Thomas D. Tuka - Page 7




                                        - 7 -                                         
               Petitioner also contends that regardless of whether U.S.               
          Airways in fact funded the disability plan, any contributions               
          that U.S. Airways made to the plan “would be constructive income            
          to the Petitioner, and thus includible in the Petitioner’s gross            
          income for each year the contributions were made.”  However, as a           
          general matter, the gross income of an employee does not include            
          employer-provided coverage under an accident or health plan.                
          Sec. 106(a).  Thus, we cannot agree that any contributions that             
          U.S. Airways made to the disability plan were properly includable           
          in petitioner’s gross income.                                               
               The benefits that petitioner received in 1999 are not                  
          excludable under section 104(a)(3).3  Accordingly, we hold that             
          the payment received in 1999 constitutes gross income, and we               
          sustain respondent’s determination of a deficiency.                         

                                                  Decision will be entered            
                                             for respondent except for the            
                                             accuracy-related penalty under           
                                             section 6662(a).                         


               3Petitioner also argues that the “US Air, Inc. Pilot’s                 
          Working Agreement” must be construed in conformance with the laws           
          of the Commonwealth of Pennsylvania, which prohibit taxation on             
          disability payments because they are not considered to be the               
          property of the beneficiary.  This case raises a question                   
          regarding the application of sec. 104(a)(3) of the Internal                 
          Revenue Code.  Whether the Commonwealth of Pennsylvania expressly           
          prohibits taxation of disability payments has no relevance in               
          deciding the issue before us.                                               





Page:  Previous  1  2  3  4  5  6  7  

Last modified: May 25, 2011