T.C. Memo. 1998-15
UNITED STATES TAX COURT
LAWRENCE W. BARTLETT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20537-96. Filed January 13, 1998.
Arthur I. Fixler, for petitioner.
Carmino J. Santaniello, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, Judge: Respondent determined deficiencies in
petitioner's 1992 and 1993 Federal income taxes of $8,402 and
$322, respectively. The only issue for decision is whether
disability payments to petitioner are excludable from gross
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income. Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. At
the time Lawrence Bartlett filed his petition, he resided in
Warwick, Rhode Island.
In 1963, Mr. Bartlett became a firefighter for the City of
Warwick. He served in the city's fire department for 29 years,
starting out as a private and ascending to battalion chief. In
1991, Mr. Bartlett, while off-duty, suffered a heart attack which
ended his career. He then applied to the Warwick Board of Public
Safety (the Board) for a service-connected disability pension.
The Board administers the city's pension system.
Section 7-75.2 of the Warwick City Code (the Warwick Code)
requires the Board to grant a service-connected disability
pension, equal to 66-2/3 percent of the firefighter's highest
salary, to any firefighter who becomes unfit for duty because of
a heart, lung, or cancer-related disability. To receive a
service-connected disability pension under the Warwick Code, a
firefighter must establish a permanent disability and a causal
connection between the disability and the firefighter's job
(i.e., that the disability is job related). Article IX, section
4 of the collective bargaining agreement between the City of
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Warwick and the Firefighters Union, however, provides in
pertinent part:
In any case where an employee covered by this
Agreement is disabled from performing his regular
duties as a fireman because of a heart condition or
respiratory ailment, it shall be conclusively presumed
that such disability is attributable to his employment
as a member of the Fire Department; and he shall be
entitled to all of the benefits of the ordinances of
the City of Warwick. * * *
In December of 1991, the Board awarded petitioner a service-
connected disability pension. The only medical information that
petitioner provided to the Board, and that the Board considered,
related to whether petitioner could continue to perform his job.
For 1992, petitioner did not report any of the $33,664.72 in
disability pension payments he received. For 1993, petitioner
reported $35,286 of the $36,426 in disability payments he
received. Respondent issued petitioner a notice of deficiency
for 1992 and 1993. In the notice, respondent determined that
petitioner should have included in gross income the total amount
of pension payments.
OPINION
Section 104(a)(1) and the regulations thereunder provide
that disability payments are excludable if they are received
under a statute in the nature of a workmen's compensation act.
Sec. 104(a)(1); sec. 1.104-1(b), Income Tax Regs.
Petitioner contends that his pension payments are excludable
from gross income because the payments were received pursuant to
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a statute in the nature of a workmen's compensation act--the
Warwick Code. Prior to trial respondent conceded that the
Warwick Code meets the requirements of section 104 and contended
that petitioner's pension payments were made pursuant to the
collective bargaining agreement. Respondent maintained this
position in his pretrial memorandum and during a pretrial
conference call with petitioner and the Court. When questioned
by the Court at trial, however, respondent's counsel was unable
to support his contention. On brief respondent's attempt to
support this contention was equally unconvincing.
The Warwick Code, not the collective bargaining agreement,
authorized petitioner's pension. Cf. Fotis v. Commissioner, T.C.
Memo. 1989-287 (finding that payments to a disabled police
officer were made pursuant to municipal law, not a collective
bargaining agreement). Contrary to respondent's contention, the
portion of the collective bargaining agreement that states
"[firefighters] shall be entitled to all of the benefits of the
ordinances of the City of Warwick," merely preserves
firefighters' rights under all the city's ordinances. It does
not authorize a service-connected disability pension. Thus, we
conclude that petitioner's pension payments were made pursuant to
the Warwick Code, not the collective bargaining agreement.
On brief respondent, for the first time, attempts to narrow
the concession by asserting that the statute, standing alone,
meets the requirements of section 104 but that the Court should
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construe the statute and the agreement together and hold that "to
comply with the legislative purpose behind the workmen's
compensation exclusion in section 104(a)(1), section 4 should be
considered as part of the Warwick Code." We reject respondent's
contention. The express language of the regulations requires
that the payments be made under a statute and that the statute be
in the nature of a workmen's compensation act. Sec. 1.104-1(b),
Income Tax Regs. Our conclusion that the payments were made
pursuant to the statute coupled with respondent's concession that
the statute is in the nature of a workmen's compensation act
compels us to hold that petitioner's payments are excludable from
gross income.
All other arguments raised by the parties are either moot or
without merit. To reflect the foregoing,
Decision will be entered
for petitioner.