Hilario M. and Cathy C. Aguirre - Page 5

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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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