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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. The
regulations also provide that 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, or the employee’s prior contributions, even though the
employee’s retirement is occasioned by an occupational injury or
sickness.” Sec. 1.104-1(b), Income Tax Regs.
Respondent argues that pursuant to section 1.104-1(b),
Income Tax Regs., the distributions are not excludable from gross
income under section 104(a)(1) because petitioner has stipulated
that the distributions in this case were determined with
reference to petitioner’s length of service. Respondent contends
that Benjamin v. Commissioner, T.C. Memo. 1993-575, is directly
on point.
In Benjamin, the taxpayer was an accountant employed by the
State of California who incurred a medical disability in the
course and scope of his employment. Benjamin v. Commissioner,
supra. The taxpayer was subsequently forced to retire, and
CalPERS determined that he was eligible for disability
retirement. Although the taxpayer reported the benefit payments
that he received from CalPERS on his return, he failed to include
them in his gross income. This Court relied on section 1.104-
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Last modified: November 10, 2007