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of the ordinary disability retirement benefits received from the
ERS in taxable year 2000.12
Section 105 provides two exceptions to includability even
for amounts attributable to employer contributions or payments
that were not includable in an employee’s gross income. Section
105(b) provides an exclusion for amounts paid by an employer to
the taxpayer to reimburse the taxpayer for expenses for medical
care. Medical expense reimbursements are not at issue in this
case, so the exception in section 105(b) does not apply. Section
105(c) excludes from gross income amounts attributable to
12 Respondent argues that petitioner’s ordinary disability
retirement benefits are not excludable under sec. 104(a)(3)
because there is no evidence that the source of the benefits was
accident or health insurance or an arrangement having the effect
of accident or health insurance. We note, in this regard, that
for purposes of secs. 104 and 105, amounts received under an
accident or health plan for employees, as well as amounts
received from a sickness and disability fund for employees
maintained under State law, are treated as received through
accident or health insurance. Sec. 105(e); secs. 1.104-1(d),
1.105-5(a), Income Tax Regs.; see also Berman v. Commissioner,
925 F.2d 936, 938-939 (6th Cir. 1991), affg. T.C. Memo. 1989-654
(a plan subject to sec. 105 may be encapsulated in a qualified
retirement plan); Trappey v. Commissioner, 34 T.C. 407 (1960)
(disability retirement income paid under the District of Columbia
Teachers' Retirement Act was received through accident or health
insurance for personal injuries or sickness within meaning of
sec. 104(a)(3)). However, because the remaining portion of
petitioner’s ordinary disability retirement benefits as
determined by respondent would be includable in petitioners’
gross income, on the record before us, under either sec. 72 or
105(a), it is not necessary for us to decide whether the ERS
would be treated as accident or health insurance, and we limit
our decision to a conclusion that, assuming arguendo that the
benefits received by petitioner from the ERS were received
through health or accident insurance, they are includable in
gross income under sec. 105(a).
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