James A. Picard - Page 6

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          pursuant to the terms of section 2610(a) of the Charter, from 75            
          to 50 percent of 1-year average compensation.  This recomputed              
          amount was equal to the amount petitioner would have received if            
          he had served without interruption for 25 years and retired for             
          service on that date, with one modification:  the compensation              
          base to which the 50-percent allowance was applied was 1-year               
          average compensation rather than the 3-year average compensation            
          utilized in computing "regular" service retirement allowances               
          under Oakland Charter section 2608.                                         
               The parties have stipulated that the amounts received prior            
          to October 31, 1991, are excludable under section 104(a)(1).  The           
          parties have also stipulated that petitioner did not receive any            
          service credit under section 2609 of the Oakland Charter for the            
          time during which he received a disability retirement allowance             
          pursuant to section 2610(a) of the Charter.                                 
               During the year in issue, petitioner received payments                 
          totaling $27,007 from the City of Oakland, awarded pursuant to              
          section 2610(a) of the Charter.  The parties have stipulated that           
          the only issue for decision is whether those payments are                   
          excludable from gross income as disability payments under section           
               The Internal Revenue Code defines “gross income” as follows:           
          "Except as otherwise provided in this subtitle, gross income                
          means all income from whatever source derived".  Sec. 61(a).  One           

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