation of which Mr. Wright was one of the founding shareholders and a long- term employee. I. General Rules “Except as otherwise provided”, gross income for the purpose of calculating Federal income tax includes “all income from whatever source derived”. Sec. 61(a). This definition is sweeping in scope, and exclusions from income are to be narrowly construed. See Commissioner v. Schleier, 515 U.S. 323, 328 (1995). Further, “exemptions from taxation are not to be implied; they must be unambiguously proved.”2 United States v. Wells Fargo Bank, 485 U.S. 351, 354 (1988). The statute and the regulations provide that compensation for services, including 2No question has been raised with respect to the burden of proof or production under sec. 7491(a).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 NextLast modified: November 10, 2007