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Petitioner initially applied for Industrial Disability
Retirement Benefits from the city of San Francisco. Petitioner
was approved for benefits under this program. The parties agree
that the benefits under this program were equivalent to workmen’s
compensation benefits, and, accordingly, such benefits would not
constitute gross income since petitioner’s disabling condition
was sustained within the scope of and in the course of his
employment. Sec. 104(a)(1). However, petitioner never received
any benefits under the Industrial Disability Retirement Benefits
program. Petitioner’s award had been made by the American
Arbitration Association. Before any benefits were paid to him,
the city of San Francisco, through its general counsel, refused
to honor the determination and threatened to challenge the award
in court. Petitioner was represented by counsel, and the two had
several conferences with officials of the city regarding the
matter. In that discourse, the representatives of the city of
San Francisco represented to petitioner and his attorney that, if
petitioner instead chose a “nonindustrial” disability retirement,
the city would not oppose such an award. Petitioner received an
assurance by the city, which was attested to by a representative
of the IRS who was present at one of the conferences, that the
benefits from a nonindustrial disability retirement program would
not constitute gross income. The benefits under the
nonindustrial disability program, however, were based on age and
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Last modified: May 25, 2011