William T. and Kathryn A. Kees - Page 6

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          Act, 42 U.S.C. secs. 416(i), 423 (1994), as a result of chronic             
          headaches, labile hypertension, major depressive disorder,                  
          seizure disorder, and sleep apnea.                                          
               Respondent argues that the entire amount petitioners                   
          received from UNUM in 1992, $150,646, is included in gross income           
          under section 105(a).  Petitioners argue that the lump-sum                  
          payment of $135,000 was not paid under the disability plan and              
          that as a result the amounts received from UNUM are not taxable             
          income to them.  We agree with respondent.                                  
               Section 105(a) provides as follows:                                    
               Except as otherwise provided in this section, amounts                  
               received by an employee through accident or health                     
               insurance for personal injuries or sickness shall be                   
               included in gross income to the extent such amounts                    
               * * * are attributable to contributions by the employer                
               which were not includible in the gross income of the                   
               employee * * *.                                                        

          Section 105(a), therefore, has several conditions for its                   
          application.  First, it applies to “amounts received * * *                  
          through accident or health insurance”.  Second, the amounts must            
          be “for personal injuries or sickness”.  Third, the amounts must            
          be “attributable to contributions by the employer”.  Fourth, it             
          must be the case that the contributions “were not includible in             
          the gross income of the employee”.  In the instant case, there is           
          no question that the second, third, and fourth conditions have              
          been met.  The concussion petitioner suffered is a personal                 
          injury.  Petitioner’s employer, Arch Mineral, funded the                    

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