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B. Haar v. Commissioner
In Haar v. Commissioner, supra, this Court addressed for the
first time whether payments made by a nonmilitary employer to a
person who retires from service with that employer are excludable
from gross income pursuant to section 104(a)(4). In Haar, the
taxpayer suffered a hearing loss while serving in the U.S. Air
Force. For reasons other than disability, he was discharged from
the U.S. Air Force and began working as a civilian employee of
the General Services Administration (GSA). He later retired from
GSA on account of his hearing disability and began receiving
annuity payments from the Civil Service Retirement and Disability
Fund.6 He sought to exclude these payments from his taxable
income, relying on section 104(a)(4).
In Haar v. Commissioner, supra at 866, we concluded that
“Although the ambiguous wording of section 104(a)(4) provides
some superficial support” for the taxpayer’s position, this
circumstance was “overshadowed” by the nature of the Civil
Service benefits in question. We noted that the Civil Service
Retirement Act, 5 U.S.C. sec. 8331 et seq., is not designed to
compensate for military injuries. Rather, in determining
6 In Haar v. Commissioner, 78 T.C. 864 (1982), affd. 709
F.2d 1206 (8th Cir. 1983), the taxpayer also applied for
disability compensation from the Veterans’ Administration.
Although the Veterans’ Administration determined that the
taxpayer had defective hearing that was service connected, it
concluded that the taxpayer’s injury was not disabling to a
compensable degree.
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