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Relying specifically upon section 105(a),1 see also sec.
104(a)(3), respondent takes the position that the payments are
includable in petitioners’ income because (1) they are
attributable to contributions made by his employer and not
includable in his income, or (2) they were paid by his employer.
As noted, during 1998, petitioner was awarded worker’s
compensation benefits totaling $15,852.29 as a result of the back
injury he sustained in the previous year. Worker’s compensation
benefits are excludable from income, see sec. 104(a)(1), and
there is no dispute on that point in this case. However, only a
portion of petitioner’s worker’s compensation award was paid
directly to petitioner. In accordance with the agreement, the
remainder was used to reimburse Anheuser for the payments.
Absent circumstances such as those that exist in this case,
an amount described in section 105(a) constitutes income to the
recipient/taxpayer because the amount constitutes an accession to
the recipient/taxpayer’s wealth. In this case, although the
payments might be generally of the type contemplated by section
1 Sec. 105(a) states:
Except as otherwise provided in this section,
amounts received by an employee through accident or
health insurance for personal injuries or sickness
shall be included in gross income to the extent such
amounts (1) are attributable to contributions by the
employer which were not includible in the gross income
of the employee, or (2) are paid by the employer.
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Last modified: May 25, 2011