Take v. Comm'r of Internal Revenue

• Decision Date: 24 April 1984
• Docket Number: Docket No. 9156–83.
• Parties: THOMAS TAKE AND JANICE TAKE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

82 T.C. 630

82 T.C. No. 50

THOMAS TAKE AND JANICE TAKE, Petitioners

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9156–83.

United States Tax Court.

Filed April 24, 1984.

Ps seek judgment as a matter of law in their favor and R seeks judgment as a matter of law in his favor. The only issue for decision is whether sec. 104(a)(1), I.R.C. of 1954, permits the exclusion of certain payments from gross income. A party may move for an adjudication in his favor if there is no genuine issue of material fact and a decision may be rendered as a matter of law. Held, local ordinance containing irrebuttable presumption that illness was occupationally caused was not a statute in the nature of a workmen's compensation act. Held further, neither Ps nor R have made the requisite showing that there is no genuine issue of material fact. Held further, Ps' and R's motions for summary judgment are denied. Milton Moss, for the petitioners.

Milton J. Carter, Jr. and Willie E. Armstrong, Jr., for the respondent.

OPINION

CANTREL, Special Trial Judge:

This case is presently before the Court on petitioners' Motion for Summary Judgment, filed on August 12, 1983, pursuant to Rule 121(a),¹ and respondent's Motion for Summary Judgment, filed on September 15, 1983, pursuant to Rule 121(a).

Respondent, in his notice of deficiency issued to petitioners on January 21, 1983, determined a deficiency in petitioners' Federal income tax for the taxable calendar year 1979 in the amount of $7,481.17 and an addition to the tax under section 6653(a)² in the amount of $374.06. Petitioners have abandoned all issues with the exception of the inclusion of $15,385.00 in their gross income.³ The $15,385.00 amount was paid to Thomas Take (hereinafter petitioner) by the trust of the Anchorage (Alaska) Retirement Plan for Police Officers and Fire Fighters (hereinafter Plan). The parties agree that inclusion or exclusion of this amount from gross income will be determined under section 104(a)(1).⁴

Petitioner applied for and was granted occupational disability benefits under Anchorage, AK Code sec. 3.85.040.⁵ This ordinance provides,in pertinent part:

3.85.040 Occupational disability.

A. A member who, due to an occupational disability, is unable to perform his assigned duties, shall receive a monthly pension of 66– 2/3 [percent] of his gross monthly compensation at the time of disability. * * * The Retirement Board shall determine whether an occupational disability exists based upon medical reports and other evidence satisfactory to the Retirement Board. The Retirement Board shall in all instances recognize the below provisions; however, consideration will not be limited to these provisions:

1. Any injury received while performing official duties for the Municipality of Anchorage which renders a member incapable of performing normal assigned duties will be construed as an occupational disability. * * *

2. The cumulative effect of the constant contact with that portion of the citizenry which suffers from infectious tuberculosis, the frequent strenuous duties encountered in performing daily assigned duties as police officers and fire fighters, and of the inhalation of smoke, toxic gases, chemical fumes and other toxic vapors on the heart, lungs and respiratory system shall be construed as an injury received or disease contracted while in the performance of duty; therefore, heart, lung and respiratory system illnesses shall be construed as occupational disabilities. A retired member hired on or after July 1, 1977 receiving benefits under Section 3.85.030 or Section 3.85.050 shall not be eligible for occupational disability benefits under this section if heart or respiratory disability occurs after the seventh anniversary of the member's retirement.

3. * * * Temporary occupational disability benefits for non-retired members shall be made only to the extent that such benefits and other wage continuation payments attributable to the municipality equal 100 [percent] of gross monthly compensation at the time of the disability. Temporary occupational disability benefits approved by the board shall be granted for a period not to exceed 90 days. The board, upon subsequent written request of the applicant and in consideration of medical and other evidence satisfactory to the board, may extend such benefits for additional periods not to exceed 90 days. [Emphasis added.]

In addition to providing benefits for temporary or permanent occupational disability, the Plan provides retirement benefits based on age and/or years of service, Anchorage, AK Code sec. 3.85.030 and non-occupational disability benefits, Anchorage, AK Code sec. 3.85.050 as well as other death and medical benefits.

