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patients for therapeutic work, “at rates not less than the wage
rates specified in the Fair Labor Standards Act (29 U.S.C. 201 et
seq.) and the regulations prescribed thereunder for work of
similar character.” 38 U.S.C. sec. 1718(c)(2).
Section 1718(f)(3) provides that, for purposes of 38 U.S.C.
chapter 15, a distribution to a patient from the VA Special
Therapeutic and Rehabilitation Activities Fund is to be
considered a donation from a public or private relief or welfare
organization.1
The complete text of section 1718 is set forth in an
appendix to this report.
The Notice of Deficiency
The principal adjustment giving rise to the deficiency
determined by respondent is his addition of $16,393 to the amount
of gross income reported by petitioner for 2000. That adjustment
is explained as reflecting information reported by the VA to the
Internal Revenue Service (IRS) on an IRS Form 1099-MISC.
1 Tit. 38 U.S.C. ch. 15 (2000) is concerned with certain
pension benefits of veterans and their survivors. Some of those
pension benefits are reduced by the recipient’s annual income.
See, e.g., 38 U.S.C. secs. 1521(b) (veteran’s annual income),
1541(b) (surviving spouse’s annual income). Tit. 38 U.S.C. sec.
1503(a) describes how “annual income” is determined for purposes
of those limitations. Paragraph (1) thereof provides that
“donations from public or private relief or welfare
organizations” are excluded in determining annual income.
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