Rev. Rul. 72-605

The purpose of this Revenue Ruling is to update and restate under the current statute and regulations the position set forth in Mim. 4411, C.B. XV-1, 497 (1936).

The question presented is whether payments of benefits made under any law administered by the Veterans' Administration to, or on account of, a beneficiary are excludable from the gross income of a recipient under section 61 of the Internal Revenue Code of 1954.

Section 61 of the Code and section 1.61-1 of the Income Tax Regulations provide that gross income includes all income from whatever source derived, unless excluded by law.

The Veterans' Benefits Act of 1957, Public Law 85-56, 71 Stat. 83, reenacted by Public Law 85-857, 38 U.S.C. 101-5228, consolidates into one Act all the laws administered by the Veterans' Administration relating to compensation, pension, hospitalization, and burial benefits.

With respect to the taxation of the payments of benefits made under any law administered by the Veterans' Administration 38 U.S.C. 3101(a) provides as follows:

(a) Payments of benefits due or to become due under any law administered by the Veterans' Administration * * * and such payments made to, or on account of, a beneficiary shall be exempt from taxation * * *.

Accordingly, it is held that payments 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.

Mim. 4411 is hereby superseded, since the position stated therein is set forth under the current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.