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This Court has previously considered similar issues in two
memorandum opinions, Wiedmaier v. Commissioner, T.C. Memo. 1984-
540, affd. 774 F.2d 109 (6th Cir. 1985), and Mabry v.
Commissioner, T.C. Memo. 1985-328. Both cases involved initial
payments to disability retirees conceded to be excludable under
section 104(a)(1) that were subsequently recomputed, on the date
when the taxpayers would have qualified for service retirement if
they had continued work uninterrupted, to substantially
approximate the amount of the service retirement benefit for
which the taxpayers would have qualified if they had retired
based on years of service on that date. In both cases the Court
concluded that the recomputed payments were ineligible for
exclusion under section 104(a)(1), by virtue of section 1.104-
1(b), Income Tax Regs.
Wiedmaier involved payments made under the Policemen and
Firemen Retirement System incorporated in the Charter of the City
of Detroit (Detroit Charter). Like the Oakland Charter at issue
in this case, the Detroit Charter provided an integrated plan of
disability and service retirement for members of the city police
and fire departments. The Detroit Charter further resembled the
Oakland Charter in three important respects: (i) Members
qualified for service retirement at the time they were retired
for disability were accorded retirement benefits computed under
the service retirement provisions of the Charter; (ii) members
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