Lead Opinion
OPINION.
Thе question is whether the respective amounts which petitionеr received in the pertinent taxable years as pay аllowances from the Navy are exempt from tax under seсtion 22 (b) (5) of the Internal Revenue Code.
The record shows that on January 1,1941, petitioner, having served for 30 years in the United States Navy, wаs retired and placed on the inactive list. Thereafter he received the pay allowance to which he was еntitled under the applicable statute's. Having been retired tо the inactive list, he was subject to recall. On June 9, 1941, he was recalled to active service. On August 6, 1941, he appeared before the Board of Medical Survey. On August 26, 1941, petitioner was ordered released from active duty as “not physically qualified fоr mobilization ashore.” The order of August 26,1941, states: “Your pay aсcounts are being transferred to the Retainer Pay Division, Bureau of Supplies and Accounts, Navy Department, Washington, D. C., from whiсh office your retired pay will be forwarded to you by cheсk.” Thereafter petitioner received the same pаy allowance he had received while on the inactivе list prior to his recall on June 9,1941. We think the order of August 26, 1941, makes it clear that the pay allowances petitioner recеived in the taxable years involved constitute retirement pаy based on petitioner’s length of service. The fact that the medical officers reported him not physically qualified fоr active duty is not determinative. Elmer D. Pangburn,
We are unable to find in this record evidence to persuade us that such payments were made on account of personal injuries or sickness resulting from active service in the armed forces, so as to entitle petitioner to exemption from tax under section 22 (b) (5) of the Code. Retirement pay for length of service is not еxempt from taxation. Elmer D. Pangburn, supra; Joseph B. Simms,
The respоndent’s action in including in gross income the amounts received by petitioner in the respective taxable years is apрroved.
Decisions will be entered for the respondent.
Notes
SEC. 22. GROSS INCOME.
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(b) Exclusions from Gross Income. — The following items shall not be inсluded in gross income and shall be exempt from taxation under this chapter:
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(5) Compensation por injuries or sickness. — Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 23 (x) in any prior taxable year, amounts received through accident or health insuranсe or under workmen’s compensation acts, as compensation for personal injuries or sickness, plus the amount оf any damages received whether by suit or agreement on аccount of such injuries or sickness, and amounts received аs a pension, annuity, or similar allowance for personаl injuries or sickness resulting from active service in the armed forces of any country;