Richard A. McDowell - Page 9

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          banc 814 F.2d 1304 (9th Cir. 1987).  Where administrative rules             
          or regulations have "the force and effect of law" they will be              
          found to be the equivalent of a statute for purposes of section             
          1.104-1(b), Income Tax Regs. interpreting  section 104(a)(1).  As           
          explained in Rutter v. Commissioner, supra at 468:                          
               A regulation, like a statute, is a rule of general                     
               applicability promulgated by a public agency to govern                 
               conduct within the agency's jurisdiction.  A labor                     
               contract, unlike a statute, is an agreement between                    
               union and employer, modifiable at any time. * * *                      
               We find the facts of this case similar to those of Clemens             
          v. Commissioner, T.C. Memo. 1989-205.  There the taxpayer argued            
          that his employer had a policy of paying benefits for work-                 
          related injuries and that he had received payments pursuant to              
          the policy.  Along with his own testimony, the taxpayer offered             
          as evidence statements of a witness who testified that the policy           
          was outlined in a handbook and was included in the relevant                 
          collective bargaining agreement.  The Court found the evidence              
          insufficient to show that the "past practice" amounted to actions           
          having the "force and effect of law".  We find the record in this           
          case insufficient to show that "application" or "practice" here             
          arose to a level having the force and effect of law.                        
               Retroactive "Clarification" of the City Ordinance                      
               Petitioner urges that our examination of the wording of the            
          City ordinance include language added to the ordinance2 by an               

               2Pawtucket City Ordinance Chapter 1406 has been renumbered.            
          The ordinance provisions with which we are concerned were Chapter           
                                                             (continued...)           



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