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Discussion
The parties appear to agree that the plan constitutes an
accident or health plan within the meaning of sections 104(a)(3)
and 105(a), and we proceed as though it does. Simply stated, the
statutory scheme framed by these sections allows a taxpayer to
exclude from income amounts received through accident or health
insurance plans if: (1) The taxpayer paid for the insurance; or
(2) the amounts were attributable to contributions by the
taxpayer’s employer that were includable in the taxpayer’s gross
income. See sec. 104(a)(3). On the other hand, amounts received
by an employee through accident or health insurance for personal
injuries must be included in gross income to the extent such
amounts are attributable to contributions by the employer that
were not includable in the gross income of the employee. See
sec. 105(a).
Petitioner does not claim that Ingram’s contributions to the
plan on his behalf were includable or included in his gross
income for any year, and the version of section 106 in effect
during the relevant periods suggests that they were not.
Instead, petitioner argues that the disability payments are
excludable from income because he paid for the applicable
insurance coverage.
According to petitioner, Ingram withheld amounts from his
salary for long-term disability coverage under the plan.
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Last modified: May 25, 2011