Cite as: 515 U. S. 323 (1995)
O'Connor, J., dissenting
administrative rulings, agency practice, and representations to the courts—a sentence that the Court expands into its holding today.
The Court states that it does not accord the Commissioner's reply brief any special deference in light of the "differing interpretations of her own regulation," ante, at 334, n. 7. But ignoring the Commissioner's off-hand assertion in this case does not wipe the slate clean. There still remain 35 years of formal interpretations upon which taxpayers have relied and of agency positions upon which courts, including this one, have based their decisions. Unless the Court is willing to declare these positions to be unreasonable, they cannot be ignored. See Lyng v. Payne, 476 U. S. 926, 939 (1986). The Court asserts that " 'the Service's interpretive rulings do not have the force and effect of regulations,' " ante, at 336, n. 8 (quoting Davis v. United States, 495 U. S. 472, 484 (1990)). That is true; it also says nothing about the deference courts must give to such reasonable interpretations, and a fuller exposition of our precedent indicates that the level of deference is substantial. Davis states: "Although the Service's interpretive rulings do not have the force and effect of regulations, we give an agency's interpretations and practices considerable weight where they involve the contemporaneous construction of a statute and where they have been in long use." Ibid. (citations omitted).
The Court states that the Commissioner "reads the regulation correctly in this case." Ante, at 334, n. 7. Even if true, that statement says nothing about whether her interpretation for the past 35 years is reasonable. Both may be reasonable; such is the nature of ambiguity. In any event, I do not agree that the Commissioner's reply brief correctly reads the regulation to impose a necessary, but not sufficient, condition for excludability under § 104(a)(2). Although the regulation purports to interpret the term "damages received (whether by suit or agreement)," that term is unambiguous; it plainly includes all kinds of damages—inflicted on property
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