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After concessions,2 the sole issue for decision is whether
$6,000 of short-term disability benefits and $10,124 of long-term
disability benefits that petitioner received in 1994 pursuant to
employer-sponsored disability plans were includable in gross
income under section 105(a), or were excludable from gross income
under either section 104(a)(3) or section 105(c).
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts is incorporated herein by this
reference.
Petitioner resided in San Quentin Prison, Tamal, California,
on the date he filed his petition.
From March 18, 1980, to January 21, 1994, petitioner was
employed full time by the City of Newport Beach, California (the
City), as a member of the City's tree maintenance crew.
2Petitioner concedes that the following items must be
included in his taxable income for 1994: (1) Payments in the
amount of $40,635 from the California Public Employees'
Retirement System (CALPERS); (2) wage income of $2,738, and (3)
vacation pay of $8,845.
Respondent concedes that (1) petitioner is not liable for
the 10-percent tax on a premature distribution from a qualified
retirement plan under sec. 72(q)(1) with respect to the CALPERS
payments to petitioner in 1994; (2) petitioner does not have
discharge of indebtedness income in the amount of $5,191 under
sec. 61(a)(12); (3) petitioner is not liable for the accuracy-
related penalty for substantial understatement of income taxes
under sec. 6662(a) and (d).
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