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liability is properly at issue, we review that issue de novo.
Sego v. Commissioner, supra at 610; Goza v. Commissioner, supra
at 181. If the validity of the underlying tax liability is not
at issue, we review the Commissioner’s determination for abuse of
discretion. Sego v. Commissioner, supra at 610. Mr. Cotler did
not receive a notice of deficiency for 1997 or for 1998, he
raised his underlying liability at the section 6330 hearing, and
he is entitled to contest the underlying tax liability for 1997
and 1998.4 Montgomery v. Commissioner, 122 T.C. 1, 5 (2004).
II. Disability Benefits
Mr. Cotler argues that the disability benefits that he
received in 1997 and 1998 are excludable from gross income
pursuant to section 104(a)(3). Respondent determined that the
amounts are not excluded from gross income.
Gross income includes income from whatever source derived.
Sec. 61(a). Gross income, however, does not include amounts
received through accident and health insurance for personal
injuries or sickness other than amounts received by an employee,
to the extent such amounts: (1) Are attributable to
contributions by the employer which were not includable in the
gross income of the employee, or (2) are paid by the employer.
Sec. 104(a)(3); see also Tuka v. Commissioner, 120 T.C. 1 (2003),
4 Respondent does not argue that Mr. Cotler is precluded
from challenging his underlying liability.
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