- 6 - 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 isPage: Previous 1 2 3 4 5 6 7 8 9 Next
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