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after the recomputation the taxpayer "was no longer being paid
purely on the basis of his disability, but started to receive new
and different payments based upon his age and years of service".
Id.
Wiedmaier v. Commissioner, supra, Mabry v. Commissioner,
supra, and the instant case involve substantially similar
arrangements wherein disability retirement payments that are
initially excludable under section 104(a)(1) are subsequently
recomputed on the date when the disabled employee would have
qualified for service retirement if he had continued work
uninterrupted. The recomputed payments are set at the (reduced)
amount that the employee would have received if he had taken
service retirement on that date, treating the time actually
working and the time spent on disability as equivalent for this
purpose. We concluded in Wiedmaier and Mabry that the payments
resulting from such a recomputation were "determined by reference
to the employee's age or length of service" within the meaning of
section 1.104-1(b), Income Tax Regs., and our opinion in
Wiedmaier was affirmed by the Court of Appeals for the Sixth
Circuit. Wiedmaier v. Commissioner, 774 F.2d 109 (6th Cir.
1985). We see no reason for a different result here.
Petitioner argues that Wiedmaier and Mabry are
distinguishable because the taxpayers therein received formal
service credit for time spent on disability under the municipal
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