James A. Picard - Page 18

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          than the service retirement provisions of section 2608 of the               
          Charter, the payments must still pass muster under section 1.104-           
          1(b), Income Tax Regs.  That regulation makes clear that even a             
          payment triggered by disability is subject to the proscription              
          against using length of service in computing the payment.                   
          Section 1.104-1(b), Income Tax Regs., provides that the section             
          104(a)(1) exclusion does not apply to a retirement pension or               
          annuity to the extent that it is determined by age or length of             
          service "even though the employee's retirement is occasioned by             
          an occupational injury or sickness". (Emphasis supplied.)  Even a           
          payment conceded to be occasioned by disability is not excludable           
          to the extent it is determined by reference to length of service.           
               Petitioner also cites various differences in the treatment             
          of "regular" service retirees under Oakland Charter section 2608            
          (that is, service retirees receiving benefits based on years of             
          actively working) and disability retirees whose payments are                
          recomputed under Oakland Charter section 2610(a) "as if" they               
          were service retirees.  For example, Oakland Charter section 2608           
          retirees may, by working longer than 25 years, become eligible              
          for allowance percentages higher than 50 percent,12 whereas                 
          Oakland Charter section 2610(a) disability retirees whose                   
          allowance percentage is recomputed at 50 percent are never                  

               12See sec. 2608(e) of the Oakland Charter, reproduced in the           

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