Court Opinion

ID: 4610998
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:48:04.862585+00
Date Added: 2024-06-11T07:59:36.005083
License: Public Domain

Glen E. Blackburn and Maxine Blackburn, Petitioners, v. Commissioner of Internal Revenue, RespondentBlackburn v. CommissionerDocket No. 22476United States Tax Court15 T.C. 336; 1950 U.S. Tax Ct. LEXIS 75; September 29, 1950, Promulgated 1950 U.S. Tax Ct. LEXIS 75">*75 Decision will be entered for the respondent.  Petitioner, a member of the California Highway Patrol, was injured while on duty. Pursuant to section 4800 of the California Labor Code his regular salary was paid to him while he was absent from duty. Held, the salary so paid was not "workmen's compensation" within the meaning of section 22 (b) (5), I. R. C., and should not be excluded from gross income. William A. Cruikshank, Jr., Esq., and Alva C. Baird, Esq., for the petitioners.A. J. Hurley, Esq., for the respondent.  Van Fossan, Judge.  VAN FOSSAN 15 T.C. 336">*336  The respondent determined deficiencies in the petitioners' 1950 U.S. Tax Ct. LEXIS 75">*76  income tax liabilities for the years 1946 and 1947 in the amounts of $ 375.10 and $ 180.50, respectively.The sole issue is whether certain amounts received by Glen E. 15 T.C. 336">*337  Blackburn during the taxable years 1946 and 1947, pursuant to the provisions of section 4800 of the Labor Code of California should be excluded from gross income as compensation for personal injuries within the meaning of section 22 (b) (5) of the Internal Revenue Code.The case was submitted upon a stipulation of facts and exhibits.FINDINGS OF FACT.The stipulated facts are so found.The petitioners, Glen E. Blackburn and Maxine Blackburn, are husband and wife and reside in Whittier, California.  They filed joint individual income tax returns for the years 1946 and 1947 with the collector of internal revenue for the sixth district of California.Glen E. Blackburn, during the taxable years 1946 and 1947, was employed as a State Traffic Officer of the California Highway Patrol of the Department of Motor Vehicles, State of California.  His work required him to serve as a traffic and automobile patrolman on the highways of the State.His salary was $ 310 per month, payable semi-monthly.On or about June 24, 1946, 1950 U.S. Tax Ct. LEXIS 75">*77  while Blackburn was riding a motorcycle in the line of duty, he was struck by an automobile and suffered resulting injuries to his right arm, shoulder and back.As a result of these injuries, Blackburn was rendered temporarily unable to continue his work with the Highway Patrol.  He was absent from duty because of those injuries from June 24, 1946, until April 1, 1947.  At the latter date he returned to his post of duty.During the period he was absent from work, Blackburn received semi-monthly payments at the rate of $ 310 per month.  These payments were made pursuant to section 4800 of the Labor Code of the State of California and amounted to $ 1,953.31 during the taxable year 1946, and $ 930 during the taxable year 1947.In addition to receiving the salary payments provided for by section 4800 of the Labor Code of California, Blackburn filed a claim for compensation under the provisions of the Workmen's Compensation Laws of the State of California, for a permanent disability award. The State Industrial Accident Commission found that the injuries received by Blackburn, as described above, resulted in partial permanent disability rated at 34 1/2 per cent.  Accordingly, on May 21, 1950 U.S. Tax Ct. LEXIS 75">*78  1948, Blackburn was granted a permanent disability award in the total sum of $ 4,140 payable at the rate of $ 30 per week for 138 weeks beginning July 2, 1946.  No part of the aforesaid sum of $ 4,140 has been included by respondent in computing petitioners' taxable income for the years 1946 and 1947.The State of California, Department of Motor Vehicles, included the salary payments to Blackburn, during his leave of absence, in 15 T.C. 336">*338  his total "wages" for Federal income tax withholding purposes and filed Treasury Form W-2 for each of the years 1946 and 1947 showing Federal income tax withheld on the payments.  The deficiencies in question arise out of respondent's inclusion in petitioners' income for the taxable years, of the salary payments received by him under the provisions of section 4800 of the Labor Code of California.OPINION.The sole issue is whether certain amounts received by Glen E. Blackburn during the taxable years 1946 and 1947, pursuant to the provisions of section 4800 of the Labor Code of California should be excluded from gross income as compensation for personal injuries within the meaning of section 22 (b) (5) of the Internal Revenue Code.  11950 U.S. Tax Ct. LEXIS 75">*79  The petitioner, Glen E. Blackburn, is a State Traffic Officer of the California Highway Patrol of the Department of Motor Vehicles, State of California.  