Ronald A. and Kellie Weigelt - Page 7

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          required to repay that amount from the nontaxable DVA disability            
          compensation, the SSB payment should also be treated as                     
               This same issue was before the Court in Berger v.                      
          Commissioner, 76 T.C. 687 (1981).  Berger involved 10 U.S.C. sec.           
          687, Pub. L. 89-718, sec. 6, 80 Stat. 1115, 1116 (1966) (repealed           
          by Pub. L. 96-513, sec. 109(a), 94 Stat. 2870 (1980)).  That                
          section provided that a member of the reserves who was                      
          involuntarily released from active duty was entitled to                     
          readjustment pay based on his years of service.  If, however, the           
          member was entitled under repealed 10 U.S.C. sec. 687(b)(6) to              
          disability compensation from the DVA (then known as the Veteran's           
          Administration), an "amount equal to 75 percent of the                      
          readjustment payment is deducted from the disability                        
          compensation."  In Berger, as here, the taxpayer argued that the            
          readjustment pay he received should be reclassified as disability           
          compensation excludable from income under section 104(a)(4).                
          Berger v. Commissioner, supra at 689.  In rejecting that                    
          argument, the Court noted that                                              
                    The legislative history reveals the congressional                 
               awareness of the plight of servicemen who have been                    
               involuntarily released from active duty, and, who                      
               * * * are immediately entitled to both a lump-sum                      
               readjustment payment and disability compensation.                      
               * * * Congress provided that these veterans would                      
               receive readjustment pay and that upon subsequent                      
               confirmation of entitlement to disability compensation,                
               the readjustment pay in essence would be repaid to the                 
               Government by a deduction from the disability                          
               compensation * * *                                                     

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