Millard D. and Marjorie C. Thomas - Page 8

                                        - 7 -                                         
               Section 61(a) defines gross income as “all income from                 
          whatever source derived, including * * * (11) Pensions”, unless             
          otherwise provided.  Section 105(a) provides that amounts                   
          received by an employee through accident or health insurance for            
          personal injuries or sickness shall be included in gross income             
          to the extent that such amounts are (1) attributable to employer            
          contributions that were not includable in the employee’s gross              
          income, or (2) were paid by the employer.  Section 105(c)                   
          provides an exception to the general rule in section 105(a):                
               Gross income does not include amounts referred to in                   
               subsection (a) to the extent such amounts --                           
                    (1) constitute payment for the permanent loss or                  
               loss of use of a member or function of the body, or the                
               permanent disfigurement, of the taxpayer, his spouse,                  
               or a dependent (as defined in section 152), and                        
                    (2) are computed with reference to the nature of                  
               the injury without regard to the period the employee is                
               absent from work.                                                      
          In order to qualify for the section 105(c) exception, the                   
          payments to Mr. Thomas must satisfy both of these requirements.             
          The Court finds that the payments to Mr. Thomas fail section                
          105(c)(2); therefore, the Court need not, and does not, decide              
          whether the payments to Mr. Thomas satisfy section 105(c)(1).               
               Section 105(c)(2) itself has two requirements that must be             
          satisfied:  (1) The payments to the taxpayer must be computed               
          with reference to the nature of the injury; and (2) the payments            
          must be computed without regard to the period the taxpayer is               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next 

Last modified: November 10, 2007