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permanent nerve damage, a personal injury or illness that she
suffered beginning in September 1999. Petitioner testified that
she paid $3.50 biweekly toward the Fortis policy premiums.
However, petitioner did not offer any documentary evidence to
substantiate such a claim. Based on the common practices of
employer-funded insurance policies, such as the Fortis policy at
issue in the present case, and on the record in this case, we
find that the contributions for the Fortis policy were paid by
Memorial Hospital, petitioner’s employer, and that the
contributions from Memorial Hospital were not included in
petitioner’s gross income. Thus, in the present case, all four
conditions of section 105(a) have been met.
The fact that section 105(a) applies does not necessarily
mean that the amounts are included in income. As section 105(a)
itself indicates, there are exceptions. The relevant exception
for the instant case appears in section 105(c), which provides as
follows:
SEC. 105(c). Payments Unrelated To Absence From Work.--
Gross income does not include amounts referred to in
subsection (a) to the extent such amounts--
(1) constitute payment for the permanent loss or
loss of use of a member or function of the body, or the
permanent disfigurement, of the taxpayer * * *, and
(2) are computed with reference to the nature of
the injury without regard to the period the employee is
absent from work.
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