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provision, petitioners argue that the amount of Social Security
disability insurance benefits to be excluded shall not be less
than the disability compensation that Mr. Reimels received in
1999 from the Veterans’ Administration. Petitioners contend that
because the Social Security disability insurance benefits
Mr. Reimels received in 1999 were less than his Veterans’
Administration disability compensation, they are entitled to
exclude the entire amount of Social Security disability insurance
benefits received. We disagree for the following reasons.
First, subsection (b)(4) of section 104, like just-discussed
subsection (b)(2), provides no independent basis for exclusion:
for petitioners to be eligible for the claimed exclusion, they
must meet the requirements of section 104(a)(4). See Grady v.
Commissioner, T.C. Memo. 1989-55. We have held that the Social
Security disability insurance benefits in question do not meet
those requirements.
Second, although section 104(b)(4) is not a model of
clarity, its legislative history suggests that it was intended to
apply with respect to retired military personnel who do not
receive the Veterans’ Administration benefits to which they are
otherwise entitled. In certain circumstances, section 104(b)(4)
provides such persons with a tax benefit at least as great as the
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