## Section I. Improved Pension -- Counting Specific Types of Income

#### Overview

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics:           |
| #### In th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ------------ ---------------------------------------------- ------------
  Topic        Topic Name                                     See Page

  56           Income Inclusions                              1-I-2

  57           Income Inclusions From Government Programs     1-I-6

  58           Income Exclusions                              1-I-9

  59           Living/Home Income Exclusions                  1-I-15

  60           Disaster Income Exclusions                     1-I-17

  61           Death and Disability Income Exclusions         1-I-18

  62           Income From Mortgage or Contract for Deed      1-I-20

  63           Indian Income                                  1-I-22

  64           Income From the Sale of Property               1-I-26

  65           Asset Transfers and Life Estates: Effect on    1-I-29
               Net Worth and Income                           

  66           Exhibits 1 and 2: Payments Excluded by Federal 1-I-32
               Statutes in Calculating Income and/or Net      
               Worth                                          
  ------------ ---------------------------------------------- ------------

#### 56. Income Inclusions

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on income inclusions. |
| troduction | > It includes information on                            |
|            |                                                         |
|            | -   the general guidelines on income inclusions         |
|            |                                                         |
|            | -   benefits subject to garnishment                     |
|            |                                                         |
|            | -   individual retirement account (IRA) distributions   |
|            |                                                         |
|            | -   withdrawal of contributions from a retirement fund  |
|            |                                                         |
|            | -   the value of room and board                         |
|            |                                                         |
|            | -   gifts and inheritances of property or cash          |
|            |                                                         |
|            | -   waived income                                       |
|            |                                                         |
|            | -   gains from gambling                                 |
|            |                                                         |
|            | -   United States Government Life Insurance (USGLI),    |
|            |     National Service Life Insurance (NSLI), and Total   |
|            |     Disability Insurance Payments (TDIP)                |
|            |                                                         |
|            | -   income from joint accounts, and                     |
|            |                                                         |
|            | -   cooperative dividends.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

56\. Income Inclusions, Continued

+------------+---------------------------------------------------------+
| ##### a.   | > The general rule set out at [38 CFR                   |
|  General G | > 3.271](http://                                        |
| uidelines  | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC) |
| on Income  | > is that all income is countable for Improved Pension  |
| Inclusions | > unless specifically excluded by [38 CFR               |
|            | > 3.272](http://w                                       |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
|            | >                                                       |
|            | > The following types of income are all countable       |
|            | > income for Improved Pension purposes:                 |
|            |                                                         |
|            | -   earnings                                            |
|            |                                                         |
|            | -   retirement or survivors' programs                   |
|            |                                                         |
|            | -   interest                                            |
|            |                                                         |
|            | -   dividends                                           |
|            |                                                         |
|            | -   unemployment compensation                           |
|            |                                                         |
|            | -   operation of a business, and                        |
|            |                                                         |
|            | -   life insurance proceeds received before December    |
|            |     10, 2004, because of the death of a veteran.        |
|            |                                                         |
|            | > This topic describes additional sources of income     |
|            | > that are countable.                                   |
|            |                                                         |
|            | ***Note***: When a veteran's death occurred before      |
|            | December 10, 2004, any insurance proceeds received      |
|            | after December 9, 2004, must be excluded from IVAP.     |
|            |                                                         |
|            | > ***Questions***: If questions arise about how to      |
|            | > handle specific types of income, the Veterans Service |
|            | > Center (VSC) or Pension Maintenance Center (PMC)      |
|            | > question coordinator should contact Compensation and  |
|            | > Pension (C&P) Service Question and Answer Committee.  |
+------------+---------------------------------------------------------+

Continued on next page

+------------+---------------------------------------------------------+
| ##### b. B | > If a claimant's benefits, such as Social Security     |
| enefits Su | > (SS), are subject to involuntary withholding due to   |
| bject to G | > legal action initiated by a third party, count the    |
| arnishment | > entire amount even though the claimant does not       |
|            | > receive it all.                                       |
|            | >                                                       |
|            | > ***Exception***: If benefits are withheld to recoup   |
|            | > an overpayment of the benefit, count only the actual  |
|            | > amount received.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > When an individual retirement account (IRA) or        |
| c. IRA Dis | > similar instrument starts paying benefits, count the  |
| tributions | > entire amount even though it represents a partial     |
|            | > return of principal.                                  |
+------------+---------------------------------------------------------+

Continued on next page

56\. Income Inclusions, Continued

+------------+---------------------------------------------------------+
| ##### d.   | > If a claimant receives a distribution of retirement   |
| Withdrawal | > benefits, count the entire amount received. This is   |
|  of Contri | > the case, even though all or part of the distribution |
| butions Fr | > might represent a return of withheld wages which were |
| om a Retir | > previously counted as income for Department of        |
| ement Fund | > Veterans Affairs (VA) purposes (IVAP) as part of the  |
|            | > claimant's gross wages.                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Count the fair value of room and board furnished to a |
| ### e. Val | > claimant if the room and board are furnished in lieu  |
| ue of Room | > of money or services provided by the beneficiary.     |
|  and Board | >                                                       |
|            | > ***Exception***: The value of room and board is not   |
|            | > countable if it is furnished gratuitously.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Count gifts and inheritances of property or cash as   |
| #### f. Gi | > received. The value of a                              |
| fts and In |                                                         |
| heritances | -   gift or inheritance of property is the fair market  |
|  of Proper |     value of the property at the time it is received,   |
| ty or Cash |     and                                                 |
|            |                                                         |
|            | -   financial instrument, such as a stock certificate   |
|            |     or bond, is the amount it would bring if it were    |
|            |     cashed on receipt, even though this might be less   |
|            |     than its face value.                                |
|            |                                                         |
|            | > ***Exception***: Regular cash contributions for the   |
|            | > purpose of paying for the claimant's maintenance are  |
|            | > not considered countable gifts.                       |
|            | >                                                       |
|            | > ***Note***: If a third party pays for medical         |
|            | > expenses, those same medical expenses cannot be       |
|            | > allowed as deductions from the claimant's or          |
|            | > beneficiary's income.                                 |
+------------+---------------------------------------------------------+

56\. Income Inclusions, Continued

+------------+---------------------------------------------------------+
| ##         | > If a beneficiary is entitled to receive income, such  |
| ### g. Wai | > as a retirement benefit, but waives the income, the   |
| ved Income | > amount that would be received if not for the waiver   |
|            | > still counts as income as described in [38 CFR        |
|            | > 3.276(b)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_276.DOC). |
|            | >                                                       |
|            | > The intent of this provision is to prevent a person   |
|            | > from creating a need for pension.                     |
|            | >                                                       |
|            | > ***Exception***: If a claimant withdraws a SS         |
|            | > application after a finding of entitlement to SS so   |
|            | > as to maintain eligibility for an unreduced SS        |
|            | > benefit on attainment of a certain age, such as age   |
|            | > 65, do not regard the withdrawal as a waiver under    |
|            | > [38 CFR                                               |
|            | > 3.276(a)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_276.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### h.   | > Count net winnings from gambling as income.           |
|  Gains Fro | >                                                       |
| m Gambling | > ***Note***: Gambling losses during a particular       |
|            | > eligibility verification report (EVR) period may be   |
|            | > deducted from gross winnings during the same EVR      |
|            | > reporting period to arrive at net gambling income.    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Count the following types of income:                  |
| #### i. US |                                                         |
| GLI, NSLI, | -   United States Government Life Insurance (USGLI)     |
|  and TDIP  |     proceeds                                            |
|            |                                                         |
|            | -   National Service Life Insurance (NSLI) proceeds,    |
|            |     and                                                 |
|            |                                                         |
|            | -   Total Disability Insurance Payments (TDIP).         |
|            |                                                         |
|            | > Insurance dividends are not countable unless they are |
|            | > left on deposit to draw interest. In that event, only |
|            | > the interest earned is countable income.              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Count income from joint bank accounts or from other   |
|  j. Income | > jointly owned property in proportion to the           |
|  From Join | > claimant's ownership share, per [38 CFR               |
| t Accounts | > 3.271(d)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC). |
|            | >                                                       |
|            | > ***Example***: A surviving spouse has a joint bank    |
|            | > account with her nephew. One half of the interest     |
|            | > earned by the joint account is countable income for   |
|            | > the surviving spouse.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### k. C | > Count cash dividends from rural cooperatives and      |
| ooperative | > similar entities.                                     |
|  Dividends | >                                                       |
|            | > ***Exception***: Do not count cooperative dividends   |
|            | > in the form of discounts on the purchase of           |
|            | > merchandise or services.                              |
+------------+---------------------------------------------------------+

