James A. Picard - Page 14

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          charter terms at issue in those cases, whereas it has been                  
          stipulated in the instant case that petitioner did not receive              
          any service credit under section 2609 of the Oakland Charter                
          during the time that he received a disability retirement                    
          allowance.  Moreover, petitioner argues, because the taxpayers in           
          the two prior cases got service credit, their payments actually             
          converted under the charter terms from disability retirement to             
          service retirement payments at the time of recomputation, whereas           
          his did not.9  In petitioner's view, it is the formal crediting             
          of time spent on disability as "service" under the charters'                

               9Petitioner relies heavily on Boystel v. Commissioner, T.C.            
          Memo. 1961-146, to support his position that the retirement                 
          payments after the 25th anniversary of his hire date could not              
          have converted to service retirement payments because he did not            
          receive credit for service while on disability.  We do not                  
          believe Boystel helps petitioner.  In Boystel, the Commissioner             
          unsuccessfully challenged the sec. 104(a)(1) exclusion for                  
          payments received in and after the 25th year following the year             
          of hire of a taxpayer who had been previously retired for, and              
          was receiving payments on account of, a job-connected disability.           
          The taxpayer had retired for disability prior to completing 25              
          years of (actual) service, the period necessary to qualify for              
          service retirement under the applicable police regulations.  The            
          Commissioner sought to deny the sec. 104(a) exclusion for                   
          payments received in 1955 (and thereafter), which was the year in           
          which the taxpayer would have completed 25 years of actual                  
          service but for the disability retirement.  However, Boystel did            
          not involve a recomputation of the payments at the 25-year mark,            
          and sec. 1.104-1(b), Income Tax Regs., was not considered or                
          cited in the case.  The taxpayer was receiving the same payment             
          in the 25th year following his hire date (and thereafter) as that           
          initially awarded him when he had been retired for disability 8             
          years earlier.  Thus, the challenged payments had not been                  
          recomputed with reference to the period that the taxpayer was on            
          disability, and the Court had no occasion to consider the effect            
          of such a factor or the application of sec. 1.104-1(b), Income              
          Tax Regs.                                                                   

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