- 9 -
Respondent finds support in this example because the excludable
amount is limited to an amount attributable solely to leave
accrued while the member was in a combat zone. We find Example
(2) analogous to the extent that the excludable portion accrued
while the member was in a combat zone, but it is excluded from
income even though utilized and received while the member was not
in a combat zone. We do not find that Example (2) controls our
factual situation.
Respondent's argument focuses on the fact that the amount of
the severance payment here was measured, in part, by time served
outside a combat zone. On the basis of that observation,
respondent argues that the payment was earned, in corresponding
part, outside a combat zone. Respondent also concludes that
petitioner is entitled to exclude the portion of the severance
payment that is allocable to his past service in a combat zone.
Although we agree that petitioner is not entitled to exclude the
severance payment, we disagree with respondent's reasoning.
Petitioner's severance payment is in exchange for his
agreement to leave the military. Although measured by length of
service, the severance payment is not for prior service, either
in a combat zone or otherwise. In the same manner as the
reenlistment example, when petitioner accepted the Navy's early
separation offer, he did not then become entitled to any
additional compensation for the services previously performed.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011