#### 57. Income Inclusions from Government Programs

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on income inclusions  |
| troduction | > from government programs. It includes information on  |
|            |                                                         |
|            | -   the SS lump-sum death benefit                       |
|            |                                                         |
|            | -   Department of Labor (DoL) employment programs       |
|            |                                                         |
|            | -   VA education or compensation benefits               |
|            |                                                         |
|            | -   VA pension benefits                                 |
|            |                                                         |
|            | -   multiple VA benefits                                |
|            |                                                         |
|            | -   accrued VA benefits                                 |
|            |                                                         |
|            | -   conservation resource program payments, and         |
|            |                                                         |
|            | -   Vietnam Era bonus payments.                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Count the SS lump-sum death benefit like any other SS |
| # a. SS Lu | > benefit.                                              |
| mp-Sum Dea |                                                         |
| th Benefit |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Count the income received by participants in programs |
| ### b. DoL | > operated by the Department of Labor (DoL), such as    |
|  Employmen | > the                                                   |
| t Programs |                                                         |
|            | -   Green Thumb Program, and                            |
|            |                                                         |
|            | -   Older Americans Community Service Employment        |
|            |     Program.                                            |
+------------+---------------------------------------------------------+

Continued on next page

57\. Income Inclusions from Government Programs, Continued

+------------+---------------------------------------------------------+
| #####      | > Count VA                                              |
| c. VA Educ |                                                         |
| ation or C | -   education or compensation benefits, including       |
| ompensatio |     Dependency and Indemnity Compensation (DIC), and    |
| n Benefits |                                                         |
|            | -   benefits paid to a claimant as accrued amounts      |
|            |     based on the entitlement and death of another       |
|            |     beneficiary.                                        |
|            |                                                         |
|            | > ***Exception***: Do not count pension benefits paid   |
|            | > as an accrued amount.                                 |
|            | >                                                       |
|            | > ***Example***                                         |
|            | >                                                       |
|            | > ***Situation***:                                      |
|            |                                                         |
|            | -   A veteran receives Improved Pension of \$500 per    |
|            |     month.                                              |
|            |                                                         |
|            | -   The veteran becomes entitled to temporary 100       |
|            |     percent compensation under Paragraph 29 of the      |
|            |     Rating Schedule at the rate of \$2,299 from March   |
|            |     1, 2005, to April 1, 2005.                          |
|            |                                                         |
|            | -   The veteran receives a \$1,799 retroactive payment  |
|            |     on August 2, 2005.                                  |
|            |                                                         |
|            | > ***Result***: Count nonrecurring income of \$1,799    |
|            | > from September 1, 2005, to September 1, 2006.         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > Generally, do not count VA pension benefits. However, |
|  VA Pensio | > under [38 CFR                                         |
| n Benefits | > 3.700(a)(4)](http://w                                 |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_700.DOC), |
|            | > a veteran receiving Improved Pension is barred from   |
|            | > receiving any other pension benefit, such as Section  |
|            | > 306 Pension as a surviving spouse.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e.   | > If one of two veterans married to each other receives |
| Multiple V | > Improved Pension and the other veteran receives       |
| A Benefits | > disability compensation, count the compensation as    |
|            | > income for Improved Pension purposes.                 |
|            | >                                                       |
|            | > If a beneficiary's VA benefits are countable income   |
|            | > on another account and the payee receives less than   |
|            | > the full benefit, count the gross VA benefit before   |
|            | > the withholding.                                      |
|            | >                                                       |
|            | > ***Example***: Two veterans are married. The husband  |
|            | > is entitled to Improved Pension and the wife is       |
|            | > entitled to compensation at the 10-percent rate. The  |
|            | > wife's compensation is being withheld to recoup a VA  |
|            | > Medical Center overpayment. The wife's entire 10      |
|            | > percent compensation still counts as income on the    |
|            | > husband's Improved Pension award.                     |
+------------+---------------------------------------------------------+

Continued on next page

57\. Income Inclusions from Government Programs, Continued

+------------+---------------------------------------------------------+
| ##### f.   | > Count accrued VA benefits.                            |
|  Accrued V | >                                                       |
| A Benefits | > ***Exceptions***: Do not count                        |
|            |                                                         |
|            | -   pension benefits paid as an accrued amount, or      |
|            |                                                         |
|            | -   VA burial benefits. (However, the amount of VA      |
|            |     burial benefits paid by VA cannot be allowed as a   |
|            |     deduction from a claimant's income.)                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### g    | > Count payments to a landowner under the               |
| . Conserva |                                                         |
| tion Resou | -   U.S. Department of Agriculture's Conservation       |
| rce Progra |     Resource Program (CRP), and                         |
| m Payments |                                                         |
|            | -   similar programs for the purpose of keeping land    |
|            |     out of production.                                  |
|            |                                                         |
|            | > If the operator of a business receives CRP payments,  |
|            | > treat them as any other business income.              |
|            | >                                                       |
|            | > A beneficiary who does not operate a business can     |
|            | > still deduct taxes and other expenses of maintaining  |
|            | > the land from the CRP income. This income should be   |
|            | > treated like rental income since the beneficiary      |
|            | > receives payment for relinquishing partial rights to  |
|            | > land.                                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Count Vietnam Era bonus payments.                     |
|  h. Vietna | >                                                       |
| m Era Bonu | > ***Exception***: Do not count the payment if          |
| s Payments | > eligibility for the bonus is based on the need of the |
|            | > beneficiary.                                          |
+------------+---------------------------------------------------------+

#### 58. Income Exclusions

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on income exclusions. |
| troduction | > It includes information on                            |
|            |                                                         |
|            | -   the general guidelines on income exclusions         |
|            |                                                         |
|            | -   Welfare, Supplemental Security Income (SSI), and    |
|            |     drug discounts received under the Medicare          |
|            |     Prescription Drug, Improvement, and Modernization   |
|            |     Act (MMA)                                           |
|            |                                                         |
|            | -   income from the Veterans Health Administration      |
|            |     (VHA) Work Restoration programs                     |
|            |                                                         |
|            | -   income tax refunds                                  |
|            |                                                         |
|            | -   withheld SS                                         |
|            |                                                         |
|            | -   chore services payments and an example              |
|            |                                                         |
|            | -   payments for foster parents                         |
|            |                                                         |
|            | -   the Survivor Benefit Annuity                        |
|            |                                                         |
|            | -   timber sales                                        |
|            |                                                         |
|            | -   mineral royalties                                   |
|            |                                                         |
|            | -   IRA interest                                        |
|            |                                                         |
|            | -   loans, including reverse mortgages                  |
|            |                                                         |
|            | -   VA pension as an accrued benefit                    |
|            |                                                         |
|            | -   insurance dividends                                 |
|            |                                                         |
|            | -   joint accounts                                      |
|            |                                                         |
|            | -   withdrawals from bank accounts and certificates of  |
|            |     deposit                                             |
|            |                                                         |
|            | -   AmeriCorps program payments                         |
|            |                                                         |
|            | -   scholarships and grants for school attendance       |
|            |                                                         |
|            | -   proceeds of cashed-in life insurance policies       |
|            |                                                         |
|            | -   proceeds of veteran's life insurance policies       |
|            |     received after December 9, 2004, and                |
|            |                                                         |
|            | -   proceeds of cashed-in savings bonds.                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

