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Petitioner counters respondent's contentions by maintaining
that:
(a) Petitioner does not rely on the agreement as a basis for
excluding the pension disability payments from income; (b) the
City ordinance has been interpreted by the Rhode Island Supreme
Court as in the nature of a worker's compensation act; (c) the
ordinance has been applied in a manner that is in the nature of a
worker's compensation act; and (d) the ordinance has been
retroactively amended to "clarify" that it is in the nature of a
worker's compensation act.
Respondent's determinations are presumed correct, and
petitioner has the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Furthermore, every
item of a person's gross income is subject to Federal income tax
unless there is a statute or some rule of law that exempts the
person or the item from gross income. HCSC-Laundry v. United
States, 450 U.S. 1, 5 (1981).
Exemption Under Section 104(a)(1)
An exclusion from gross income can be found at section
104(a)(1) for "amounts received under workmen's compensation acts
as compensation for personal injuries or sickness". Section
1.104-1(b), Income Tax Regs., interprets section 104(a)(1) to
exempt amounts received under a worker's compensation act, "or
under a statute in the nature of a workmen's compensation act
which provides compensation to employees for personal injuries or
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