Section of Taxation Publications
  VOL. 57
NO. 1
FALL 2003
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Form and Function in Section 104(a)(1) Dual-Purpose Statute Exclusions: Byrne v. Commissioner
Erika L. Larson


In Byrne v. Commissioner, the Tax Court held that the taxpayer properly excluded disability retirement benefits from gross income under section 104(a)(1). Section 104(a)(1) excludes from gross income payments received under workmen’s compensation acts. Regulations promulgated under this section expand its reach to encompass “a statute in the nature of a workmen’s compensation act,” which provides compensation for personal injuries or sickness incurred in the course of employment. The Byrne court held that the California Judges’ Retirement Law is a dual-purpose statute designed to provide both retirement benefits and benefits in the nature of workmen’s compensation. Thus, the benefits were excludable under section 104(a)(1). This holding provides guidance to taxpayers planning retirement packages based on benefits derived from job-related disabilities.

This Note focuses on Byrne’s place in the evolutionary path of the dual-purpose statute, which has been examined both under a functional analysis, via evaluation of the predecessor to section 104(a)(1), and under a more formalistic analysis in modern case law. Part I of the Note recounts the facts of Byrne. Part II explores the Tax Court’s application of section 104(a)(1) to those facts. Part III details Byrne’s place in section 104(a)(1) dual-purpose statute exclusion jurisprudence through examination of the guidance Byrne offers both to taxpayers and law makers. Finally, Part IV concludes by indicating Byrne’s place in the evolution of section 104(a)(1) jurisprudence.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


If you are an ABA member, you can receive The Tax Lawyer and the Section NewsQuarterly, both quarterly publications, when you join the Section of Taxation. Anyone can subscribe to The Tax Lawyer by contacting the ABA Service Center.