58\. Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ##### a.   | > Certain items are not countable for Improved Pension, |
|  General G | > either because they are                               |
| uidelines  |                                                         |
| on Income  | -   not considered to be income under [38 CFR           |
| Exclusions |     3.271](http://                                      |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC) |
|            |                                                         |
|            | -   deemed to fall under one of the specific exclusions |
|            |     in [38 CFR                                          |
|            |     3.272](http://w                                     |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC), |
|            |     or                                                  |
|            |                                                         |
|            | -   excluded by Federal statute, per M21-1MR, Part V,   |
|            |     Subpart iii, 1.I.66.                                |
|            |                                                         |
|            | > ***Questions***: If questions arise about how to      |
|            | > handle specific types of income, the VSC or PMC       |
|            | > question coordinator should contact the C&P Service   |
|            | > Question and Answer Committee.                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > In general, do not count any type of benefit for      |
| # b. Welfa | > which eligibility is based on the claimant's          |
| re, SSI, a | > financial need, such as Welfare, Supplemental         |
| nd Drug Di | > Security Income (SSI), and savings from prescription  |
| scounts Re | > drug discounts received under the Medicare            |
| ceived Und | > Prescription Medication, Improvement, and             |
| er the MMA | > Modernization Act (MMA).                              |
|            | >                                                       |
|            | > ***Reference***: For more information on this         |
|            | > exclusion, see [38 CFR                                |
|            | > 3.272(a)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c. I | > Do not count income received from Work Restoration    |
| ncome from | > programs administered by the Veterans Health          |
|  VHA Work  | > Administration (VHA), including                       |
| Restoratio |                                                         |
| n Programs | -   Incentive Therapy (IT), and                         |
|            |                                                         |
|            | -   Compensated Work Therapy (CWT).                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d    | > Do not count income tax refunds, including the        |
| . Income T | > Federal Earned Income Credit.                         |
| ax Refunds |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e. W | > Do not count SS or similar benefits withheld to       |
| ithheld SS | > recoup a prior overpayment from SS or other non-VA    |
|            | > organization. Count the check amount received, if     |
|            | > any, plus any Medicare deduction.                     |
|            | >                                                       |
|            | > ***Exception***: If the withholding is due to legal   |
|            | > action by a third party, such as a garnishment order, |
|            | > count the gross benefit.                              |
+------------+---------------------------------------------------------+

Continued on next page

58\. Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ##         | > Do not count amounts paid by a governmental entity to |
| ### f. Cho | > an individual to care for a disabled VA claimant in   |
| re Service | > the claimant's home, provided eligibility for the     |
| s Payments | > payments is based on the disabled VA claimant's       |
|            | > financial need.                                       |
|            | >                                                       |
|            | > Payments are not countable if they are paid to a      |
|            | > dependent of the disabled VA claimant where           |
|            |                                                         |
|            | -   counting the payments would reduce the disabled VA  |
|            |     beneficiary's rate of pension, and                  |
|            |                                                         |
|            | -   eligibility for the payments is based on the VA     |
|            |     beneficiary's financial need.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > ***Example 1***: A spouse of a veteran beneficiary is |
| ### g. Exa | > paid by the State to take care of the veteran in      |
| mples: Cho | > their home under a chore services program. The income |
| re Service | > is not countable. It makes no difference whether the  |
| s Payments | > State pays the spouse directly or pays the veteran.   |
|            | >                                                       |
|            | > ***Example 2***: A surviving spouse beneficiary is    |
|            | > paid by the State to take care of a neighbor in the   |
|            | > neighbor's home under a chore services program. The   |
|            | > chore services payments are countable earned income   |
|            | > since eligibility for the payments derives from the   |
|            | > neighbor's financial need and not the financial need  |
|            | > of the VA beneficiary.                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not count as income payments made by a state or    |
|  h. Paymen | > subdivision of a state to foster parents for care of  |
| ts to Fost | > foster children.                                      |
| er Parents |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Do not count Survivor Benefit Annuity amounts paid by |
| # i. Survi | > the Department of Defense (DoD) under *Public Law     |
| vor Benefi | > (PL) 100-456* to the surviving spouse of a veteran    |
| t Annuity  | > who died prior to November 1, 1953, per [38 CFR       |
|            | > 3.272(n)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
|            | >                                                       |
|            | > ***Exception***: The following DoD annuity payments   |
|            | > are countable as income:                              |
|            |                                                         |
|            | -   Survivor Benefit Plan (SBP) annuity payments        |
|            |                                                         |
|            | -   SBP Minimum Income Widow/Widowers Annuity Plan      |
|            |     (MIW-SBP), and                                      |
|            |                                                         |
|            | -   Annuities for Certain Military Surviving Spouses    |
|            |     (ACMSS).                                            |
|            |                                                         |
|            | > ***References***: For more information on             |
|            |                                                         |
|            | -   SBP, see M21-1MR, Part IV, Subpart iii, 3.I, and    |
|            |                                                         |
|            | -   MIW-SBP, see M21-1MR, Part V, Subpart iii, 6 (TBD)  |
|            |     or [M21-1, Part IV,                                 |
|            |     26.25](htt                                          |
|            | p://www.warms.vba.va.gov/admin21/m21_1/part4/ch26.doc). |
+------------+---------------------------------------------------------+

Continued on next page

58\. Income Exclusions, Continued

+------------+---------------------------------------------------------+
| #          | > Do not count income received from the occasional      |
| #### j. Ti | > sales of timber, as they are considered a conversion  |
| mber Sales | > of assets.                                            |
|            | >                                                       |
|            | > ***Exception***: If the claimant is in the business   |
|            | > of selling timber, the proceeds from the sale of      |
|            | > timber constitute business income.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not count royalties received for extracting        |
| k. Mineral | > minerals. Royalties are considered to be a conversion |
|  Royalties | > of assets. The claimant is deemed to be exchanging    |
|            | > mineral assets for cash assets.                       |
|            | >                                                       |
|            | > ***Exception***: Bonus payments and delay rentals     |
|            | > that do not involve depletion of mineral assets are   |
|            | > countable.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > In general, do not count interest on IRAs if it       |
| #### l. IR | > cannot be withdrawn without incurring a substantial   |
| A Interest | > penalty.                                              |
|            | >                                                       |
|            | > ***Exception***: When the claimant starts drawing     |
|            | > down his/her IRA, all payments, including interest    |
|            | > and principal, are countable income.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Do not count loans to a claimant as long as the       |
| ## m. Loan | > claimant incurs a legally binding obligation to repay |
| s, Includi | > the loan.                                             |
| ng Reverse | >                                                       |
|  Mortgages | > Do not count funds received from a reverse mortgage.  |
|            | > A reverse mortgage is considered a home equity loan   |
|            | > that must be repaid when the homeowner no longer      |
|            | > lives in the home.                                    |
|            | >                                                       |
|            | > ***Note***: Loans must be distinguished from gifts. A |
|            | > gift disguised as a loan is countable.                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Do not count VA pension that is paid as an accrued    |
| #### n. VA | > benefit.                                              |
|  Pension a | >                                                       |
| s an Accru | > In *Martin v. Brown,* 17 Vet. App. 196 (1994), the    |
| ed Benefit | > Court held that when pension benefits are paid as an  |
|            | > accrued benefit, that payment meets the               |
|            | > pension-income-exclusion provision of [38 U.S.C.      |
|            | > 1503(a)(2)](http://straylight.law.cornell.edu/        |
|            | uscode/html/uscode38/usc_sec_38_00001503----000-.html), |
|            | > and, therefore, is not income for VA purposes.        |
+------------+---------------------------------------------------------+