On June 24, 1946, Blackburn suffered injuries incurred in the line of duty which caused him to be absent from work until April 1, 1947.  While Blackburn was absent from his work because of his injuries he received his regular salary payments at the rate of $ 310 per month.  These payments were made pursuant to section 4800 of the Labor Code of California and amounted to $ 1,953.31 in 1946 and $ 930 in 1947.  Whether these amounts should be included in Blackburn's gross income is the only matter in controversy.On May 21, 1948, the Industrial Accident Commission of the State of California granted Blackburn a permanent disability award in the total amount of $ 4,140 payable at the rate of $ 30 per week for a period of 138 weeks beginning July 2, 1946.  This award was independent of the payments referred to above, made under section 4800.  There is no controversy concerning these payments in the total amount of $ 4,140 and the respondent agreed that they should properly be excluded from gross income under section 22 (b) (5), I. R. C.1950 U.S. Tax Ct. LEXIS 75">*80  The petitioners contend that the payments in controversy were received "under workmen's compensation acts, as compensation for personal injuries", section 22 (b) (5), I. R. C.  The respondent's contention 15 T.C. 336">*339  is to the contrary.  This controversy will be resolved by an inquiry into the nature of the payments and what appears to have been the intent of the legislature of the State of California.  The several pertinent provisions of the California Labor Code are set forth in the margin.  21950 U.S. Tax Ct. LEXIS 75">*81 Section 4800 is a special provision in the California Code which provides only for certain members of the Highway Patrol of that State.  It provides a means of compensation for the hazardous nature of the work by continuing the regular salary if the patrolman is injured in his work.  It provides that the patrolmen shall be entitled "to a leave of absence while so disabled without loss of salary." Such allowance is "in lieu of disability payments." Section 4803 of the California Labor Code provides that when the disability "continues for a period of beyond one year, such member shall thereafter be subject, as to disability indemnity, to the provisions of this division other than section 4800 which refers to temporary disability only, during the remainder of the disability." [Emphasis added.] Section 4804 provides that "No disability indemnity shall be paid to said member as temporary disability concurrently with wages or salary payments."The petitioners seek to derive some support for their position from the fact that the pertinent sections of the Labor Code are preceded by the heading: "Division IV, Workmen's Compensation"; and from the further reference in section 3201 to a 1950 U.S. Tax Ct. LEXIS 75">*82  "complete system of workmen's compensation."The pertinent sections of the California Labor Code have been interpreted in a recent case in the District Court of California.  The Department 15 T.C. 336">*340 v. Industrial Accident Commission et al., 178 Pac. (2d) 43. That case was a proceeding to annul an award of the Industrial Accident Commission against the Department of Motor Vehicles, California Highway Patrol.  There too, a patrolman had been injured in the line of duty and his regular salary had been paid to him for 1 year after his injuries.  The Accident Commission had also awarded him the sum of $ 6,000 on account of a permanent disability. The employer, the Department of Motor Vehicles, California Highway Patrol, as the petitioner in the case, contended that it was entitled to a credit for all payments made by it; that its continuation of the policeman's regular salary substituted for all disability allowance; that the leave of absence payments were in themselves a temporary disability allowance, and that, therefore, no permanent disability indemnity should be paid concurrently therewith under the provisions of section 4661 of1950 U.S. Tax Ct. LEXIS 75">*83  the California Labor Code.  The Court refuted the petitioner's contentions and affirmed the award.  We are particularly impressed with the language of the Court in its analysis of the nature of the various Code provisions.  