Thomas J. Rabideau and Sandra M. Rabideau - Page 2

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               Respondent determined a deficiency in petitioners' Federal             
          income tax for the taxable year 1992, as well as an accuracy-               
          related penalty for negligence under section 6662(a), in the                
          amounts of $6,176 and $1,235, respectively.                                 
               Respondent subsequently conceded that petitioners are not              
          liable for the accuracy-related penalty.  Accordingly, the sole             
          issue for decision is whether petitioners may exclude from gross            
          income the disability benefits that petitioner Thomas J. Rabideau           
          received from his former employer.2                                         
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated, and they are so                
          found.  Petitioners resided in Pardeeville, Wisconsin, at the               
          time that their petition was filed with the Court.                          
               Petitioner Thomas J. Rabideau (petitioner) was employed by             
          Metropolitan Life Insurance Co. (Met Life) from no later than               
          1981 through 1989.                                                          
               During 1989, Met Life maintained a "flexible benefits plan",           
          or "cafeteria plan", that allowed eligible employees to select              
          between different types of benefits and cash.  Specifically, the            
          flexible benefits plan offered medical, dental, long-term                   
          disability, and life insurance benefits to eligible employees of            
          Met Life.                                                                   


               2 An adjustment to petitioners' earned income credit is a              
          mechanical matter, the resolution of which depends on our                   
          disposition of the issue for decision.                                      




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