Continued on next page

58\. Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ##### o.   | > Do not count insurance dividends, as they are         |
|  Insurance | > considered to be a return of excess premium payments. |
|  Dividends | >                                                       |
|            | > ***Exceptions***:                                     |
|            |                                                         |
|            | -   If insurance dividends are left on deposit, count   |
|            |     any interest earned.                                |
|            |                                                         |
|            | -   Count TDIP (cash payments to totally disabled       |
|            |     policyholders) as income.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > If a joint owner of property, such as a bank account, |
| ## p. Join | > acquires the other joint owner's share because of the |
| t Accounts | > death of that person, do not count the amount         |
|            | > acquired, per [38 CFR                                 |
|            | > 3.272(f)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
|            | >                                                       |
|            | > ***Exception***: If one joint owner transfers his/her |
|            | > share of property to another joint owner (Improved    |
|            | > Pension claimant) during the transferor's lifetime,   |
|            | > the amount acquired is countable as a gift of         |
|            | > property.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### q.   | > Do not count withdrawals from regular bank accounts   |
|  Withdrawa | > and certificates of deposit, as they do not           |
| ls From Ba | > constitute income events because the                  |
| nk Account |                                                         |
| s and Cert | -   interest is counted as it accrues, and              |
| ificates o |                                                         |
| f Deposit  | -   withdrawal is merely a conversion of assets.        |
|            |                                                         |
|            | > ***Exception***: If the assets are in an IRA or other |
|            | > retirement account, apply the provisions in M21-1MR,  |
|            | > Part V, Subpart iii, 1.I.56.c.                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not count as income any of the following types of  |
| r. AmeriCo | > payments received by participants in an AmeriCorps    |
| rps Progra | > program under the National and Community Service      |
| m Payments | > State grant program:                                  |
|            |                                                         |
|            | -   educational awards                                  |
|            |                                                         |
|            | -   living allowances, and                              |
|            |                                                         |
|            | -   child-care allowances.                              |
|            |                                                         |
|            | > An AmeriCorps program is any program that receives    |
|            | > approved AmeriCorps positions or Corporation funds    |
|            | > under [42 U.S.C.                                      |
|            | > 12571](http://straylight.law.cornell.edu/             |
|            | uscode/html/uscode42/usc_sec_42_00012571----000-.html). |
|            | >                                                       |
|            | > ***Reference***: For more information on payments     |
|            | > excluded by Federal statutes, see M21-1MR, Part V,    |
|            | > Subpart iii, 1.I.66.                                  |
+------------+---------------------------------------------------------+

Continued on next page

58\. Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ####       | > Do not count scholarships and grants earmarked for    |
| # s. Schol | > specific educational purposes, provided that the      |
| arships an | > payments are actually used for school purposes, such  |
| d Grants f | > as tuition or fees.                                   |
| or School  | >                                                       |
| Attendance | > ***Exception***: Any amounts in excess of amounts     |
|            | > actually paid for school expenses are countable       |
|            | > income.                                               |
|            | >                                                       |
|            | > ***Reference***: For information on educational       |
|            | > expenses that may be deducted from income, see        |
|            | > M21-1MR, Part V, Subpart iii, 1.G.48.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Do not count the proceeds of cashed-in life insurance |
| # t. Proce | > policies to the extent that they represent return of  |
| eds of Cas | > premiums.                                             |
| hed-In Lif | >                                                       |
| e Insuranc | > ***Exception***: Cashed-in life insurance policies    |
| e Policies | > are countable to the extent that they represent       |
|            | > interest on the policyholder's contributions.         |
|            | >                                                       |
|            | > Ask the claimant to furnish a statement from the      |
|            | > insurance company breaking down the payment between   |
|            | > interest and return of premiums. If the claimant does |
|            | > not furnish the statement, count the entire amount as |
|            | > income.                                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Under *Public Law 108-454*, do not count the lump sum |
| u. Proceed | > proceeds of a life insurance policy on a veteran who  |
| s of Life  | > dies after December 9, 2004.                          |
| Insurance  | >                                                       |
| Policies R | > ***Reference***: For more information on this         |
| eceived Af | > exclusion, see [38 CFR                                |
| ter Decemb | > 3.272(x)](http://w                                    |
| er 9, 2004 | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Do not count the entire proceeds of cashed-in savings |
| # v. Proce | > bonds because                                         |
| eds of Cas | >                                                       |
| hed-In Sav | > cashing in the savings bond is partly a conversion of |
| ings Bonds | > assets.                                               |
|            | >                                                       |
|            | > ***Note***: Any amount that is over the face value of |
|            | > a cashed-in savings bond should be counted as         |
|            | > interest.                                             |
+------------+---------------------------------------------------------+

#### 59. Living/Home Income Exclusions

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on living/home income |
| troduction | > exclusions. It includes information on                |
|            |                                                         |
|            | -   the profit from sale of property                    |
|            |                                                         |
|            | -   maintenance                                         |
|            |                                                         |
|            | -   the California State Renter's Credit, and           |
|            |                                                         |
|            | -   the Farmers Home Administration construction        |
|            |     grants.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > If a claimant enters into an occasional sale of       |
| . Profit F | > property, do not count the income unless it is an     |
| rom Sale o | > installment sale, even if the amount received exceeds |
| f Property | > the value of the property.                            |
|            | >                                                       |
|            | > ***Exception***: Profit from sale of property is      |
|            | > countable if the claimant sells the property as part  |
|            | > of a regular business.                                |
|            | >                                                       |
|            | > ***Note***: An installment sale, for the purposes of  |
|            | > Improved Pension, is any sale in which the seller     |
|            | > receives more than the sales price over the course of |
|            | > the transaction. The actual number of installments is |
|            | > irrelevant.                                           |
+------------+---------------------------------------------------------+

Continued on next page

59\. Living/Home Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ##### b. M | > Do not count the value of maintenance. In other       |
| aintenance | > words, if someone furnishes a claimant free room and  |
|            | > board, or pays the claimant's bills, the value of     |
|            | > room and board or the amount of the extinguished debt |
|            | > is not countable.                                     |
|            | >                                                       |
|            | > Regular cash contributions can be considered          |
|            | > maintenance, and not be counted as income, if the     |
|            | > evidence establishes that                             |
|            |                                                         |
|            | -   the donor has assumed all or part of the burden of  |
|            |     regular maintenance of the claimant, and            |
|            |                                                         |
|            | -   cash contributions are used by the claimant to pay  |
|            |     for basic necessities, such as food or housing.     |
|            |                                                         |
|            | > ***Exception***: Cash contributions which are         |
|            | > sporadic or in amounts in excess of what is required  |
|            | > for regular maintenance should be considered gifts    |
|            | > which are countable for Improved Pension purposes.    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Do not count California State Renter's Credit, as it  |
| #### c. Ca | > is considered to be a welfare payment, per [38 CFR    |
| lifornia S | > 3.272(a)](http://w                                    |
| tate Rente | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
| r's Credit |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not count grants made by the Farmers Home          |
| d. Farmers | > Administration to needy families in rural areas for   |
|  Home Admi | > repairs or improvements to structures.                |
| nistration |                                                         |
|  Construct |                                                         |
| ion Grants |                                                         |
+------------+---------------------------------------------------------+

#### 60. Disaster Income Exclusions

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on disaster income    |
| troduction | > exclusions. It includes information on                |
|            |                                                         |
|            | -   proceeds of casualty insurance, and                 |
|            |                                                         |
|            | -   disaster relief payments.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > Do not count the amount received from an insurance    |
| Proceeds o | > policy when a claimant loses property due to fire,    |
| f Casualty | > flood, or theft, as long as it does not exceed the    |
|  Insurance | > value of the lost property, per [38 CFR               |
|            | > 3.272(d)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Do not count voluntary payments in the nature of      |
| ## b. Disa | > relief after widespread national disaster, such as    |
| ster Relie | > floods and hurricanes, as they are considered to be   |
| f Payments | > welfare under [38 CFR                                 |
|            | > 3.272(a)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
|            | >                                                       |
|            | > ***Exception***: This exclusion does not apply to     |
|            | > disaster relief payments made in a commercial         |
|            | > context, such as drought relief to farmers. If the    |
|            | > operator of a business receives disaster relief, it   |
|            | > must be treated as any other business income.         |
+------------+---------------------------------------------------------+