We believe that it is a sound inference that payments made under section 4800 of the Labor Code are not payments analogous to workmen's compensation but are, on the other hand, a continuation of regular pay during a period of incapacity in a manner similar to any other provision for sick leave, whether or not the employee is involved in hazardous duty. In answer to the contention that the amounts paid to a patrolman while on leave under section 4800 are compensation for an injury as distinguished from salary, the Court said that:* * * Such an interpretation, however, produces an immediate conflict with the express provision of Section 4800 that the salary is in lieu of disability payments.  If the legislature had intended the salary to be paid as a disability allowance, it undoubtedly would have said so.  What it did say is exactly to the contrary and any seeming conflict with this expression must be resolved to give it effect if reasonably possible.  * * *Viewing1950 U.S. Tax Ct. LEXIS 75">*84  the several sections of the Labor Code under consideration in the light of the established rules of construction, it is manifest that it was intended by the legislature to provide an injured patrolman with his full pay for a year in the place of any temporary disability allowance, but in no way to limit his right in accordance with the general rule to receive an award of permanent disability indemnity concurrently with his salary.The foregoing analysis of the pertinent provision of the California Labor Code demonstrates that it provides for two types of payments to the members of the Highway Patrol injured while on duty. One of those provisions merely continues the regular salary of the disabled patrolman for a period not to exceed 1 year.  The other payment is in the nature of workmen's compensation which it is agreed should be excluded.  The payment under consideration, in our opinion, is not a payment under a "workmen's compensation" act of a nature 15 T.C. 336">*341  intended by Congress in section 22 (b) (5) of the Internal Revenue Code to be excluded from gross income.We hold that the payments made to Glen E. Blackburn under the provisions of section 4800 of the California Labor Code1950 U.S. Tax Ct. LEXIS 75">*85  should not be excluded from his gross income under the provisions of section 22 (b) (5), Internal Revenue Code.Decision will be entered for the respondent.  Footnotes1. SEC. 22. GROSS INCOME.* * * *(b) Exclusions from Gross Income. -- The following items shall not be included in gross income and shall be exempt from taxation under this chapter:* * * *(5) Compensation for injuries or sickness. -- Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 23 (x) in any prior taxable year, amounts received, through accident or health insurance or under workmen's compensation acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness, and amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country;↩2. Labor Code of the State of California, Division IV, Workmen's Compensation3201.  Division IV and Division V of this code are an expression of the police power and are intended to make effective and apply to a complete system of workmen's compensation the provisions of section 17 1/2 and 21 of Article XX of the Constitution of this State.* * * *4800.  Whenever any member of the California Highway Patrol is disabled by injury or illness arising out of and in the course of his duties, he shall become entitled, regardless of his period of service with the patrol to a leave of absence while so disabled without loss of salary, in lieu of disability payments under this chapter, for a period of not exceeding one year.  This section shall apply only to members of the California Highway Patrol whose principal duties consist of active law enforcement and shall not apply to persons employed in the Department of Motor Vehicles whose principal duties are those of telephone operator, clerk, stenographer, machinist, mechanic or otherwise clearly not falling within the scope of active law enforcement service, even though such person is subject to occasional call or is occasionally called upon to perform duties within the scope of active law enforcement service.* * * *4803.  Whenever such disability of such member of the California Highway Patrol continues for a period of beyond one year, such member shall thereafter be subject, as to disability indemnity, to the provisions of this division other than section 4800, which refers to temporary disability only, during the remainder of the disability, except that such compensation shall be paid out of funds available for the support of the Department of Motor Vehicles, and the leave of absence shall continue.4804.  No disability indemnity shall be paid to said member as temporary disability concurrently with wages or salary payments.* * * *↩