United States v. Burke, 504 U.S. 229, 5 (1992)

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Cite as: 504 U. S. 229 (1992)

Opinion of the Court

The dissent in the Court of Appeals, 929 F. 2d, at 1124, took the view that the settlement of respondents' claims for earned but unpaid wage differentials—wages that would have been paid and would have been subjected to tax absent TVA's unlawful discrimination—did not constitute compensation for "loss due to a tort," as required under 104(a)(2). See id., at 1126.

We granted certiorari to resolve a conflict among the Courts of Appeals concerning the exclusion of Title VII backpay awards from gross income under 104(a)(2).3 502 U. S. 806 (1991).



The definition of gross income under the Internal Revenue Code sweeps broadly. Section 61(a), 26 U. S. C. 61(a), provides that "gross income means all income from whatever source derived," subject only to the exclusions specifically enumerated elsewhere in the Code. As this Court has recognized, Congress intended through 61(a) and its statutory precursors to exert "the full measure of its taxing power," Helvering v. Clifford, 309 U. S. 331, 334 (1940), and to bring within the definition of income any "accessio[n] to wealth." Commissioner v. Glenshaw Glass Co., 348 U. S. 426, 431 (1955). There is no dispute that the settlement awards in this case would constitute gross income within the reach of 61(a). See Brief for Respondents 9-10.

The question, however, is whether the awards qualify for special exclusion from gross income under 104(a), which

3 Compare the Sixth Circuit's opinion in this case with Sparrow v. Commissioner, 292 U. S. App. D. C. 259, 949 F. 2d 434 (1991) (Title VII backpay awards not excludable), and Thompson v. Commissioner, 866 F. 2d 709 (CA4 1989) (same). See also Johnston v. Harris County Flood Control Dist., 869 F. 2d 1565, 1579-1580 (CA5 1989) (noting, for purposes of district court consideration of tax liability in computing damages, that Title VII backpay awards may not be excluded under 104(a)(2)), cert. denied, 493 U. S. 1019 (1990).


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