#### 61. Death and Disability Income Exclusions

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on death and          |
| troduction | > disability income exclusions. It includes information |
|            | > on                                                    |
|            |                                                         |
|            | -   Radiation Exposure Compensation Act (RECA) payments |
|            |                                                         |
|            | -   payments for the participation in a program of      |
|            |     rehabilitative services                             |
|            |                                                         |
|            | -   Agent Orange settlement payments                    |
|            |                                                         |
|            | -   provisional income                                  |
|            |                                                         |
|            | -   VA burial benefits, and                             |
|            |                                                         |
|            | -   interest on irrevocable burial trusts.              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Do not count payments received under the Radiation    |
| ### a. REC | > Exposure Compensation Act (RECA).                     |
| A Payments | >                                                       |
|            | > ***Reference***: For more information on this         |
|            | > exclusion, see *PL 101-426*.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Do not count payments made as a result of a           |
|  b. Paymen | > claimant's participation in a therapeutic or          |
| ts for Par | > rehabilitation activity under [38 U.S.C.              |
| ticipation | > 1718](http://straylight.law.cornell.edu/              |
|  in a Prog | uscode/html/uscode38/usc_sec_38_00001718----000-.html), |
| ram of Reh | > per [38 CFR                                           |
| abilitativ | > 3.272(l)](http://w                                    |
| e Services | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
|            | >                                                       |
|            | > Prior to November 4, 1992, this exclusion applied     |
|            | > only to therapeutic and rehabilitation activities     |
|            | > under the auspices of a VA Medical Center (VAMC).     |
|            | >                                                       |
|            | > *PL 102-585*, which was effective November 4, 1992,   |
|            | > extends the exclusion to approved rehabilitative      |
|            | > services programs furnished in State homes.           |
|            | >                                                       |
|            | > Contact C&P Service Procedures Staff (212B) to        |
|            | > determine if a State home rehabilitative services     |
|            | > program is approved.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Do not count payments received in settlement of the   |
| #### c. Ag | > case *In Re Agent Orange Product* *Liability          |
| ent Orange | > Litigation* in the U.S. District Court for the        |
|  Settlemen | > Eastern District of New York.                         |
| t Payments |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

61\. Death and Disability Income Exclusions, Continued

+------------+---------------------------------------------------------+
| ##### d    | > Do not count any awarded benefits, such as Black Lung |
| . Provisio | > benefits, if                                          |
| nal Income |                                                         |
|            | -   it is later determined that the claimant is not     |
|            |     eligible for the amount awarded, and                |
|            |                                                         |
|            | -   the claimant makes a complete repayment.            |
|            |                                                         |
|            | > VA must receive satisfactory evidence of repayment    |
|            | > within the time limit specified in [38 CFR            |
|            | > 3.660(b)](http://                                     |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_660.DOC) |
|            | > for amending an income report.                        |
|            | >                                                       |
|            | > ***Exception***: If the claimant repays less than the |
|            | > total amount awarded, count the difference between    |
|            | > the amount awarded and the amount repaid.             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e    | > Do not count VA burial benefits.                      |
| . VA Buria | >                                                       |
| l Benefits | > ***Note***: If a beneficiary claims a final expense   |
|            | > deduction and subsequently receives VA burial         |
|            | > benefits as reimbursement for paying those same       |
|            | > expenses, adjust the award.                           |
|            | >                                                       |
|            | > ***Reference***: For more information about VA burial |
|            | > expenses, see M21-1MR, Part V, Subpart iii, 1.G.46.c. |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Certain prepaid burial plans, often characterized as  |
| f. Interes | > irrevocable burial trusts, earn interest that is      |
| t on Irrev | > added to the value of the policy to offset the        |
| ocable Bur | > effects of inflation. Typically, the interest earned  |
| ial Trusts | > is not available to the holder of the policy.         |
|            | >                                                       |
|            | > Do not count the interest on such a burial plan if it |
|            | > is not available to the VA claimant.                  |
+------------+---------------------------------------------------------+

#### 62. Income From a Mortgage or Contract for Deed

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on income from a      |
| troduction | > mortgage or contract for deed. It includes            |
|            | > information on                                        |
|            |                                                         |
|            | -   the general principles of income from a mortgage or |
|            |     contract for deed                                   |
|            |                                                         |
|            | -   applying the general principles of income from a    |
|            |     mortgage or contract for deed                       |
|            |                                                         |
|            | -   countable income, and                               |
|            |                                                         |
|            | -   countable interest versus non-countable principal.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Instruments such as mortgages or contracts for deed   |
| # a. Gener | > typically entitle a seller of property to receive     |
| al Princip | > payments for the property and retain a security       |
| les of Inc | > interest in the property.                             |
| ome From a | >                                                       |
|  Mortgage  | > The payments the seller receives under the instrument |
| or Contrac | > represent a combination of interest and return of     |
| t for Deed | > principal.                                            |
|            | >                                                       |
|            | > A mortgage or contract for deed is similar to other   |
|            | > property, such as stocks or bonds, in that it is      |
|            | > assignable and produces income. However, the value of |
|            | > a contract for deed or mortgage, unlike that of a     |
|            | > stock or bond, usually decreases as the buyer or      |
|            | > mortgagor makes payments under the instrument.        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b.   | > The general principles of income from a mortgage or   |
|  Applying  | > contract for deed apply when the VA claimant          |
| the Genera |                                                         |
| l Principl | -   is the owner of a mortgage or contract for deed,    |
| es of Inco |     but                                                 |
| me From a  |                                                         |
| Mortgage o | -   was not the seller of the property which is secured |
| r Contract |     by the mortgage or contract for deed.               |
|  for Deed  |                                                         |
|            | > If the VA claimant is both the seller of property and |
|            | > the holder of the mortgage or contract for deed,      |
|            | > sale-of-property rules apply.                         |
|            | >                                                       |
|            | > ***Reference***: For information about the            |
|            | > sale-of-property rules, see M21-1MR, Part V, Subpart  |
|            | > iii, 1.I.64.                                          |
+------------+---------------------------------------------------------+

Continued on next page

62\. Income From a Mortgage or Contract for Deed, Continued

+------------+---------------------------------------------------------+
| #####      | > If a claimant receives a contract for deed or         |
|  c. Counta | > mortgage as a gift or by inheritance after the date   |
| ble Income | > of entitlement to pension, the value of the contract  |
|            | > for deed or mortgage is countable income for pension  |
|            | > purposes for 12 months from the first of the month    |
|            | > after the month of receipt.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > If the claimant received the contract for deed or     |
|  Countable | > mortgage as a gift or by inheritance before the date  |
|  Interest  | > of entitlement to Improved Pension, any interest      |
| Versus Non | > received under the instrument is countable income,    |
| -Countable | > but principal payments are considered a conversion of |
|  Principal | > assets.                                               |
|            | >                                                       |
|            | > The same applies where the instrument is received     |
|            | > after the date of entitlement to Improved Pension and |
|            | > the value of the instrument has been counted for 12   |
|            | > months.                                               |
|            | >                                                       |
|            | > The VSC or PMC must secure a copy of the amortization |
|            | > schedule or similar document showing a monthly        |
|            | > breakdown of interest and principal payments.         |
+------------+---------------------------------------------------------+

#### 63. Indian Income

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on Indian income. It  |
| troduction | > includes information on                               |
|            |                                                         |
|            | -   determining if Indian income is countable           |
|            |                                                         |
|            | -   income from gaming on Indian trust lands            |
|            |                                                         |
|            | -   the conversion of assets theory                     |
|            |                                                         |
|            | -   business or investment income, and                  |
|            |                                                         |
|            | -   exclusionary language in specific legislation.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > American Indians may receive a variety of unique      |
|  a. Genera | > types of income. Often the Federal government is the  |
| l Informat | > direct or indirect source of this income and complex  |
| ion on Ind | > treaties and Federal statutes govern payments.        |
| ian Income | >                                                       |
|            | > This topic attempts to summarize VA's approach to     |
|            | > counting various types of income received by Indian   |
|            | > beneficiaries. However, it is recognized that other   |
|            | > types of Indian income not covered here will be       |
|            | > encountered. When this happens, contact C&P Service   |
|            | > Program Management Staff for guidance.                |
|            | >                                                       |
|            | > ***Reference***: For more information on payments     |
|            | > excluded by Federal statutes, see M21-1MR, Part V,    |
|            | > Subpart iii, 1.I.66.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b. D | > Use the table below as a suggested analytical         |
| etermining | > approach to determining if Indian income is countable |
|  if Indian | > for Improved Pension                                  |
|  Income Is |                                                         |
|  Countable |                                                         |
+------------+---------------------------------------------------------+

  ------------------------------------------------------------------------- ---------------------------------------------------------------------------
  If ...                                                                    Then ...