Petitioner was awarded temporary occupational disability benefits by a letter from the Secretary of the Retirement Board of the Plan dated June 11, 1979, and permanent occupational disability benefits by a letter from the Secretary of the Retirement Board of the Plan dated August 20, 1979. Neither letter explicitly stated under which provision of the Anchorage ordinance benefits were to be awarded. However, the description of benefits awarded indicates that petitioner received temporary occupational disability benefits under Anchorage, AK Code sec. 3.85.040(A)(3)⁶ and permanent occupational disability benefits under Anchorage, AK Code sec. 3.85.040(A), Subsection (1) or (2).⁷

In support of their motion for summary judgment, petitioners have submitted a memorandum of law, copies of petitioner's “Retirement Papers”, and a copy of Anchorage, AK Code ch. 3.85, Anchorage Police and Fire Retirement Plan. Respondent submitted a memorandum of law and supporting materials with his motion for summary judgment. Petitioners also have submitted a memorandum in opposition to respondent's motion.

A decision will be rendered on a motion for summary judgment if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. See Rule 121(b). The burden of proving that there is no genuine issue of material fact is on the moving party. See Adickes v. Kress & Co., 398 U.S. 144, 157 (1970); 416 (1982). Where both parties submit motions for summary judgment, each motion must be examined to determine if the moving party has established that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. See C. Wright, A. Miller & M. Kane, 10A Federal Practice and Procedure: Civil, sec. 2720 (2d ed. 1983). ⁸

Petitioners' Motion

Petitioners contend that the payments made to petitioner by the trust of the Plan are excludible from gross income as a matter of law under the language of section 104(a)(1). Section 104(a) states, in pertinent part:

(a) In General.— * * * [G]ross income does not include— (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness. * * *

The exclusion under section 104(a)(1) applies as well to a statute in the nature of a workmen's compensation act. Haar v. Commissioner, 78 T.C. 864, 867–868 (1952), affd. per curiam on the basis of the Tax Court's opinion, 709 F.2d 1206 (8th Cir. 1983); Dyer v. Commissioner, 71 T.C. 560, 561 (1979). A statute is in the nature of a workmen's compensation act only if it allows disability payments solely for service related personal injury or sickness. See Haar v. Commissioner, supra at 868; Dyer v. Commissioner, supra at 562; Robinson v. Commissioner, 42 T.C. 403, 407–408 (1964). Here, the ordinance under which amounts were received by petitioner is not part of the state workmen's compensation act. Consequently, the ordinance must be a statute in the nature of a workmen's compensation act if the exclusion under section 104(a)(1) is to apply.

The ordinance establishing the Plan under which payments were made provides that a claimant under the Plan can prove the existence of an occupational disability by showing a causal relationship between the injury and performance of official duties; see Anchorage, AK Code sec. 3.85.040(A)(1) (Paragraph 1); or by showing that the claimant has a heart, lung, or respiratory illness in which event the causal relationship will be presumed; see Anchorage, AK Code sec. 3.85.040(A)(2) (Paragraph 2). Paragraph 2 makes no provision for the employer to rebut the presumption of causation established therein; on its face, Paragraph 2 establishes an irrebuttable presumption.⁹ Petitioners have presented facts and argued only the issue of whether the provisions under Paragraph 2 are in the nature of a workmen's compensation statute and have cited case authority to support their position.¹⁰ All of the cases on which petitioners rely are inapposite as they do not involve the effect of an irrebuttable presumption in a statute providing for occupational disability payments.

The issue raised by petitioners' motion is one of first impression. ¹¹ The ordinance under which payments were received purports to compensate employees for occupational disabilities. However, Paragraph 2 creates an irrebuttable presumption that certain enumerated disabilities are occupationally related. Paragraph 2 does not sufficiently limit the criteria for compensability to meet the requirement that the statute allow disability payments solely for service related personal injury or sickness.

Generally, the purpose of workmen's compensation statutes is to provide benefits to victims of work connected injuries and to ultimately place the cost of such injuries on the consumer. A. Larson, 1 Workmen's Compensation Law, sec. 1.00 (1979). Where the statute extends to occupational disease as well as injury, the principal problem has been distinguishing diseases which are peculiar to that occupation from “ordinary diseases of life” which are not compensable. A. Larson, 1B Workmen's...