In case you need one, Judge Albert G. (“Scholar Al”) Lauber has a checklist of losing arguments for the nontaxability of Social Security Disability Income (“SSDI”, 42 U.S.C. secs. 402, 423(c)(1) (2012); 20 C.F.R. sec. 404.130 (2017)).

Here’s Jon K. Palsgaard and Kimberly A. Kelly, 2018 T. C. Memo. 82, filed 6/13/18, delayed because I had to sort out a minor shunt with our State’s Attorney General’s office that ended well for all parties.

It’s Kim’s story (that’s Doc Kim, M.D.), and a sad one. Everyone agrees Doc Kim is disabled and can’t practice due to injury. She has a dust-up with her disability insurer, so applies for SSDI. And doesn’t report the payout.

Well, Section 86.

No, says Doc Kim, Section 104. And her lawyer, whom I’ll hereinafter designate as MTW, runs the checklist and gets a Taishoff “Good Try, Second Class,” but loses.

Workers’ Comp doesn’t work, because Congress said that SSDI is taxable under Section 86(d)(1)(A), so that quashed Section 104(a). And there’s no evidence that Doc Kim’s injury was work-related. Even if it was, SSDI doesn’t depend on employment status or past contributions to Workers’ Comp fund.

And it’s not “damages,” as there was no litigation. The “no-fault” argument wasn’t raised, but it wouldn’t work here anyway. See my blogpost “The Egg and I,” 1/22/15, in which appears the Perez case, cited by Scholar Al.

Finally, MTW tries the accident-health insurance provision in Section 104(a)(3), but SSDI isn’t accident or health insurance, because Congress said it wasn’t.

A handy checklist for Section 104. Thanks, MTW.