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not report the $22,820.23 on his 1993 Federal income tax return.3
In the notice of deficiency, respondent determined that
petitioner should have reported the above amount.
Petitioner’s Year-to-Date Earning Reports for 1989 and 1990
(i.e., the City’s employment records) show that no funds were
withheld from petitioner’s wages to pay for the long-term
disability plan. Francisco Gutierrez, the City’s administrative
service manager in charge of payroll functions, testified that
Standard’s insurance premiums, to the extent paid by employees,
are typically paid through withholding and would be reflected on
those earning reports.
Discussion
Respondent asserts that the distributions should be included
in petitioner’s 1993 gross income because the City, not
petitioner, exclusively funded the long-term disability plan
under which petitioner benefited. Petitioner, on the other hand,
argues that the payments should be excluded from gross income
because he funded the disability plan through employee
withholdings and because he was advised that the payments were
not taxable.
3 Petitioner prepares his tax returns on the cash method of
accounting.
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Last modified: May 25, 2011