  the income is paid to an individual Indian from trust or restricted lands exclude up to \$2,000 per year per individual under [38 CFR
  as defined in [25 CFR                                                     3.272(r)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC).
  151.2](http://www.access.gpo.gov/nara/cfr/waisidx_03/25cfr151_03.html).   
  ------------------------------------------------------------------------- ---------------------------------------------------------------------------

Continued on next page

63\. Indian Income, Continued

  -----------------------------------------------------------------------
  b\. Determining if Indian Income Is Countable (continued)

  -----------------------------------------------------------------------

  ------------------------------------- ---------------------------------
  If ...                                Then ...

  the distribution to the beneficiary   it is excludable on a conversion
  represents compensation for lost      of assets theory.
  assets of the Indian tribe as opposed 
  to income from investments or         
  business operations                   

  the distribution is made to           exclude \$2,000 per person each
  individual Indians out of tribal      year under the Per Capita
  trust fund revenues held in trust by  Distribution Act.
  the Bureau of Indian Affairs (BIA)    

  the legislation authorizing the       contact the VA Central Office
  payment provides that it is not       (VACO) for further guidance.
  countable income for purposes of      
  other federal benefit programs        
  ------------------------------------- ---------------------------------

+-----------------------------------------------------------------------+
| > ***Reference***: For more information on payments excluded by       |
| > Federal statutes, see M21-1MR, Part V, Subpart iii, 1.I.66.         |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c.   | > In [*VAOPGCPREC                                       |
| Income Fro | > 21-97*](http://www.va.gov/ogc/docs/Prc21-97.doc), the |
| m Gaming o | > General Counsel held that amounts received by an      |
| n Indian T | > individual pursuant to a per capita distribution of   |
| rust Lands | > proceeds from gaming on Indian trust lands are        |
|            | > considered IVAP.                                      |
|            | >                                                       |
|            | > The General Counsel noted that gaming proceeds are    |
|            | > *not*                                                 |
|            |                                                         |
|            | -   held in trust by the Federal government, so the Per |
|            |     Capita Distribution Act does *not* apply, and       |
|            |                                                         |
|            | -   generated by individually-owned trust lands, so [38 |
|            |     CFR                                                 |
|            |     3.272(r)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC) |
|            |     does *not* apply.                                   |
+------------+---------------------------------------------------------+

Continued on next page

63\. Indian Income, Continued

+------------+---------------------------------------------------------+
| #####      | > Under [38 U.S.C.                                      |
| d. Convers | > 1503(a)(6)](http://straylight.law.cornell.edu/        |
| ion of Ass | uscode/html/uscode38/usc_sec_38_00001503----000-.html), |
| ets Theory | > profit from the sale of property is not countable     |
|            | > income. The General Counsel has held that the         |
|            | > underlying rationale is to exclude income from        |
|            | > transactions that represent a mere conversion of      |
|            | > assets from one form to another.                      |
|            | >                                                       |
|            | > Applying the same reasoning, the General Counsel      |
|            | > determined that any income received by Indians as     |
|            | > compensation for lost land or other lost property is  |
|            | > excludable on a conversion of assets theory. This     |
|            | > exclusion encompasses and goes beyond the exclusion   |
|            | > described in M21-1MR, Part V, Subpart iii, 1.I.64.c.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e.   | > In some instances, distributions to Indian tribes     |
|  Business  | > that are intended to compensate the tribe for lost    |
| or Investm | > land are invested to produce income or are used to    |
| ent Income | > establish tribal businesses or native corporations.   |
|            | > Individual Indians will in turn receive dividends or  |
|            | > distributions from the business operations of these   |
|            | > entities.                                             |
|            | >                                                       |
|            | > These types of distributions are IVAP, even though    |
|            | > the funds for establishment of the business were      |
|            | > intended to compensate the tribe for lost land or     |
|            | > other property. The conversion of assets exclusion    |
|            | > applies only to compensatory transfers. It does not   |
|            | > apply to secondary income generated from the amount   |
|            | > transferred as compensation.                          |
|            | >                                                       |
|            | > ***Note***: The Alaska Native Claims Settlement Act,  |
|            | > *PL 103-446, Section 506* provides that profits of    |
|            | > native businesses (cash dividends on stock received   |
|            | > from a Native Corporation) are excluded up to \$2,000 |
|            | > per year, per individual.                             |
|            | >                                                       |
|            | > ***Reference***: For more information on payments     |
|            | > excluded by Federal statutes, see M21-1MR, Part V,    |
|            | > Subpart iii, 1.I.66.                                  |
+------------+---------------------------------------------------------+

Continued on next page

63\. Indian Income, Continued

+------------+---------------------------------------------------------+
| ####       | > Legislation providing for payments to Indian tribes   |
| # f. Exclu | > may include provisions such as the following:         |
| sionary La | > "*Distributions under this Act shall not be           |
| nguage in  | > considered income for purposes of any Federal benefit |
| Specific L | > program*."                                            |
| egislation | >                                                       |
|            | > If a beneficiary claims exclusion of income on this   |
|            | > basis, first determine if the income is otherwise     |
|            | > excludable. If it is not, contact the C&P Service     |
|            | > Policy Staff for guidance.                            |
+------------+---------------------------------------------------------+

#### 64. Income From the Sale of Property

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the impact of the  |
| troduction | > sale of property on Improved Pension. It includes     |
|            | > information on                                        |
|            |                                                         |
|            | -   the impact of the sale of property on Improved      |
|            |     Pension                                             |
|            |                                                         |
|            | -   the definition of the term ***installment sale***   |
|            |                                                         |
|            | -   the sale of property in the course of business      |
|            |                                                         |
|            | -   counting income from installment sales              |
|            |                                                         |
|            | -   an example of an installment sale                   |
|            |                                                         |
|            | -   ensuring proper documentation prior to the          |
|            |     computation of income                               |
|            |                                                         |
|            | -   the absence of the need for distinguishing between  |
|            |     principal and interest in installment sales         |
|            |                                                         |
|            | -   establishing controls for installment sales, and    |
|            |                                                         |
|            | -   counting income for sales occurring before          |
|            |     entitlement to pension.                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > Income received from the sale of property is viewed   |
| Impact of  | > as a conversion of assets and is *not* countable      |
| the Sale o | > income for Improved Pension purposes, unless the      |
| f Property |                                                         |
|  on Improv | -   property is sold in the course of operating a       |
| ed Pension |     business, or                                        |
|            |                                                         |
|            | -   income from the sale of property is received by the |
|            |     claimant in installments.                           |
|            |                                                         |
|            | > ***Reference***: For more information on property     |
|            | > sales for Improved Pension, see [38 CFR               |
|            | > 3.272(e)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_272.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b    | > An ***installment sale,*** for the purposes of        |
| . Definiti | > Improved Pension, is any sale in which the seller     |
| on: Instal | > receives more than the sales price over the course of |
| lment Sale | > the transaction. The actual number of installments is |
|            | > irrelevant.                                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > If a beneficiary who operates a business sells        |
| #### c. Sa | > property or merchandise in connection with the        |
| le of Prop | > business, add any profit received from the sale of    |
| erty in th | > the property to the other income of business.         |
| e Course o | >                                                       |
| f Business | > ***Reference***: For information on deductions from   |
|            | > gross business income, see M21-1MR, Part V, Subpart   |
|            | > iii, 1.G.51.a.                                        |
+------------+---------------------------------------------------------+

