                        T.C. Memo. 2003-21



                      UNITED STATES TAX COURT



                   CHARLIE LAWS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13979-99.              Filed January 22, 2003.


     Charlie Laws, pro se.

     Monica D. Armstrong, for respondent.



                        MEMORANDUM OPINION


     PAJAK, Special Trial Judge:   Respondent determined a

deficiency of $2,505 in petitioner’s Federal income tax for the

taxable year 1997.   Unless otherwise indicated, section

references are to the Internal Revenue Code in effect for the

year in issue, and all Rule references are to the Tax Court Rules

of Practice and Procedure.
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     This Court must decide (1) whether an amount received by

petitioner as a disability retirement annuity is includable in

gross income, and (2) whether Social Security payments received

by petitioner are includable in gross income.

     Some of the facts in this case have been stipulated and are

so found.    Petitioner resided in Atlanta, Georgia, at the time he

filed his petition.

     Petitioner was born on February 7, 1913.    Petitioner retired

in 1962.    Petitioner timely filed his 1997 Federal income tax

return (1997 return).    He reported adjusted gross income of

$14,375 on his 1997 return.    This amount consisted solely of

interest income.

     Attached to the 1997 return was a Form 1099R, Statement of

Annuity Paid, from the Office of Personnel Management Retirement

Programs, which indicated that petitioner received a gross

retirement annuity in the amount of $13,296 in 1997.    This amount

was not reported on petitioner’s 1997 return.    According to a

November 7, 1967, letter from the United States Civil Service

Commission, petitioner’s retirement annuity under the Civil

Service Retirement Act was based on his being declared totally

disabled from his position as Special Delivery Messenger, Post

Office Department.    The nature of petitioner’s disability was

listed as industrial blindness.

     Petitioner also received $8,241 of Social Security benefits
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in 1997.   This amount was not reported on petitioner’s 1997

return.

     Respondent determined that petitioner failed to report the

disability retirement annuity and a portion of his Social

Security benefits on his 1997 return.

     Petitioner argues generally that the disability retirement

annuity is not taxable.   In his words:    “If I live above the

bridge, if I have to pay tax, let the man under the bridge pay

tax.”   He asserts age discrimination in that he claims a 54 year

old does not have to pay tax whereas a 74 year old person must

pay tax.   Petitioner does not cite any sections of the Internal

Revenue Code to support his position.     We do not find any age

discrimination provisions in the applicable statutes cited below.

It is clear based on the record before us that the disability

retirement annuity is excludable from gross income only if the

requirements of section 104(a)(3) are met.

     Section 61(a) provides that, except as otherwise provided by

law, gross income includes all income from whatever source

derived.   Exclusions from income are a matter of legislative

grace and are construed narrowly.      Commissioner v. Schleier, 515

U.S. 323, 328 (1995).   Taxpayers generally bear the burden of

proving that they are entitled to exclude amounts claimed.     Rule

142(a)(1); Welch v. Helvering, 290 U.S. 111 (1933).     Petitioner

does not contend that the burden of proof is on respondent under
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section 7491.

     Section 104(a)(3) excludes from gross income amounts

received by an employee "through accident or health insurance * *

* for personal injuries or sickness" except to the extent such

amounts are (A) attributable to contributions made by the

employer which were not includable in the gross income of the

employee, or (B) paid by the employer.    Thus, petitioner may

exclude the disability payments under section 104(a)(3) if the

payments were attributable to contributions made by his employer

which were included in petitioner’s gross income.    Sec.

104(a)(3).   Similarly, petitioner may exclude disability payments

if he paid the premiums for the disability policy.    Id.   Section

105(a) is essentially the mirror image of section 104(a)(3), and,

subject to two exceptions not applicable in this case, includes

in the gross income of an employee amounts received through

accident or health insurance for personal injuries or sickness to

the extent such amounts are (A) attributable to contributions by

the employer which were not includable in the gross income of the

employee, or (B) are paid by the employer.

     Petitioner failed to establish that the disability annuity

payment he received in 1997 was attributable solely to

contributions he made under the disability plan or that the

disability payments were not attributable in whole or part to

contributions by his employer.     Miley v. Commissioner, T.C. Memo.

2002-236.    Likewise, there is no evidence that the contributions
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from petitioner’s employer were included in petitioner’s income.

Id.   Therefore, petitioner is not entitled to exclude the

disability retirement annuity from gross income under section

104(a)(3).   Accordingly, we sustain respondent’s determination

that petitioner’s disability retirement annuity received in 1997

is includable in his gross income.

      Respondent also contends that petitioner failed to include

in gross income a portion of the Social Security benefits he

received in 1997.

      Section 86(a) requires the inclusion of a portion of Social

Security benefits in gross income when the sum of the recipient’s

modified adjusted gross income plus one-half of the Social

Security benefits exceeds certain threshold amounts.    In the case

of a single taxpayer, when this sum exceeds $25,000, the lesser

of 50 percent of such excess or 50 percent of the Social Security

benefits received during the taxable year must be included in

gross income.   Sec. 86(a)(1), (c)(1)(A).   Under section 86,

modified adjusted gross income in general equals adjusted gross

income with adjustments not relevant here.    Sec. 86(b)(2).

      Petitioner had modified adjusted gross income in 1997 in

excess of $25,000.   Therefore, a portion of his Social Security

benefits is taxable.   Accordingly, we sustain respondent’s

determination that petitioner’s gross income includes a portion
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of the respective Social Security disability benefits he received

during the taxable year in issue.

     To reflect the foregoing,



                                              Decision will be entered

                                         for respondent.
