David A. Popper and Claudette B. Stulz - Page 5




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          Glenshaw Glass Co., 348 U.S. 426, 430 (1955).  For example,                 
          certain military compensation, such as that received by members             
          of the Armed Forces serving in combat zones, is excluded from               
          gross income.  Sec. 112.  Military subsistence, uniform                     
          allowances, and other amounts received as commutation of quarters           
          are excludable from gross income.  See sec. 1.61-2(b), Income Tax           
          Regs.                                                                       
               Petitioners contend that the unreported portion of the JROTC           
          instructor’s pay represents “qualified military benefits” that              
          are excludable from gross income pursuant to section 134 and 10             
          U.S.C. section 2031(d) (2000).  Petitioners rely on the statutes            
          and copies of ARMY JROTC Instructor Monthly Statements.  The                
          latter documents calculate petitioner’s pay reimbursed to the               
          school “on your behalf”.  Petitioner argues that the statements             
          clearly show pay and allowances directly from U.S. Army funds.              
               Department of Defense (DOD) Directive No. 1205.13 (Dec. 26,            
          1995), provides that the total compensation received by a                   
          retiree-instructor is to be equal to the difference between                 
          retired pay and active duty pay plus “allowances” that the                  
          retiree-instructor would receive if ordered to active duty.  DOD            
          Instruction 1205.13, reissued and updated February 6, 2006,                 
          states that for calculating instructor pay, active duty pay is              
          limited to basic pay and allowances “which the individual would             
          receive if called to active duty.”  DOD Instruction 1205.13,                







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