Continued on next page

64\. Income From the Sale of Property, Continued

+------------+---------------------------------------------------------+
| ##### d    | > If a claimant or dependent sells property and         |
| . Counting | > receives payment in installments, count as income any |
|  Income Fr | > amounts received over and above the sales price, but  |
| om Install | > not until an amount equal to the sales price has been |
| ment Sales | > received by the seller.                               |
|            | >                                                       |
|            | > ***Note***: This principle applies regardless of      |
|            | > whether the sale occurred before or after the date of |
|            | > entitlement to Improved Pension.                      |
|            | >                                                       |
|            | > ***Reference***: For information on the impact of     |
|            | > installment sales on Section 306 or Old Law Pension,  |
|            | > see M21-1MR, Part V, Subpart iii, 1.C.20.             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > ***Situation***: A veteran sells his/her house for    |
| # e. Examp | > \$80,000. The veteran receives a cash payment of      |
| le: Instal | > \$40,000 and a cash payment of \$45,000.              |
| lment Sale | >                                                       |
|            | > ***Result***: This is an installment sale for VA      |
|            | > pension purposes and \$5,000 is countable as interest |
|            | > income when the veteran receives the \$45,000.        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### f. E | > Ensure that the following information is of record    |
| nsuring Pr | > before attempting to compute countable income from    |
| oper Docum | > the sale of property:                                 |
| entation P |                                                         |
| rior to Co | -   sales price                                         |
| mputation  |                                                         |
| of Income  | -   amount of the down payment                          |
|            |                                                         |
|            | -   date the first installment payment is received      |
|            |                                                         |
|            | -   frequency of installment payments                   |
|            |                                                         |
|            | -   amount of each installment payment, and             |
|            |                                                         |
|            | -   date the last installment payment will be received. |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### g    | > It is not necessary to distinguish between payment of |
| . No Need  | > principal and interest in the installment sale        |
| for Distin | > context. As soon as the down payment and installment  |
| guishing B | > payments received by the beneficiary equal the sales  |
| etween Pri | > price, all subsequent installment payments count as   |
| ncipal and | > income.                                               |
|  Interest  | >                                                       |
| in Install | > ***Example***:                                        |
| ment Sales | >                                                       |
|            | > ***Situation***: A veteran reports the sale of a      |
|            | > house for \$60,000 on December 1, 1997. The veteran   |
|            | > received \$20,000 down and will receive installment   |
|            | > payments of \$400 per month for the next 10 years.    |
|            | > The first payment was received January 1, 1998.       |
|            | >                                                       |
|            | > ***Result***: The veteran's return from the sale of   |
|            | > property will exceed \$60,000 during May 2006. Charge |
|            | > recurring income of \$400 per month effective June 1, |
|            | > 2006.                                                 |
+------------+---------------------------------------------------------+

Continued on next page

64\. Income From the Sale of Property, Continued

+------------+---------------------------------------------------------+
| ###        | > Once the date from which to count installment         |
| ## h. Esta | > payments has been determined                          |
| blishing C |                                                         |
| ontrols fo | -   place a flash in Virtual VA, and                    |
| r Installm |                                                         |
| ent Sales  | -   establish a master record control (reason code 30)  |
|            |     via the DIAR command for the month prior to that    |
|            |     during which installment income will be countable.  |
|            |                                                         |
|            | > When the control matures, process an amended award to |
|            | > charge the installment payments as "other" income.    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Previously, if a beneficiary received income from a   |
| # i. Count | > sale of property that occurred before the date that   |
| ing Income | > the beneficiary became entitled to pension, only      |
|  on Sales  | > interest from the sale of property was countable      |
| Occurring  | > income.                                               |
| Before Ent | >                                                       |
| itlement t | > If a case is encountered in which income from the     |
| o Pension  | > sale of property is being counted under the old rule, |
|            | > continue to count interest only. Do not attempt to    |
|            | > apply the current rule on the sale of property,       |
|            | > unless to do so would clearly be to the payee's       |
|            | > advantage.                                            |
+------------+---------------------------------------------------------+

#### 65. Asset Transfers and Life Estates: Effect on Net Worth and Income 

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the effect of      |
| troduction | > asset transfers, and the income associated with asset |
|            | > transfers, on Improved Pension. It includes           |
|            | > information on                                        |
|            |                                                         |
|            | -   the effect of asset transfers on countable income   |
|            |                                                         |
|            | -   when a claimant transfers property, but takes       |
|            |     income from the property                            |
|            |                                                         |
|            | -   transferring a partial interest in property         |
|            |                                                         |
|            | -   three examples of transfers of a partial interest   |
|            |     in property                                         |
|            |                                                         |
|            | -   the definition of the term ***life estate***        |
|            |                                                         |
|            | -   the impact of a life estate on a claimant's net     |
|            |     worth, and                                          |
|            |                                                         |
|            | -   computing property value when a life estate is      |
|            |     involved.                                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > A claimant may attempt to reduce net worth or         |
|  a. Effect | > countable income by transferring property to another  |
|  of Asset  | > person without actually giving up all rights in the   |
| Transfers  | > property. However, no sale or gift of property to     |
| on Countab |                                                         |
| le Income  | -   a member of the same household will reduce the      |
|            |     claimant's net worth or IVAP, or                    |
|            |                                                         |
|            | -   a person outside the claimant's household will      |
|            |     reduce net worth or IVAP, unless the claimant can   |
|            |     demonstrate that there has been an actual           |
|            |     relinquishment of rights to the property and income |
|            |     from the property.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b.   | > If a transferee takes legal title to the property and |
| When a Cla | > receives income from the property, a true transfer is |
| imant Tran | > deemed to have occurred. However, if the transferee   |
| sfers Prop | > turns income from the property back to the claimant,  |
| erty but T | > the income is countable under [38 CFR                 |
| akes Incom | > 3.271](http://                                        |
| e From the | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC) |
|  Property  | > as a gift of money.                                   |
|            | >                                                       |
|            | > ***Reference***: For more information, see [38 CFR    |
|            | > 3.276b](http://w                                      |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_276.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

65\. Asset Transfers and Life Estates: Effect on Net Worth and Income,
Continued

+------------+---------------------------------------------------------+
| ##         | > If a claimant transfers a partial interest in         |
| ### c. Tra | > property to a person who is outside the claimant's    |
| nsferring  | > household, the claimant's net worth and income are    |
| a Partial  | > reduced in proportion to the percentage of the asset  |
| Interest i | > transferred.                                          |
| n Property |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > ***Situation***:                                      |
| #### d. Ex |                                                         |
| ample 1: T | -   A veteran has a \$10,000 certificate of deposit     |
| ransferrin |     (CD).                                               |
| g a Partia |                                                         |
| l Interest | -   The veteran adds a nephew who does not live in the  |
|  in Proper |     veteran's household as joint owner.                 |
| ty to Pers |                                                         |
| on Outside | > ***Result***: The legal effect of this transaction is |
|  Household | > to give each joint owner an undivided one-half        |
|            | > interest in the CD. The value of the CD is reduced to |
|            | > \$5,000 for net worth purposes.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Situation***:                                      |
| e. Example |                                                         |
|  2: Transf | -   A veteran has a \$10,000 CD.                        |
| erring a P |                                                         |
| artial Int | -   The veteran adds an adult (non-helpless) child who  |
| erest in P |     lives in the same household as joint owner of the   |
| roperty to |     CD.                                                 |
|  Person in |                                                         |
|  Household | > ***Result***: The legal effect of this transaction is |
|            | > to give each joint owner an undivided one-half        |
|            | > interest in the CD. The value of the CD is still      |
|            | > \$10,000 for net worth purposes and all of the        |
|            | > interest earned by the CD is counted as income in     |
|            | > determining the veteran's IVAP.                       |
|            | >                                                       |
|            | > ***Note***: This is the case regardless of who        |
|            | > reports the income from the CD for IRS purposes.      |
+------------+---------------------------------------------------------+

