Robert Matthew Donohoe and Jane Haregewoin Donohoe - Page 6




                                        - 5 -                                         
          457(b).  An eligible employer is “a State, political subdivision            
          of a State, and any agency or instrumentality of a State or                 
          political subdivision of a State”.  Sec. 457(e)(1)(A).                      
               Initially we note that while it may be arguable that the               
          vacation and/or sick leave could be considered a deferred                   
          compensation plan, section 457 would only defer the income to               
          “the taxable year in which such compensation or other income is             
          paid”.  Sec. 457(a).  Petitioner received the payment in 1999,              
          the year before the Court.                                                  
               But that is not the only problem with petitioner’s section             
          457 argument. Section 457(e)(11) provides that “Any bona fide               
          vacation leave, sick leave, compensatory time, severance pay,               
          disability pay, or death benefit plan” is not a plan that                   
          provides for the deferral of compensation.  Sec.                            
          457(e)(11)(A)(i).6   Although the County of Los Angeles is an               
          eligible employer under section 457, the compensation petitioner            
          received for unused sick and vacation leave fits squarely within            
          the exemption of section 457(e)(11).  As a result, petitioner’s             
          compensation for unused vacation and sick leave is not a deferred           
          compensation plan, and section 457 cannot apply.  Therefore, we             




               6  Respondent issued Notice 88-8, 1988-1 C.B. 477, and                 
          Notice 88-68, 1988-1 C.B. 556, which Congress later codified in             
          sec. 457(e)(11) by the Technical and Miscellaneous Revenue Act of           
          1988, Pub. L. 100-647, sec. 6064(a), 102 Stat. 3700.                        





Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011