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the Cold War. In 1980, Ronald A. Weigelt (petitioner) joined the
Army and, after completing Officer's Candidate School, was
commissioned an officer in the U.S. Army Reserves. Petitioner
had planned to make the Army a career. In 1990, the Army began a
reduction in force because of the changes in the international
situation. On September 30, 1992, petitioner was honorably
discharged from the Army and received a special separation
benefit (SSB payment) in the amount of $70,070.60.
Prior to his discharge, petitioner applied to the Department
of Veterans Affairs (DVA) for a disability pension. On January
11, 1994, the DVA notified petitioner by letter that he was
entitled to monthly disability compensation benefits commencing
November 1, 1992, December 1, 1992, and January 1, 1993, in the
respective amounts of $83, $85, and $87. The letter, however,
also informed him that
You have received a Special Separation Benefit (SSB)
payment of $70,070.60 from the Army. We must withhold
benefit payments until we recover that full amount. We
will then automatically begin monthly payments.
On their 1992 joint Federal income tax return, petitioners
reported the $70,070.60 SSB payment. Petitioners also claimed a
$4,000 deduction for two $2,000 IRA contributions. Upon
examination, respondent determined that petitioners had
unreported income from wages and interest in the respective
amounts of $153 and $83, and that the deduction claimed for the
IRA contributions was not allowable. While the 1992 return was
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