Lawrence L. and Kathleen J. Kelter - Page 7

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            promulgated by the Federal Aviation Administration, rendered him                              
            ineligible for employment as an airline pilot.  Under a loss of                               
            license plan maintained by the pilot’s employer, because of his                               
            medical incapacity, he became entitled to certain payments.                                   
            Under that plan, all medically incapacitated pilots received the                              
            same yearly benefit.  We determined that the payments received by                             
            the pilot failed to satisfy the requirement of section 105(c)(2)                              
            that payments be computed with reference to the nature of the                                 
            injury:                                                                                       
                  The benefits, however, do not vary according to the                                     
                  type of injury received and a pilot who has a heart                                     
                  attack is entitled to the same benefits as one who                                      
                  suffers a mental breakdown or loses a limb.  Thus, the                                  
                  payments are not computed with reference to the nature                                  
                  of the injury.  [Id. at 720.]                                                           
                  We refused to accept the taxpayer’s argument that payment                               
            for any injury that permanently robs an individual of his                                     
            principal means of livelihood should qualify for the section                                  
            105(c) exclusion.  We stated:                                                                 
                  We think that the overall scheme of section 105(c) is                                   
                  aimed at providing tax relief to persons who suffer                                     
                  serious, permanent physical injury and receive                                          
                  compensation because of it.  The fact that a person may                                 
                  have also lost wages or suffered a diminution of                                        
                  earning capacity because of the injury is irrelevant.                                   
                  * * *  [Id.; emphasis added.]                                                           
                  In Beisler v. Commissioner, 814 F.2d 1304 (9th Cir. 1987),                              
            affg. T.C. Memo. 1985-25, the Court of Appeals for the Ninth                                  
            Circuit affirmed a decision of ours based on our finding that                                 
            line-of-duty disability payments received on account of a career-                             




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