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Use of the word "for" in the section 112(a)(1) language
"compensation received for active service * * * in a combat zone"
requires that the compensation be earned for a person's service
in a combat zone. This statutory language is not ambiguous
concerning the subject of when and how the compensation must be
earned.
As to when the payment is received, the underlying
regulation contains the following pertinent language:
The time and place of payment are irrelevant in
considering whether compensation is excludable under
section 112; rather, the time and place of the
entitlement to compensation determine whether the
compensation is excludable under section 112. * * * For
this purpose, entitlement to compensation fully accrues
upon the completion of all actions required of the
member to receive the compensation. * * * [Sec.
1.112-1(b)(4), Income Tax Regs.3]
The above-quoted language also addresses the question of when the
compensation is earned. The regulation does not, however,
address how the compensation is to be earned in order to be
excludable under section 112; i.e., for military service
performed in a combat zone or any type of service or act that is
performed or may occur in a combat zone.
Congress provided a specific exception from the type of
compensation that may be excludable under section 112; to wit,
pensions and retirement pay. Sec. 112(c)(4). Respondent does
3On Aug. 19, 1993, these regulations were retroactively
amended under authority of sec. 7805 to be effective Jan. 16,
1991. T.D. 8489, 1993-2 C.B. 65.
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Last modified: May 25, 2011