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to the compensation which might be awarded by the VA. This
waiver is required to prevent veterans from receiving double
benefits from both the VA and a branch of the military for the
same military service. The VA awarded petitioner an initial
disability rating of VA 10 percent for a chronic back ailment.
The VA percentage rating equals a dollar amount based on VA
charts. This service-connected disability rating was
subsequently increased to a VA 40 percent in 1995. In addition
to the back ailment, petitioner has degenerative arthritis and
spinal disk shrinkage with a bulging disk.
In 1995, petitioner received $45,847 in service pension pay
from the Air Force. The Defense Finance and Accounting Service
sent petitioner statements on which the $45,847 figure was
clearly labeled as taxable income. Petitioner also received
$5,926 from the VA for disability benefits. In a notice dated
September 28, 1988, from the VA, the VA stated that VA
compensation (disability benefits) is not taxable, but that
retirement pay (service pensions) which is based on age or length
of service is taxable.
On their 1995 return, petitioners reported total income of
$99,240. Apparently, petitioner's ailments did not prevent him
from working in 1995. Petitioner earned $25,015.74 from American
Airlines, Inc., $8,090 from Aviation Crew Training, Inc., and
$1,260 from American Trans Air., Inc.
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