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section 105 may be encapsulated in a qualified retirement plan.
See, e.g., Berman v. Commissioner, 925 F.2d 936, 938-939 (6th
Cir. 1991), affg. T.C. Memo. 1989-654; Caplin v. United States,
718 F.2d 544, 548-549 (2d Cir. 1983); Wood v. United States, 590
F.2d 321, 323 (9th Cir. 1979). Additionally, section 105(e)(2)
provides that amounts received under a disability fund maintained
under State law are treated as received through accident or
health insurance. See, e.g., Rosen v. United States, 829 F.2d
506, 509 (4th Cir. 1987); Beisler v. Commissioner, 814 F.2d 1304,
1306 (9th Cir. 1987); Trappey v. Commissioner, 34 T.C. 407, 408
(1960).
The general rule of section 105(a) is that amounts received
by an employee through accident or health insurance are included
in gross income to the extent: (1) Attributable to contributions
by the employer, not included in the gross income of the
employee, or (2) paid by the employer. Stated conversely,
amounts received through such insurance are typically excludable
7(...continued)
(b) Amounts Expended for Medical Care.* * * gross
income does not include amounts referred to in
subsection (a) if such amounts are paid, directly or
indirectly, to the taxpayer to reimburse the taxpayer
for expenses incurred by him for the medical care * * *
of the taxpayer * * *
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Last modified: May 25, 2011