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In order to qualify for the section 105(c) exception, the
payments to petitioner must satisfy both paragraphs (1) and (2)
of section 105(c). We find that the payments fail section
105(c)(2); therefore, we need not, and do not, decide whether
they satisfy section 105(c)(1).
Section 105(c)(2) itself has two parts that must be
satisfied: (1) The payments to the taxpayer must be computed
with reference to the nature of the injury, and (2) the payments
must be computed without regard to the period the taxpayer is
absent from work. With respect to the first part of section
105(c)(2), the Court of Appeals for the Fourth Circuit stated in
Rosen v. United States, 829 F.2d 506, 509 (4th Cir. 1987):
A review of the cases indicates that for payments to be
excludible from income under section 105(c), the instrument
or agreement under which the amounts are paid must itself
provide specificity as to the permanent loss or injury
suffered and the corresponding amount of payments to be
provided. * * * Exclusion is permitted only under plans
which vary benefits to reflect the particular loss of bodily
function. * * *
Accord Beisler v. Commissioner, 814 F.2d 1304, 1307 (9th Cir.
1987), affg. T.C. Memo. 1985-25; Hines v. Commissioner, 72 T.C.
715, 720 (1979).
Further, the legislative history of section 105(c)(2)
illustrates the distinct character of both the nature-of-the-
injury and the absence-from-work requirements of the statute. S.
Rept. 1622, 83d Cong., 2d Sess. 183-184 (1954), provides the
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