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benefits”, and to have such payments “deemed to have been paid in
lieu of Worker’s Compensation” and thus afford nontaxable status
to the benefits paid. Finally, the city council makes “no
warranties that the Internal Revenue Service or any other taxing
jurisdiction will abide by such retroactive redesignation.”
This case is distinguishable from Strickland v.
Commissioner, 540 F.2d 1196 (4th Cir. 1976), revg. T.C. Memo.
1974-188, cited by petitioner. Strickland involved an award of
service-connected disability benefits by the Veteran’s
Administration (VA). The Court of Appeals for the Fourth Circuit
held that a retired veteran of the Army awarded such disability
payments was entitled to an exclusion from gross income under
section 104(a)(4) and 38 U.S.C. section 3101.3 Unlike this case,
Strickland discussed the effect of a Federal law, namely 38
U.S.C. section 3010, which the Court of Appeals held, clearly
contemplated retroactive disability awards in that it permitted
the date of application for such an award to be treated as the
“effective date” of the award itself. The period of
3 Title 38 U.S.C. sec. 3101(a) provides: Payments of
benefits due or to become due under any law administered by the
Veterans Administration shall be exempt from taxation.”
Title 38 U.S.C. sec. 3101 has been reorganized and
renumbered pursuant to the Department of Veterans Health Care
Personnel Act of 1991, Pub. L. 102-40, 105 Stat. 187 (1991), and
the Department of Veterans Affairs Certification Act, Pub. L.
102-83, 105 Stat. 378 (1991) (codified at 38 U.S.C. sec. 5301
(1999)).
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