*32 Decisions will be entered for the respondent.
On January 1, 1941, petitioner was retired from active service for having served 30 years in the United States Navy, and thereafter received the appropriate pay allowances for such service. On June 9, 1941, he was recalled for active service. The Board of Medical Survey reported him not physically qualified, and on August 26, 1941, he was ordered released and restored to his former inactive status and pay allowances. Held: the Navy pay allowances petitioner received in the taxable years 1944, 1945, and 1946 constituted retirement pay, which is not exempt from taxation under section 22 (b) (5), Internal Revenue Code.
*831 These consolidated proceedings involved income tax deficiencies for the taxable years 1944, 1945, and 1946, as follows:
| Year | Deficiency |
| 1944 | $ 197.60 |
| 1945 | 308.00 |
| 1946 | 219.00 |
The sole issue is whether the retirement pay received by petitioner in the taxable years involved is exempt from tax under the provisions of section 22 (b) (5) of the Internal Revenue Code.
FINDINGS *33 OF FACT.
Petitioner is an individual residing at Bean Station, Grainger County, Tennessee. His income tax returns for the periods involved were filed with the collector of internal revenue for the district of Tennessee.
Petitioner enlisted in the United States Navy in September 1910 as an apprentice seaman, and was eventually advanced to the rank of chief boatswain's mate. Petitioner served continuously on active duty until May 1931 when he was transferred to the Fleet Reserve of the United States Navy, where he continued as a member until January 1, 1941. From May 1931 until January 1, 1941, he received pay from the Navy which was unchanged in amount during that period.
On January 1, 1941, petitioner was placed on the retired list, having completed 30 years' total service, and began receiving a higher pay allowance than he had received during the period May 1931 to January 1, 1941.
On June 9, 1941, petitioner was recalled to active duty. On August 6, 1941, he appeared before the Board of Medical Survey at the Naval Hospital, Pensacola, Florida. Under the date of August 26, 1941, petitioner received the following order:
*832 U. S. NAVAL HOSPITAL
Pensacola, Florida
August *34 26, 1941.
From: The Commanding Officer.
To: SCARCE, Marshall Sherman, 190-66-57, CBM (PA), USN. (Ret.).
Subject: Release from active duty.
Reference: (a) BuNav. Ltr. Nav-66-FLF over MM-190-66-57, dated August 19, 1941.
1. In accordance with authorization contained in reference (a), you are this date released from active duty and ordered home. NOT physically qualified for mobilization ashore.
2. You have stated and your record shows your home address to be Bean Station, Tennessee, and you will inform the Commandant, EIGHTH Naval District immediately upon your arrival.
3. This is a permanent change of station within the meaning of the Act of May 18, 1920, and you are entitled to such transportation for dependents, and household effects as is authorized by law.
4. The Commandant of the EIGHTH District is your Commanding Officer, and all correspondence with the Navy Department should be forwarded via that officer. You are also cautioned to reply immediately to any official correspondence addressed to you by proper authority.
5. Your pay accounts are being transferred to the Retainer Pay Division, Bureau of Supplies and Accounts, Navy Department, Washington, D. C., from which office*35 your retired pay will be forwarded to you by check. You are cautioned to notify that office via the Commandant of your district immediately of any change of address.
(Sgd.) G. B. McArthur
G. B. McArthur,Acting in Command.
Copy to:
COM8.N.D.
BuS&A. RPD.
After his release from active duty on August 26, 1941, petitioner continued to receive the same amount of pay which he had received while on the inactive list during the period January 1, 1941, to June 9, 1941.
During the calendar years 1944, 1945, and 1946 petitioner received from the United States Navy pay allowances in the respective amounts of $ 1,457.28, $ 1,457.28, and $ 1,599.84. The receipt of such payments was disclosed on petitioner's tax returns for the respective calendar years, but they were omitted from gross income under a claim of exemption.
In determining the deficiencies for the respective taxable years the respondent disallowed the claimed exemption and included such amounts in petitioner's gross income as ordinary retirement pay for having served 30 years in the United States Navy.
*833 OPINION.
The question is whether the respective amounts which petitioner received in the pertinent taxable years as*36 pay allowances from the Navy are exempt from tax under section 22 (b) (5) of the Internal Revenue Code. 1 Exemptions from taxation do not rest on implication. United States v. Stewart, 311 U.S. 60">311 U.S. 60, 85 L. Ed. 40">85 L. Ed. 40, 61 S. Ct. 102">61 S. Ct. 102. Hence petitioner must affirmatively establish that the amounts in question were received as compensation for disability resulting from active service in the armed forces.
*37 The record shows that on January 1, 1941, petitioner, having served for 30 years in the United States Navy, was retired and placed on the inactive list. Thereafter he received the pay allowance to which he was entitled under the applicable statutes. Having been retired to 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 for mobilization ashore." The order of August 26, 1941, states: "Your pay accounts are being transferred to the Retainer Pay Division, Bureau of Supplies and Accounts, Navy Department, Washington, D. C., from which office your retired pay will be forwarded to you by check." Thereafter petitioner received the same pay allowance he had received while on the inactive 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 received in the taxable years involved constitute retirement pay based on petitioner's length of service. The fact that the medical officers reported him not physically*38 qualified for active duty is not determinative. Elmer D. Pangburn, 13 T.C. 169">13 T.C. 169.
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 exempt from taxation. Elmer D. Pangburn, supra;Joseph B. Simms, 17 T.C. 1">17 T.C. 1 (on appeal to C. A. D. C.).
*834 The respondent's action in including in gross income the amounts received by petitioner in the respective taxable years is approved.
Decisions will be entered for the respondent.
Footnotes
1. SEC. 22. GROSS INCOME.
* * * *
(b) Exclusions from Gross Income. -- The following items shall not be included in gross income and shall be exempt from taxation under this chapter:
* * * *
(5) Compensation for 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 insurance or under workmen's compensation acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness, and amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country;↩