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Respondent determined a deficiency in petitioners’ Federal
income tax of $1,425 for the taxable year 2000.
The issue for decision is whether disability benefits
received by petitioner, Nancy L. Jerose, in 2000 from the Fortis
Benefits Insurance Co. are excludable from petitioners’ gross
income pursuant to section 105(c). For reasons set forth herein,
we hold they are not.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Horse Shoe, North Carolina, on the date the petition was filed in
this case.
During the period from 1991 through September 2000, Nancy L.
Jerose (petitioner) was employed as a certified nursing assistant
by Henderson County Hospital Corp. doing business as Margaret R.
Parsee Memorial Hospital (Memorial Hospital). Memorial Hospital
contracted through the Fortis Benefits Insurance Co. (Fortis Co.)
for a group long-term disability insurance program (the Fortis
policy) for the benefit of its employees. The Fortis policy
states, in pertinent part:
Schedule Amount
Core Plan: The Schedule Amount is 60 percent of
monthly pay subject to a Maximum Schedule
Amount of $6,000 per month.
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