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sickness shall be included in gross income to the extent such
amounts are (1) attributable to contributions by the employer and
not includable in gross income of the employee, or (2) are paid
by the employer. Section 105(c) provides that gross income does
not include amounts referred to in section 105(a) to the extent
such amounts (1) constitute payment for personal 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. It is clear that petitioner received the
payments from CFITF so long as he did not return to work. Since
the payments are contingent on petitioner’s absence from work,
rather than based on the nature of the injury, the payments do
not fit within the exception of includability under section
105(a) and (c). Respondent’s determination is sustained on this
issue.
Dependency Exemption
As indicated petitioner claimed a dependency exemption for
his girlfriend, Lupe Chitwood. A taxpayer may be allowed a
deduction for a dependent over half of whose support is provided
by the taxpayer. Secs. 151(c)(1), 152(a). A dependent includes
an individual who, for the taxable year, has as her principal
place of abode the home of the taxpayer and is a member of the
taxpayer’s household. Sec. 152(a)(9). It is necessary that the
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Last modified: May 25, 2011