Henry v. Commissioner ( 1942 )

H. N. HENRY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Henry v. Commissioner

Docket No. 108258.

United States Board of Tax Appeals

47 B.T.A. 149; 1942 BTA LEXIS 725;

June 23, 1942, Promulgated

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">*725 Payments received in 1937 and 1939 by petitioner, a naturalized citizen and resident of the United States, from the Canadian Government under its pension act, as compensation for disabilities incurred from injuries received in 1918 while in active service as a member of its armed forces, are taxable income to petitioner in the respective years when received.

Robert C. Lane, Esq., for the petitioner.

F. L. Van Haaften, Esq., for the respondent.

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LEECH

">*149 Respondent determined deficiencies in income tax of $52.53 and $27.42 for the calendar years 1937 and 1939 respectively. The issue is whether amounts received in each year by the petitioner, a citizen of the United States, under the Canadian Pension Act, for disability incurred by reason of injuries received in action in 1918 while serving in the Canadian armed forces in France, are exempt from tax.

">*150 FINDINGS OF FACT.

Petitioner is a resident of Miami Beach, Florida. His returns for the years here involved were filed with the collector of internal revenue at Jacksonville, Florida. In 1937 he became a naturalized citizen of the United States.

In 1918, while serving with">*726 the armed forces of the Dominion of Canada in France, petitioner received injuries in action resulting in permanent disability, for which he was awarded annual payments of compensation under chapter 157 of the Revised Statutes of the Cominion of Canada, known as the "Pension Act". The compensation payments under this act are substantially similar in character to those made under the laws of the United States to officers and enlisted men of its armed forces for disabilities incurred in service.

The payments received by petitioner from the Dominion of Canada as compensation under the aforesaid award amounted to $1,397.40 in 1937 and $1,273.40 in 1939, and were not included in his Federal income tax returns for those years. Their inclusion by respondent results in the deficiency determined for each year.

OPINION.

LEECH: The question here is original, so far as we know. We think it is clearly answered by the provisions of the statutes hereinafter cited.

That the payments received by petitioner from the Dominion of Canada constituted gross income to him under the definition of sections 22(a) of the Revenue Acts of 1936 and 1938 is manifest and needs no argument. It is likewise">*727 clear that they do not fall within the class of any of the statutory deductions from gross income. It thus remains to be determined whether they fall within the exclusions from gross income. The only sections of these acts, possibly pertinent, are sections 22(b)(5) and (7) reading as follows:

SEC. 22. GROSS INCOME.

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(b) EXCLUSIONS FROM GROSS INCOME. - The following items shall not be included in gross income and shall be exempt from taxation under this title:

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(5) COMPENSATION FOR INJURIES OR SICKNESS. - Amounts received, through accident or health insurance or under workmen's compensation acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness;

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(7) INCOME EXEMPT UNDER TREATY. - Income of any kind, to the extent required by any treaty obligation of the United States.

">*151 The payments in question were not "received, through accident or health insurance or under workmen's compensation acts" nor were they damages for accident or received as compensation or damages for personal injuries or sickness. There is no treaty obligation of">*728 this country for their exemption from tax.

Petitioner argues that payments similar in character made by this country under its laws to former members of its armed forces are not subject to tax and that he is now a citizen of this country and should be accorded the same exemption. The exemption to which he points is provided by the Act of August 12, 1935, 49 Stat. 607, exempting from all taxes amounts paid as pensions or disability compensation under certain specified statutes of the United States. The payments in controversy were not made under those acts and petitioner is accordingly not entitled to the statutory exemption there provided.

Decision will be entered for the respondent.