                  T.C. Summary Opinion 2003-33



                     UNITED STATES TAX COURT



    HILARIO M. AGUIRRE AND CATHY C. AGUIRRE, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7837-01S.              Filed April 2, 2003.



     Hilario M. Aguirre and Cathy C. Aguirre, pro sese.

     David B. Mora, for respondent.



     CARLUZZO, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Subsequent section

references are to the Internal Revenue Code in effect for 1998.

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.
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     Respondent determined a deficiency of $1,073 in petitioners’

1998 Federal income tax.   The issue for decision is whether

petitioners must include in income certain amounts paid to

Hilario M. Aguirre in 1998 as a result of a back injury sustained

in the previous year.

Background

     Some of the facts have been stipulated and are so found.

Petitioners are husband and wife.   They filed a timely 1998 joint

Federal income tax return.   At the time the petition was filed,

they resided in Richmond, Texas.    References to petitioner are to

Hilario M. Aguirre.

     At all relevant times, petitioner was employed by Anheuser

Busch, Inc. (Anheuser).    In 1997, petitioner injured his back and

filed a claim for worker’s compensation benefits.   At first his

claim was disputed, but ultimately, in 1998, petitioner was

awarded worker’s compensation benefits totaling $15,852.29 of

which, for reasons explained below, only approximately $9,000 was

paid directly to him.

     During the period in which petitioner’s worker’s

compensation claim was under consideration, he entered into an

agreement with Anheuser (the agreement) whereby he was entitled

to receive certain benefits upon the condition that any amount he

received pursuant to the agreement would be repaid from any

worker’s compensation award that he might subsequently receive.
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Pursuant to the agreement, from February 2 through May 19, 1998,

petitioner received payments totaling $7,050 (the payments).

The payments were reported on a Form W-2, Wage and Tax Statement,

issued to petitioner by the General American Life Insurance

Company, the third-party administrator for Anheuser’s self-

insured, group indemnity plan.    Petitioner did not contribute to

the cost of this plan, and contributions made to this plan on his

behalf were not included in his income for any period.

     Petitioners did not include the payments in the income

reported on their 1998 return.    In the notice of deficiency,

respondent determined that the payments must be included in

petitioners’ 1998 income.   Other adjustments made in the notice

of deficiency are not in dispute.

Discussion

     According to respondent, the payments constitute income.

Section 61(a) defines gross income as “all income from

whatever source derived”.   Income is defined as “undeniable

accessions to wealth” clearly realized by a taxpayer over which

the taxpayer has “complete dominion”.     Commissioner v. Glenshaw

Glass Co., 348 U.S. 426, 431 (1955).     Whether a taxpayer enjoys

“complete dominion” over an “accession to wealth” depends upon

“whether the taxpayer has some guarantee that * * * [the

taxpayer] will be allowed to keep the money”.     Commissioner v.

Indianapolis Power & Light Co., 493 U.S. 203, 210 (1990).
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     Relying specifically upon section 105(a),1 see also sec.

104(a)(3), respondent takes the position that the payments are

includable in petitioners’ income because (1) they are

attributable to contributions made by his employer and not

includable in his income, or (2) they were paid by his employer.

     As noted, during 1998, petitioner was awarded worker’s

compensation benefits totaling $15,852.29 as a result of the back

injury he sustained in the previous year.    Worker’s compensation

benefits are excludable from income, see sec. 104(a)(1), and

there is no dispute on that point in this case.    However, only a

portion of petitioner’s worker’s compensation award was paid

directly to petitioner.    In accordance with the agreement, the

remainder was used to reimburse Anheuser for the payments.

     Absent circumstances such as those that exist in this case,

an amount described in section 105(a) constitutes income to the

recipient/taxpayer because the amount constitutes an accession to

the recipient/taxpayer’s wealth.    In this case, although the

payments might be generally of the type contemplated by section


     1
         Sec. 105(a) states:

          Except as otherwise provided in this section,
     amounts received by an employee through accident or
     health insurance for personal injuries or sickness
     shall be included in gross income to the extent such
     amounts (1) are attributable to contributions by the
     employer which were not includible in the gross income
     of the employee, or (2) are paid by the employer.
                                 - 5 -

105(a), the agreement effectively prevents any accretion to

petitioner’s wealth attributable to the payments.       See

Commissioner v. Glenshaw Glass Co., supra.        Consequently, the

payments received by petitioner during 1998 are not income to

petitioner and therefore are not includable in petitioners’

income for that year.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                         Decision will be entered

                                 for petitioners.
