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benefits package was also established through collective
bargaining negotiations. ALPA negotiated with U.S. Airways for
disability benefits for its member pilots.
As a result of petitioner’s carpal tunnel syndrome, he was
eligible for disability benefits under the pilot disability plan.
In 1999, U.S. Airways, through Reliastar Life of New York, paid
to petitioner $83,046.54 in disability benefits. Petitioner’s
disability benefits were paid on the basis of his age, years of
service, and salary. The disability benefits were not paid on
the basis of his medical condition.
Reliastar issued a Form W-2, Wage and Tax Statement, on
which it reported the disability benefits that petitioner
received in 1999 as taxable income (“Wages, tips, other
compensation”). Petitioner did not report the disability
benefits as income on the Form 1040, U.S. Individual Income Tax
Return, that he filed with respect to taxable year 1999.
Petitioner alleges, and he introduced testimony to show,
that U.S. Airways pilots made wage concessions of approximately
$20 million in exchange for the pilot disability plan.
Petitioner’s disability benefits package under that plan did not
result in any separate deductions out of his pay, and its cost
was not incorporated in his union dues. Instead, petitioner
alleges that the pilot disability plan was “paid for at the
negotiating table” through the wage concessions.
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