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Petitioners reported no interest income on their 1997
Federal income tax return. Respondent determined that
petitioners received interest in 1997 in the amount of $311.84 on
their overpayment of income tax for 1993.
Discussion
A. Disability Benefits
As a general rule, section 104(a)(3) excludes from an
employee's gross income amounts received through accident or
health insurance for personal injuries or sickness. However, the
section provides an exception for amounts received by an employee
to the extent such amounts either are paid by the employer or are
attributable to employer contributions that were not includable
in the employee's gross income.4
Section 105(a) coordinates with section 104. Rabideau v.
Commissioner, T.C. Memo. 1997-230. As a general rule, section
105(a) provides that amounts received by an employee through
3(...continued)
Date Amount
4/15/97 $196.41
8/25/97 0.04
10/6/97 115.39
311.84
4 See Trappey v. Commissioner, 34 T.C. 407 (1960)
(disability income is received through accident or health
insurance for personal injuries or sickness within the meaning of
sec. 104(a)(3)); see also sec. 105(e)(1) (for purposes of secs.
104 and 105, amounts received under an accident or health plan
for employees are treated as amounts received through accident or
health insurance); Chernik v. Commissioner, T.C. Memo. 1999-313.
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