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did not include that amount in income on their joint 1991 Federal
income tax return. Mr. Crandall's 1991 Form W-2, Wage and Tax
Statement, issued by the Kodak Welfare Benefit Trust, reported
the amount of $5,491.52 in separate boxes, alternatively entitled
"Wages, tips, other compensation" and "Disability Benefits (Sick
Pay) Included in Wages", and also in the box for "Total Benefits
Paid". Nothing was withheld or excluded from Mr. Crandall's 1991
benefits. On their 1991 return, Mr. Crandall reported as his
occupation "Disabled", and petitioner Ida Crandall reported as
her occupation "Teacher".
Petitioners contend that the payments they received in 1991
from the Kodak Welfare Benefit Trust are excludable from gross
income because the total amount received was not attributable to
employer contributions that were not includable in petitioners'
gross income.
Respondent determined that the payments Mr. Crandall
received must be included in petitioners' 1991 gross income
because the Kodak Long Term Disability Plan was funded solely by
employer contributions. Respondent's determinations as to
petitioners' tax liability are presumed correct, and petitioners
have the burden of proving otherwise. Rule 142(a).
Section 105 provides that, in general, amounts received by
an employee, through an accident or health plan for employees,
for personal injuries or sickness must be included in gross
income to the extent such amounts (1) are attributable to
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