- 28 -
distributions from the VA Special Therapeutic and Rehabilitation
Fund on the ground that a recipient must work in order to receive
a distribution in the later case. Payments for work, argues
respondent, are squarely within the definition of gross income
found in section 61 and section 1.61-2(a)(1), Income Tax Regs.
While it is true that the definition of gross income
includes payments for work, see sec. 61(a)(1), respondent’s
argument ignores the introductory language of section 61(a)(1):
“Except as otherwise provided in this subtitle”. Indeed, section
61(a)(11) includes pensions as an item of gross income. Section
139(a)(3), however, directs us to 38 U.S.C. section 5301 for an
exemption for benefits under laws administered by the VA.
Respondent has acknowledged that veterans’ pensions are
excludable from gross income as a veterans’ benefit. Rev. Rul.
72-605, 1972-2 C.B. 35. The fact that a distribution from the VA
Special Therapeutic and Rehabilitation Fund may fit the
description of an item normally classified as an item of gross
income does not necessarily mean that the distribution is an item
of gross income for which no exemption is afforded by section
139(a)(3) and 38 U.S.C. section 5301 (2000).
Respondent relies specifically on Rev. Rul. 65-18, 1965-1
C.B. 32, which addresses the inclusion in income of remuneration
a patient or member receives for the work he performs for the VA
under 38 U.S.C. section 618 (Supp. V, 1962), a predecessor
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
Last modified: November 10, 2007