The respondent in the notice of deficiency disallowed $ 930 of the $ 950 deduction and stated in part as follows:

It has been determined1962 U.S. Tax Ct. LEXIS 220">*224 that you are not entitled to exclude from gross income as statutory subsistence allowance under Section 120 of the 1954 Internal Revenue Code $ 930.00 retroactively designated as "subsistence allowance" by you but actually representing a part of ordinary salary income previously received by you.

The respondent's determination was in accord with his published position stated in Rev. Rul. 59-276, 1959-2 C.B. 49.

The entire amount received by the petitioner from the Township of Mahwah prior to September 25, 1958, was received pursuant to a salary ordinance of the township. It was thus received purely as salary; its character as such was fixed. The action of the township, by its ordinance of September 25, 1958, in retroactively designating a portion of the salary of police officers up to that time as a subsistence allowance, cannot be considered as having the effect, for Federal income tax purposes, of changing the character of the salary received. We see no essential difference between the situation here presented and that presented in Leicht v. Commissioner, (C.A. 8) 137 F.2d 433, affirming a Memorandum1962 U.S. Tax Ct. LEXIS 220">*225 Opinion of this Court. There the president of a corporation received from the corporation amounts as salary and rent. After such receipt he agreed to readjust the salary and the 37 T.C. 603">*605 rental, and agreed to give the corporation credit for certain portions thereof on a note which it owed him for a previous loan. It was there held that this did not relieve the taxpayer of tax liability based upon the receipt of salary and rent. It may be also pointed out that it has been held that retroactive judgments of State courts do not determine the rights of the Federal Government under its tax laws. See Daine v. Commissioner, (C.A. 2) 168 F.2d 449, affirming 9 T.C. 47">9 T.C. 47, and Eisenberg v. Commissioner, (C.A. 3) 161 F.2d 506, affirming 5 T.C. 856">5 T.C. 856. In the latter case it was stated:

Certainly no authority is needed today for the proposition that income tax liability rests upon events as they actually happened. The fact is that, for the years involved, the parties were guided by and acted under the agreements as they were originally drawn.

The petitioner cites Shirah v. United States, (D.C. Ed. S.C.) 158 F. Supp. 40">158 F. Supp. 40,1962 U.S. Tax Ct. LEXIS 220">*226 affd. (C.A. 4) 253 F.2d 798, and Parrish v. United States, (D.C. Md. Ga.) 158 F. Supp. 238">158 F. Supp. 238, in which statutory subsistence allowances under ordinances of other townships were held to meet the requirements of section 120 of the Internal Revenue Code of 1954. However, those cases involved such allowances paid for periods after the enactment of the ordinances and did not involve amounts retroactively designated as statutory subsistence allowances. Indeed, in the Shirah case the taxpayer conceded the issue which is here presented.

We hold that the respondent did not err in determining that the petitioner is not entitled to exclude from gross income $ 930 of the $ 950 which he claimed as a statutory subsistence allowance.

Decision will be entered for the respondent.