William D. and Joyce M. Reimels - Page 18

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               Petitioners argue that the Social Security disability                  
          insurance benefits Mr. Reimels received in 1999 are excludable              
          under section 104(b)(2)(C) because they are part of a disability            
          pension for his combat-related injury resulting from his exposure           
          to Agent Orange.  Petitioners also argue that the Social Security           
          disability insurance benefits are excludable under section                  
          104(b)(2)(D) because Mr. Reimels is entitled to receive                     
          disability compensation from the Veterans’ Administration.  We              
          disagree.                                                                   
               Section 104(b)(2) provides no independent basis for                    
          exclusion.  Instead, consistent with express legislative intent,            
          it limits the classes of persons who otherwise might be eligible            
          for the section 104(a)(4) exclusion.  Thus, regardless of whether           
          Mr. Reimels’s disability arose from combat-related injuries while           
          he was serving in the U.S. Armed Forces, the payments in question           
          must meet the requirements for exclusion under section 104(a)(4).           
          For the reasons discussed above, Mr. Reimels’s Social Security              
          disability insurance benefits do not meet those requirements.15             


               14(...continued)                                                       
          amounts taken into account under subsection (a)(4) shall be the             
          amounts which he receives by reason of a combat-related injury.”            
               15 Moreover, as previously discussed, the fact that Mr.                
          Reimels received disability compensation from the Veterans’                 
          Administration does not distinguish Haar v. Commissioner, 78 T.C.           
          864 (1982), and does not entitle Mr. Reimels to an exclusion                
          under sec. 104(a)(4).  See Kiourtsis v. Commissioner, T.C. Memo.            
          1996-534.                                                                   





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