                        T.C. Memo. 2001-152



                      UNITED STATES TAX COURT



            JAMES E. & RUTH L. NORRIS, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2081-98.                        Filed June 26, 2001.


     James E. Norris, pro se.

     Roy Wulf, for respondent.


                        MEMORANDUM OPINION


     GOLDBERG, Special Trial Judge:   Respondent determined a

deficiency in petitioners’ Federal income tax for 1995 in the

amount of $6,630.   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.
                               - 2 -


     After concessions by the parties,1 the sole issue for

decision is whether payments under the Federal Employees

Retirement System (FERS) received during the 1995 tax year are

excludable from gross income under section 104(a)(1).

Adjustments to Social Security income are computational and will

be resolved by the Court’s holding on the issue in this case.

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   At the time of filing the

petition, petitioners resided in Tacoma, Washington.    Petitioners

are husband and wife.   References to petitioner in the singular

are to James E. Norris.

     Petitioner has a 4-year degree in social sciences from

Central Washington University with a minor in aviation studies.

He also holds a master’s degree in criminal justice

administration and has completed 1 year of law school.

Petitioner served for approximately 8 years in the United States

Air Force and left at a rank of Captain in 1980.   After a few


     1
          Petitioners concede that they failed to report interest
income of $141 received by Ruth L. Norris from Peoples Bank and
Trust in 1995. Petitioners further concede that they failed to
report gambling winnings of $798 earned by petitioner in 1995.
Because petitioner incurred gambling losses in excess of his
gambling income, $798 will be deductible on Schedule A, Itemized
Deductions.
     Respondent concedes an accuracy-related penalty under sec.
6662(a) and (d) of $1,326, as determined in the notice of
deficiency.
                               - 3 -


different jobs, petitioner was employed by the Department of

Transportation, Federal Aviation Administration (FAA), as a pilot

examiner from 1988 until November 2, 1992.    Petitioner’s first 3

years of service with the FAA passed without incident.    In 1991,

after petitioner’s immediate supervisor left the FAA, petitioner

began to have problems with his new supervisors.    Petitioner

became severely depressed and alleged that his depression

resulted from discrimination from other FAA supervisors and

employees.   Petitioner was placed on medical light duty with the

FAA in October 1991.   Due to the claimed unstable work

environment, petitioner sought psychiatric treatment beginning in

1991.

     On October 2, 1992, petitioner received a 30-day notice of

employment termination, and, subsequently, on November 2, 1992,

the FAA terminated petitioner’s employment.    Prior to

petitioner’s termination, petitioner filed claims on October 12,

1992, with the Social Security Administration (SSA) and the

Office of Personnel Management (OPM) for disability retirement

annuity payments pursuant to FERS.     Petitioner was approved for

Social Security disability on June 22, 1994, and FERS disability

retirement on March 8, 1995.

     Concurrent with filing claims with SSA and OPM, petitioner

also filed a claim with the United States Department of Labor

(DOL) pursuant to the Federal Employees’ Compensation Act (FECA),
                                - 4 -


5 U.S.C. ch. 81 (1994).    Petitioner believed that he “suffered

from an emotional/psychiatric injury as a result of harassment

and racial discrimination” in his workplace.    Petitioner’s

request was denied on March 2, 1993.

     Petitioner disagreed with the OPM decision denying that

request, and obtained a rehearing on January 12, 1994.       In a

decision dated March 23, 1994, the March 2, 1993, decision was

affirmed.    Petitioner requested reconsideration of the March 23,

1994, decision and on January 30, 1995, OPM denied modification

of the March 23, 1994, decision.    Petitioner requested further

reconsideration of the January 30, 1995, decision, and, again,

OPM denied merit review of the case in a decision dated June 7,

1997.    Petitioner continued to appeal unfavorable decisions

through OPM’s appeals process.2    On October 5, 2000, the

Employment Compensation Appeals Board (ECAB) of the DOL rendered

a Final Appeals decision finding that petitioner had not

established that his emotional condition arose out of the

performance of duty, and, further, that the Office of Workers’

Compensation Programs properly denied petitioner’s request for

reconsideration.

     On February 6, 1997, petitioner filed a complaint with the

United States District Court for the Western District of


     2
          Petitioner has filed, unsuccessfully, a total of six
appeals of prior unfavorable decisions from 1994 through 2000.
                                - 5 -


Washington seeking compensation for an emotional injury allegedly

sustained as a result of discrimination by the FAA.    Petitioner

sought relief under the Federal Tort Claims Act (FTCA), 28 U.S.C.

secs. 2671-2680, but asserted that jurisdiction was appropriate

under FECA.    This action was subsequently dismissed without

prejudice based upon petitioner’s failure to exhaust

administrative remedies prior to bringing suit under FTCA and

petitioner’s failure to allege a constitutional claim under FECA.

