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issue which the Court must decide is whether a disability
percentage rating issued by the Veterans' Administration entitles
petitioners to exclude any portion of a "length of service
military retirement pension" (service pension) under section
104(a)(4). If the exclusion is denied, then, due to the
resultant increase in income, petitioners' Schedule A limitation
must be adjusted by the amount of $234 in accordance with
respondent's determination in the notice of deficiency.
(Petitioners did not contest this issue at trial or on brief.)
FINDINGS OF FACT
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Arlington, Texas, at the time
they filed their petition. They filed a joint Federal income tax
return for 1995.
In 1987, petitioner Dale C. Holt (petitioner) retired from
the United States Air Force (Air Force) as a Colonel. Petitioner
served on active duty from January 1957 until August 1987. He
received a retirement pension for his length of service and not
for any disability.
After retirement, petitioner applied for nontaxable
disability benefits from the Veterans' Administration (VA).
Petitioner executed a VA form, Veteran's Application for
Compensation or Pension. In doing so, petitioner waived that
portion of his service pension from the Air Force which was equal
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