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subsection (a) to the extent such amounts–
(1) constitutes payment for the permanent loss or
loss of use of a member or function of the body, or the
permanent disfigurement, of the taxpayer, his spouse,
or a dependent (as defined in section 152), and
(2) are computed with reference to the nature of the
injury without regard to the period the employee is
absent from work.
Thus, a necessary predicate for exclusion under section 105(c) is
that the amounts are computed “without regard to the period the
employee is absent from work.” Armstrong v. Commissioner, T.C.
Memo. 1993-579.
The Minnesota State Retirement System provides that
disability payments are to be made to employees found to be
“totally and permanently disabled”. Minn. Stat. sec. 352.113
subdiv. 1, sec. 352.01 subdiv. 22 (2001). The statute defines
total and permanent disability as the employee’s “inability to
engage in any substantial gainful activity by reason of any
medically determinable physical * * * impairment that has existed
or is expected to continue for a period of at least one year.”
Minn. Stat. sec. 352.01 subdiv. 17 (2001). The statute goes on
to provide that if “the employee is no longer permanently and
totally disabled, or is engaged in or can engage in a gainful
occupation, payments of the disability benefit by the fund must
be discontinued.” Minn. Stat. sec. 352.113 subdiv. 6 (2001).
Thus, the disability payments under the Minnesota State
Retirement System cover only the period of time during which an
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Last modified: May 25, 2011