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recomputed payments were no longer excludable under section
104(a)(1) because they "were computed only with reference to
* * * [the taxpayer's] length of service." Wiedmaier v.
Commissioner, supra. The Court reasoned:
Section 104(a)(1) excludes disability payments, not pension
payments from income. Section 1.104-1(b), Income Tax Regs.,
acts to prevent pension payments that are disguised as
disability payments from being excluded under section
104(a)(1). If a retirement provision is meant to compensate
employees for their disability and not for their creditable
service, then payments are computed with regard to the
injured employee's disability, not with regard to the number
of years that the employee has worked for the organization.
* * * [Id.]
Mabry v. Commissioner, supra, involved payments under the
same provisions of the Oakland Charter as are at issue in this
case, with one modification noted below. The taxpayer in Mabry
was a member of the Oakland Fire Department retired for an
employment-connected disability on July 1, 1960, prior to
qualifying for service retirement. Accordingly, pursuant to
section 2610(a) of the Oakland Charter, the taxpayer commenced
receiving payments on that date equal to 75 percent of 1-year
average compensation. Approximately 3 months later, on September
27, 1960, the taxpayer turned 55 and, since he had 22 years of
service, became qualified for service retirement,8 treating time
8The version of sec. 2610(a) of the Oakland Charter
applicable to the year at issue in this case requires the 75-
percent payments to be recomputed on the date when the member
"would have completed twenty-five (25) years of service and
(continued...)
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