Court Opinion

ID: 4479100
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:28.204484+00
Date Added: 2024-06-11T14:53:56.759546
License: Public Domain

Withey, J., dissenting: I dissent from the view of the majority in this case for the reason that the prevailing opinion does not pass upon the applicability of section 105 (d) of the 1954 Code with respect to the facts here presented. Under section 105 generally amounts received under accident and health insurance plans which are attributable to contributions made to the funding of such plans by the employer and amounts so received which are paid by the employer are includible in the gross income of the beneficiary. Only under subsection (d) may certain of such benefits be excluded and petitioner must bring himself squarely within that subsection to benefit taxwise from its provisions. Clearly taxpayer’s receipts were from a pension plan, not from health or accident insurance. He became eligible for benefits it is true because he was permanently physically disabled, but what he received was pension, not insurance benefits. His receipts of benefits were not to compensate him for sickness or injuries suffered as the result of an accident; they were in the nature of savings or an annuity paid for at least in part by his past services to his employer. Epmeier v. United States, 199 F. 2d 508 (C.A. 7); Haynes v. United States, 353 U.S. 81. The cited cases have no application to the issue before us. The issue there is whether a plan providing compensation for ill health or disability arising from accident but funded or paid by the employer falls within the statutory “health or accident insurance” plan. Here, the issue is more fundamental; the issue is whether a pension paid because of ill health or physical disability is “health or accident insurance.” If it is, section 105(d) makes it unnecessary to question whether all or any portion of the benefits are attributable to or paid by the employer. If not, the benefits are clearly not excludible under either section 104 or 105. Subsection (d) of the latter section was incorporated in the Code for the first time subsequent to Epmeier v. United States, supra. Haynes v. United States, supra, merely dealt with an issue similar to Epmeier arising under the 1939 Code, section 22(b) (5). It seems clear to me that subsection (d) permits the exclusion of benefits received from a “wage continuation plan” and then only if the receipts are “for a period during which the employee is absent from work on account of personal injuries or sickness.” Surely the word “employee” and the phrase “absent from work” and the phrase “personal injuries or sickness” are not consistent with the concept of a pension as distinguished from insurance benefits. The word “employee” connotes the continued status of being upon the payroll of an employer. The phrase “absent from work” connotes not only a continued status as an employee, but the continued existence of a job from which the employee is only temporarily absent. Likewise the phrase “personal injuries or sickness,” used together with the mentioned word and phrase and no mention of permanent disability being made, unavoidably leads to the conclusion that Congress intended to exclude only receipts planned to take the place of wages during a temporary “absence from work.” To the extent section 1.105-4(a) (3) (i) of the respondent’s regulations would hold a pension excludible from gross income under section 105(d), it is clearly beyond the provisions of that subsection and therefore void. Decision should have been entered for the respondent.