Ronald A. and Kellie Weigelt - Page 6

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          An exemption "cannot rest upon mere implications."  United States           
          v. Stewart, 311 U.S. 60, 71 (1940); see also United States v.               
          Wells Fargo Bank, 485 U.S. 351, 355-356 (1988).                             
               Section 104(a)(4) excludes from income "amounts received as            
          a pension * * * for personal injuries or sickness resulting from            
          active service in the armed forces".  The parties agree that with           
          respect to the disability compensation received from the DVA,               
          those payments would be exempt under section 104(a)(4).  The SSB            
          payment, however, was not made for personal injury or sickness.             
          The payment was made under 10 U.S.C. sec. 1174(c) because of                
          petitioner's separation from active service prior to normal                 
          retirement, and was based, in part, on his years of active                  
          service.  There are two distinct potential sources for the                  
          payment--the SSB payment and the DVA disability compensation.               
               10 U.S.C. sec. 1174(h)(2) provides, however, that                      
               A member [of the armed forces] who has received                        
               separation pay under this section * * * based on                       
               service in the armed forces shall not be deprived, by                  
               reason of his receipt of such separation pay * * * of                  
               any disability compensation to which he is entitled                    
               under the laws administered by the Department of                       
               Veterans Affairs, but there shall be deducted from that                
               disability compensation an amount equal to the total                   
               amount of separation pay * * * received.  [10 U.S.C.                   
               sec. 1174(h)(2).]                                                      
               Petitioner does not dispute that normally the SSB payment              
          would be includable in gross income.  See Felman v. Commissioner,           
          49 T.C. 599 (1968); Woolard v. Commissioner, 47 T.C. 274 (1966).            
          On the other hand, petitioner argues that since he in effect is             

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