Harold T. and Francesca Redman - Page 5




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          income can be found at section 104(a)(1) for “amounts received              
          under workmen’s compensation acts as compensation for personal              
          injuries or sickness”.  Section 1.104-1(b), Income Tax Regs.                
          interprets section 104(a)(1) to exempt amounts received under a             
          workmen’s compensation act, “or under a statute in the nature of            
          a workmen’s compensation act which provides compensation to                 
          employees for personal injuries or sickness incurred in the                 
          course of employment.”  This exclusion has been strictly                    
          construed to conform with the general rule that all income is               
          taxable unless it is specifically excluded.  See Kane v. United             
          States, 43 F.3d 1446, 1449, 1451 (Fed. Cir. 1994).                          
               Where administrative rules or regulations have “the force              
          and effect of law”, they will be found to be the equivalent of a            
          statute for purposes of section 1.104-1(b), Income Tax Regs.                
          Dyer v. Commissioner, 71 T.C. 560, 562 (1979).  As explained in             
          Rutter v. Commissioner, 760 F.2d 466, 468 (2d Cir. 1985), affg.             
          T.C. Memo. 1984-525:                                                        
               A regulation, like a statute, is a rule of general                     
               applicability promulgated by a public agency to govern                 
               conduct within the agency’s jurisdiction.  A labor                     
               contract, unlike a statute, is an agreement between                    
               union and employer, modifiable at any time.  That                      
               * * * [a] labor contract involved a public employer is                 
               irrelevant to the legislative purposes behind the                      
               workmen’s compensation exclusion, and does not convert                 
               the contract into a “statute”.                                         
               Where the language of a collective bargaining agreement is             
          by legislative act incorporated by reference into a municipal               






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