Vorris J. Blankenship (Attorney, Placerville, CA) has published Controlling and Minimizing the Taxation of Disability Benefits, 60 Tax Law. 725 (2007). Here is part of the Summary:
Some disability benefits are entirely tax exempt. Other disability benefits are wholly or partially includable in gross income depending on the source of their funding.
(Editor’s note: Mr. Blankenship apparently has some first-hand experience with these issues. See Blankenship v. Liberty Life Assurance Co., 486 F.3d 620 (9th Cir. 2007)).
