Ronald A. and Kellie Weigelt - Page 8

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                    Congress could have enacted a law which would have                
               allowed the immediate exclusion of readjustment                        
               payments from taxation * * *.  However, Congress did                   
               not choose to have the lump-sum readjustment payments                  
               treated in this manner.  Congress deliberately                         
               determined that a veteran covered by 10 U.S.C. sec.                    
               687(b)(6) would be permitted to receive Veterans'                      
               Administration disability compensation upon restoring                  
               to the Government that 75-percent portion of the                       
               readjustment payment * * *.  [Id. at 693-694.]                         
               The repealed section 687 of title 10 would appear to be the            
          lineal ancestor of 10 U.S.C. sec. 1174.  While 10 U.S.C. sec.               
          1174(h)(2) mandates a 100-percent recovery of the SSB payment               
          before petitioner would receive the DVA disability compensation,            
          in substance the two provisions are the same.  Congress could               
          have provided that the SSB payment received under 10 U.S.C. sec.            
          1174(c) was nontaxable to the extent it was subject to recoupment           
          under 10 U.S.C. sec. 1174(h)(2).  We have searched the statutory            
          language and the legislative history of 10 U.S.C. sec. 1174 and             
          find no indication that Congress intended that an SSB payment               
          would be tax exempt under these circumstances.  See H. Rept. 96-            
          1462 (1980).  In sum, Congress did not provide for such an                  
          exemption, and we cannot infer one.  See Palm v. United States,             
          904 F. Supp. 1312 (M.D. Ala. 1995).3                                        

          3   Contrary to petitioners' argument, Strickland v.                        
          Commissioner, 540 F.2d 1196 (4th Cir. 1976), is inapposite.  That           
          case concerned the tax treatment of retirement pay and the                  
          retroactive granting of increased disability compensation.                  

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