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Revenue Code, section 139(a)(3), as an exemption from income with
respect to veterans’ benefits.
Petitioner also relies on Rev. Rul. 72-605, 1972-2 C.B. 35,
wherein the Commissioner ruled with respect to the almost
identical language in a predecessor version of 38 U.S.C. section
5301 (2000): “[P]ayments of benefits under any law administered
by the Veterans’ Administration are excludable from the gross
income of a recipient under section 61 of the Code.”
B. Respondent’s Argument
Respondent does not dispute that petitioner participated in
the CWT program for therapeutic reasons, or that, because he
participated in the program, he received a distribution of
$16,393 from of the VA Special Therapeutic and Rehabilitation
Fund. Respondent argues that petitioner overstates his case when
he argues that money is a benefit and, by that fact alone, is
exempt from taxation to petitioner under the general exemption
for veterans’ benefits found in section 5301 of title 38.
Respondent adds: “The monies paid to the petitioner for his
participation in the program are unlike those payments made to
taxpayers under legislatively-provided-social-welfare-benefit
programs, which are excludable from gross income.”
In support of that argument, respondent refers us to a set
of his revenue rulings exemplifying payments excludable from
gross income not pursuant to the provision of any statute but
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