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disability Social Security benefits petitioner received during
2001. Petitioner’s position is that the disability Social
Security benefits are not includable in his income because these
benefits are merely a continuance of the employer-sponsored
insurance benefit and, since those latter benefits are not
taxable, that exempt characteristic extends or carries over to
the disability Social Security benefits. Petitioner did not
include these benefits as income on his 2001 Federal income tax
return. Of the $41,685 in Social Security benefits he received
during 2001, respondent determined that $9,511 of these benefits,
pursuant to section 86(a), was includable in income.
Prior to 1984, certain payments made in lieu of wages to an
employee who was retired by reason of permanent and total
disability were excludable from the employee’s gross income under
section 105(d). However, the Social Security Act Amendments of
1983, Pub. L. 98-21, sec. 122(b), 97 Stat. 87, repealed the
limited exclusion of disability payments provided by section
105(d), effective with respect to taxable years beginning after
1983. Since 1984, Social Security disability benefits have been
treated in the same manner as other Social Security benefits.
Sec. 86(d)(1).2 These benefits are subject to tax under the
2Sec. 86(d)(1) defines “Social Security benefit” as any
amount received by reason of entitlement to a monthly benefit
under title II of the Social Security Act, which includes
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