- 4 -
sections 104(a)(3) and 105(e).4 As such, the benefits are
excludable from gross income. The Court disagrees.
Prior to 1984, certain payments made in lieu of wages to an
employee who was retired by reason of permanent and total
disability were excludable from the employee's gross income under
section 105(d). However, the Social Security Act Amendments of
1983, Pub. L. 98-21, sec. 122(b), 97 Stat. 85, repealed the
limited exclusion of disability payments provided by section
105(d), effective with respect to taxable years beginning after
1983. Since 1984, Social Security disability benefits have been
treated in the same manner as other Social Security benefits.
See sec. 86(d)(1).5 These benefits are subject to tax under the
provisions of section 86. See Ernzen v. United States, 875 F.2d
228 (9th Cir. 1989); Wallers v. United States, 847 F.2d 1279 (7th
Cir. 1988); Gibson v. Commissioner, T.C. Memo. 1996-140; Bradley
v. Commissioner, T.C. Memo. 1991-578.
Section 61(a) provides that gross income includes all income
from whatever source derived, unless excludable by a specific
provision of the Code. Moreover, section 86(a), for the year at
issue, provides that gross income includes Social Security
4 See supra note 3.
5 Sec. 86(d)(1) defines "Social Security benefit" as
amounts received under title II of the Social Security Act that
include Social Security disability benefits.
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