Donald G. Russell - Page 4

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               The unemployment compensation benefits petitioner received             
          were paid to him by a Federal or State agency, not for any work             
          or personal services performed by petitioner, but particularly              
          and solely because of petitioner's lack of employment and                   
          inability to earn salary or wages due to the lack of employment             
          opportunities.  Section 1.219-1(c)(1), Income Tax Regs., provides           
          in pertinent part that the term "compensation" means wages,                 
          salaries, professional fees, or other amounts derived from or               
          received for personal services actually rendered.  Petitioner's             
          unemployment compensation benefits were not paid to him for                 
          personal services actually rendered.  Accordingly, the Court                
          holds that unemployment compensation benefits, since such                   
          benefits are not paid for personal services actually rendered,              
          does not constitute "compensation" within the intent and meaning            
          of section 219(b)(1)(B).  Thus, petitioner's allowable IRA                  
          contribution deduction for the year in issue is limited to                  
          $306.26, the amount of his taxable wages during 1992.                       
               At trial, petitioner referred the Court to the Internal                
          Revenue Service (IRS) 1990 instruction booklet for Form 1040 and            
          the following statement in that booklet on which he relied in               
          considering his unemployment compensation benefits as                       
          "compensation" for purposes of his IRA contribution:  "NOTE:                
          Supplemental unemployment benefits received from a company-                 
          financed supplemental unemployment benefit fund are wages.                  





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