Larry J. and Catherine E. France - Page 13

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          under accident and health plans for personal injuries or                    
          sickness.                                                                   
                    2.   Section 104(a)(1)                                            
               Section 104(a)(1) excludes from gross income “amounts                  
          received under workmen’s compensation acts as compensation for              
          personal injuries or sickness”.  The regulations provide that               
          section 104(a)(1) includes “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.”  Sec. 1.104-1(b), Income Tax Regs.  A                
          statute that conditions eligibility for benefits on the existence           
          of a work-related injury or sickness may qualify as a workers’              
          compensation act for purposes of section 104 even though those              
          benefits are called “disability retirement benefits.”  Take v.              
          Commissioner, 804 F.2d 553, 557 (9th Cir. 1986), affg. 82 T.C.              
          630 (1984).  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 * * *               
          even though the employee’s retirement is occasioned by an                   
          occupational injury or sickness.”  Sec. 1.104-1(b), Income Tax              
          Regs.  The relevant inquiry is into the nature of the statute               
          pursuant to which the payment is made and not the source of the             
          particular taxpayer’s injury.  Rutter v. Commissioner, 760 F.2d             
          466, 468 (2d Cir. 1985), affg. T.C. Memo. 1984-525.  If the                 






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