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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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