Steven Arnold Diem - Page 6

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               Section 1.104-1(b), Income Tax Regs., provides in pertinent            
          part:                                                                       

               Section 104(a)(1) excludes from gross income amounts which             
               are received by an employee under a workmen’s compensation             
               act * * * or under a statute in the nature of a workmen’s              
               compensation act which provides compensation to employees              
               for personal injuries or sickness incurred in the course of            
               employment.  * * *  However, section 104(a)(1) does not                
               apply to a retirement pension or annuity to the extent that            
               it is determined by reference to the employee’s age or                 
               length of service, or the employee’s prior contributions,              
               even though the employee’s retirement is occasioned by an              
               occupational injury or sickness.  * * *  [Emphasis added.]             

               This and other courts have consistently held that, in order            
          to be excludable under the provisions of section 104(a)(1),                 
          retirement benefits or payments may not be based upon any factor            
          other than disability, and, where benefits are based upon any               
          other factor, such as age or length of service on the job, the              
          retirement plan under which such benefits are paid will not                 
          qualify as being similar to workmen’s compensation acts within              
          the meaning of section 104.  Haar v. Commissioner, 78 T.C. 864              
          (1982), affd. 709 F.2d 1206 (8th Cir. 1983); Riley v. United                
          States, 140 Ct. Cl. 381, 156 F. Supp. 751 (1957); Mabry v.                  
          Commissioner, T.C. Memo. 1985-328; Dauria v. Commissioner, T.C.             
          Memo. 1982-458; Carlton v. United States, 7 Cl. Ct. 323 (1985),             
          affd. 782 F.2d 173 (Fed. Cir. 1986).                                        
               There is no dispute that the benefits petitioner received              
          came from the nonindustrial disability retirement program, and              





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