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1962), a predecessor provision to section 1718.2 It holds that
the receipt is a payment for services rendered even though it is
intended for therapeutic or rehabilitative purposes, and, because
it is a payment for services, it is included in the recipient’s
gross income.
III. Discussion
A. Exemption
We are faced with a question of statutory construction.
While section 61(a) states that the term “gross income” means
“all income from whatever source derived”, and specifically
includes within that meaning “[c]ompensation for services”,
section 139(a)(3) exempts “[b]enefits under laws administered by
the Veterans’ Administration”, and directs us to 38 U.S.C.
section 5301 (2000).3 If the distribution petitioner received
does in fact constitute a “benefit” payable under a law
administered by the VA, then, by law, it is excludable from
petitioner’s gross income as a tax-exempt veterans’ benefit.
Because the parties are in agreement that: (1) petitioner
2 The Veterans’ Administration was redesignated the
Department of Veterans Affairs by the Department of Veterans
Affairs Act, Pub. L. 100-527, sec. 2, 102 Stat. 2635 (1988). We
shall use the initials “VA” to refer both to the Veterans’
Administration and the Department of Veterans Affairs, the
referent being determined by context.
3 We assume that Congress’s failure to amend sec. 139(a)(3)
to redesignate the Veterans’ Administration the Department of
Veterans Affairs is an oversight that is of no significance to
this case.
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