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ambiguous and did not provide clear indicia of a dual purpose.
Id. at 939.
Petitioners rely on Wood v. United States, 590 F.2d 321 (9th
Cir. 1979) and Masterson v. United States, 478 F. Supp. 454 (N.D.
Ill. 1979), both holding that distributions from pension plans
were excludable from income under section 105(c). These cases,
however, are not controlling. See Caplin v. United States, 718
F.2d at 547-548; Gordon v. Commissioner, 88 T.C. at 636-638 (both
rejecting the application of these cases under similar facts).
In Wood, the status of the plan as an accident or health plan had
been conceded by the Government and was not in dispute. Wood v.
United States, supra at 323.3 In Masterson, the court simply
proceeded on the assumption that the distributing profit-sharing
plan was a dual purpose plan without any analysis. The court
relied on a statement in Wood that the precise nature and taxable
status of these payments is uncertain until the funds are
disbursed. Because the taxpayer received the payments after he
became disabled, the court concluded that they represented
compensation for a disability. Masterson v. United States, supra
at 455. However, this conclusion has been criticized by this and
3In Beisler v. United States, 814 F.2d 1304, 1308 (9th Cir.
1987), affg. T.C. Memo. 1985-25, the Court of Appeals for the
Ninth Circuit subsequently clarified its holding in Wood v.
United States, 590 F.2d 321 (9th Cir. 1979). In Beisler, the
Court of Appeals for the Ninth Circuit stated "The Wood court
itself recognized that it was not addressing the entire body of
section 105(c) law. See 590 F.2d at 323 (court assumes for
purposes of litigation that plan qualifies as accident or health
plan)." Beisler v. United States, supra.
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