     On their 1995 Federal income tax return, petitioners

reported total pension and annuity income in the amount of

$6,936, none of which was included in their gross income for that

year.    Petitioner received from OPM Form 1099-R, Statement of

Annuity Paid, for 1995 showing a gross annuity amount of

$29,459.94.    Petitioners included an attachment to their return

stating “Although the total Personal Injury Disability Annuity

listed on the OPM Form No. CSA-1099-R, lists the total annuity as

$29,459.94. [sic] Only $6,936.00 was for Tax Year 1995.”

Petitioner further disclosed the pending worker’s compensation

claim.

     In the notice of deficiency, respondent determined that no

portion of payments from OPM paid to petitioners during 1995 was

excludable from gross income and increased petitioners’ 1995

taxable income in the amount of $29,459.
                               - 6 -


     Respondent contends that petitioners may not exclude FERS

payments received during the year in issue from gross income

because the amounts were not received under a worker’s

compensation act pursuant to section 104(a)(1), or a statute in

the nature of a worker’s compensation act pursuant to section

1.104-1(b), Income Tax Regs.

     Petitioners contend that the disability pension amounts

received should be paid under FECA rather than FERS.    The parties

agree that had the payments been made under FECA they would be

excludable under section 104(a)(1).

     This Court is a court of limited jurisdiction as

specifically authorized by Congress.    See sec. 7442; Neilson v.

Commissioner, 94 T.C. 1, 9 (1990).     Although we have jurisdiction

to redetermine the income tax deficiency under section 6213, the

Court does not have jurisdiction to decide employee benefit

entitlement issues that fall within the purview of various

departments and agencies of the United States Government.    See

sec. 7442; Merker v. Commissioner, T.C. Memo. 1997-277; Steines

v. Commissioner, T.C. Memo. 1991-588, affd. without published

opinion 12 F.3d 1101 (7th Cir. 1993).    The record is clear that

petitioner’s numerous requests to transform the payor of the

disability payments from FERS to FECA have been consistently

denied.   Further, all payments at issue in this case are

disability payments pursuant to FERS.    Therefore, the issue
                                 - 7 -


before us is whether such disability payments are exempt under

section 104(a)(1).

     Section 61(a) provides that gross income includes all income

from whatever source derived.    Certain income, however, may be

specifically excluded from gross income.    See sec. 61(b).

      Under section 104(a)(1), worker’s compensation amounts are

excluded from gross income.   However, such exclusions have been

“strictly construed so as to conform with the general rule that

all income is taxable unless it is specifically excluded.”

McDowell v. Commissioner, T.C. Memo. 1997-500; see Take v.

Commissioner, 804 F.2d 553, 558 (9th Cir. 1986), affg. 82 T.C.

630 (1984).

     Section 104(a)(1) excludes from gross income “amounts

received under workmen’s compensation acts as compensation for

personal injuries or sickness”.    Section 1.104-1(b), Income Tax

Regs., interprets section 104(a)(1) to exempt amounts received

under a worker’s compensation act, or under a statute “in the

nature of a workmen’s compensation act which provides

compensation to employees for personal injuries or sickness

incurred in the course of employment.”

     “Workmen’s compensation act” is defined as a statute which

requires as a precondition to eligibility for benefits that the

injury be incurred in the course of employment.     Take v.

Commissioner, supra at 557.     A statute is not considered to be in
                                - 8 -


the nature of a workmen’s compensation act if it allows for

disability payments for any reason other than on-the-job

injuries.    See Haar v. Commissioner, 78 T.C. 864, 868 (1982),

affd. per curiam 709 F.2d 1206 (8th Cir. 1983).    If the statute

does not qualify, then the fact that the taxpayer’s injury was

work related is irrelevant.   See Smelley v. United States, 806 F.

Supp. 932, 935 (N.D. Ala. 1992), affd. per curiam 3 F.3d 389

(11th Cir. 1993).

     Disability retirement payments received under FERS are not

workmen’s compensation payments.   See Merker v. Commissioner,

supra; Wham v. Commissioner, T.C. Memo. 1985-625, affd. without

published opinion 812 F.2d 1402 (4th Cir. 1987).    Although

petitioner suffers from a disability which may have arisen in the

course of his employment with the FAA, a Federal agency, that

alone is insufficient to meet the requirements of section

104(a)(1).   Petitioner received his disability annuity under

FERS, 5 U.S.C. ch. 84 (1994).   Under FERS, an employee shall be

considered disabled only if the employee is found by OPM to be

“unable, because of disease or injury, to render useful and

efficient service in the employee’s position.”    5 U.S.C. sec.

8451(a)(1)(B) (1994).   Disability under FERS does not distinguish

between injuries occurring on the job or elsewhere; rather, the

focus is on whether the employee is able to perform the tasks of

his employment in a “useful and efficient” manner.    See Merker v.
                                 - 9 -


Commissioner, supra.   Because petitioner received disability

retirement payments under FERS, which is not in the nature of a

workmen’s compensation statute, petitioners are not entitled to

exclude these payments from their gross income under section

104(a)(1).

     We have considered all of the other arguments made by

petitioners, and, to the extent we have not addressed them, find

them to be without merit.

     To reflect the foregoing,

                                         Decision will be entered

                                 under Rule 155.