Continued on next page

65\. Asset Transfers and Life Estates: Effect on Net Worth and Income,
Continued

+------------+---------------------------------------------------------+
| ##         | > ***Situation***:                                      |
| ### f. Exa |                                                         |
| mple 3: Pa | A veteran and an adult (non-helpless) child who lives   |
| rtial Inte | in the same household are joint owners of a \$10,000 CD |
| rest in Pr | and were joint owners before the date that the veteran  |
| operty --  | became entitled to pension.                             |
| No Transfe |                                                         |
| r Involved | > ***Result***: Each owner has an undivided one-half    |
|            | > interest in the CD. The value of the CD is \$5,000    |
|            | > for net worth purposes and only one-half of the       |
|            | > interest earned is counted as income in determining   |
|            | > the veteran's IVAP.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > A ***life estate*** is an estate which is limited in  |
| ## g. Defi | > duration to the life or lives of a particular         |
| nition: Li | > individual or individuals, and is non-inheritable.    |
| fe Estate  | >                                                       |
|            | > The life tenant is the owner of the property during   |
|            | > his/her life and is entitled to exclusive possession  |
|            | > and control of the property.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > When a claimant transfers an interest in property to  |
| h. Life Es | > someone other than a relative residing in the         |
| tate: Dete | > claimant's household, retaining a life estate in the  |
| rmining a  | > property, [38 CFR                                     |
| Claimant's | > 3.276(b)](http://                                     |
|  Net Worth | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_276.DOC) |
|            | > requires that the transfer be disregarded in          |
|            | > determining the claimant's net worth for Improved     |
|            | > Pension purposes, unless the right to ownership       |
|            | > (control) is relinquished.                            |
|            | >                                                       |
|            | > This requirement is due to the fact that the life     |
|            | > tenant retains ownership interest in the property     |
|            | > during his/her lifetime.                              |
|            | >                                                       |
|            | > ***Note***: If necessary, request a copy of the life  |
|            | > estate to determine whether the right to ownership of |
|            | > the property has been relinquished.                   |
|            | >                                                       |
|            | > ***Reference***: For more information on the effect   |
|            | > of property held as a life estate on pension          |
|            | > eligibility, see [*VAOPGCPREC                         |
|            | > 15-92.*](http://www1.va.gov/ogc/docs/PREC_15-92.doc)  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### i.   | > Calculate the value of the property for Improved      |
|  Computing | > Pension purposes based on the market value of the     |
|  the Prope | > property, less mortgages and encumbrances, without    |
| rty Value  | > regard to the purported transfer.                     |
| When a Lif |                                                         |
| e Estate I |                                                         |
| s Involved |                                                         |
+------------+---------------------------------------------------------+

#### 66. Exhibits 1 and 2: Payments Excluded by Federal Statutes in Calculating Income and/or Net Worth

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on payments excluded  |
| troduction | > by Federal Statutes in calculating income and/or net  |
|            | > worth, including                                      |
|            |                                                         |
|            | -   payments excluded for all income-based benefits,    |
|            |     and                                                 |
|            |                                                         |
|            | -   payments excluded for Improved Pension and Parents' |
|            |     Dependency and Indemnity Compensation (DIC) only.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > The table below shows whether certain payments are    |
| . Exhibit  | > included or excluded by Federal statutes in           |
| 1: Payment | > calculating income or net worth for                   |
| s Excluded |                                                         |
|  for All I | -   Old Law Pension                                     |
| ncome-Base |                                                         |
| d Benefits | -   Section 306 Pension                                 |
|            |                                                         |
|            | -   Improved Pension                                    |
|            |                                                         |
|            | -   Parents' DIC, and                                   |
|            |                                                         |
|            | -   the purpose of establishing parents as dependents   |
|            |     on veterans' compensation awards.                   |
+------------+---------------------------------------------------------+

  ------------------------------------------ ---------- ---------- ------------------------------------------------------------------------------------------------------------
  Program or Payment                         Income     Net Worth  Authority

  **Compensation or Restitution Payments**                         

  *Relocation payments.* Payments to persons Excluded   Included   [42 U.S.C. 4636](http://straylight.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00004636----000-.html)
  displaced as a direct result of programs                         
  or projects undertaken by a Federal agency                       
  or with Federal financial assistance under                       
  the Uniform Relocation Assistance and Real                       
  Property Acquisition Policies Act of 1970.                       

  *Crime victim compensation.* Amounts       Excluded   Excluded   [42 U.S.C.
  received as compensation under the Victims                       10602(c)](http://straylight.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00010602----000-.html)
  of Crime Act of 1984 unless the total                            
  amount of assistance received from all                           
  federally funded programs is sufficient to                       
  fully compensate the claimant for losses                         
  suffered as a result of the crime.                               

  *Restitution to individuals of Japanese    Excluded   Excluded   [50 U.S.C. App.
  ancestry.* Payments made as restitution                          1989b-4(f)](http://straylight.law.cornell.edu/uscode/html/uscode50a/usc_sup_05_50_10_sq7_20_sq1_30_I.html)
  under *Pub. L. 100-383* to an individual                         
  of Japanese ancestry who was interned,                           
  evacuated, or relocated during the period                        
  of December 7, 1941, through June 30,                            
  1946, pursuant to any law, Executive                             
  Order, Presidential proclamation,                                
  directive, or other official action                              
  respecting these individuals.                                    
  ------------------------------------------ ---------- ---------- ------------------------------------------------------------------------------------------------------------

Continued on next page

66\. Exhibits 1 and 2: Payments Excluded by Federal Statutes in
Calculating Income and/or Net Worth, Continued

  -----------------------------------------------------------------------
  a\. Exhibit 1: Payments Excluded for All Income-Based Benefits
  (continued)

  -----------------------------------------------------------------------

+-----------------------------------------+-------+-------+-----------+
| Program or Payment                      | I     | Net   | Authority |
|                                         | ncome | Worth |           |
+-----------------------------------------+-------+-------+-----------+
| *Victims of Nazi persecution.* Payments | Exc   | Exc   | Sec.      |
| made to individuals because of their    | luded | luded | 1(a),     |
| status as victims of Nazi persecution.  |       |       | Pub. L.   |
|                                         |       |       | 103-286,  |
|                                         |       |       | 108 Stat. |
|                                         |       |       | 1450;     |
|                                         |       |       |           |
|                                         |       |       | [42       |
|                                         |       |       | U.S.C.    |
|                                         |       |       | 1437a     |
|                                         |       |       | note      |
|                                         |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 1437---a0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Agent Orange settlement payments.*     | Exc   | Exc   | Sec. 1,   |
| Payments made from the Agent Orange     | luded | luded | Pub. L.   |
| Settlement Fund or any other fund       |       |       | 101-201,  |
| established pursuant to the settlement  |       |       | 103 Stat. |
| in the In Re Agent Orange product       |       |       | 1795      |
| liability litigation, M.D.L. No. 381    |       |       |           |
| (E.D.N.Y.).                             |       |       |           |
+-----------------------------------------+-------+-------+-----------+
| *Chapter 18 benefits.* Allowance paid   | Exc   | Exc   | [38       |
| under 38 U.S.C. chapter 18 to or for a  | luded | luded | U.S.C.    |
| veteran's child with a birth defect.    |       |       | 1833(c)   |
|                                         |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 38/usc_se |
|                                         |       |       | c_38_0000 |
|                                         |       |       | 1833----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| Payments to Native Americans            |       |       |           |
+-----------------------------------------+-------+-------+-----------+
| *Indian judgment fund distributions.*   | Exc   | Exc   | -   [25   |
|                                         | luded | luded |           |
| -   Funds held in trust, including all  |       |       |    U.S.C. |
|     interest and investment income      |       |       |     1407  |
|     accrued on those funds, and up to   |       |       | ](http:// |
|     \$2,000 per year of per capita      |       |       | strayligh |
|     distributions of funds distributed  |       |       | t.law.cor |
|     per capita or held in trust under a |       |       | nell.edu/ |
|     plan approved under the provisions  |       |       | uscode/ht |
|     of the Indian Judgment Funds Use    |       |       | ml/uscode |
|     and Distributions Act, *Pub. L.     |       |       | 25/usc_se |
|     93-134* (25 U.S.C. 1401 et. seq.),  |       |       | c_25_0000 |
|     or funds that were distributed      |       |       | 1407----0 |
|     under a plan approved by Congress   |       |       | 00-.html) |
|     before January 1, 1982, and any     |       |       |           |
|     purchases made with such funds.     |       |       | -   [38   |
|                                         |       |       |           |
| -   Certain amounts of distributions of |       |       |    U.S.C. |
|     funds appropriated to satisfy       |       |       |           |
|     judgments of the Indian Claims      |       |       |    501(a) |
|     Commission and the Court of Federal |       |       | ](http:// |
|     Claims held in trust under an Act   |       |       | strayligh |
|     of Congress.                        |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 38/usc_se |
|                                         |       |       | c_38_0000 |
|                                         |       |       | 0501----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Interests of individual Indians in     | Exc   | Exc   | [25       |
| trust or restricted lands.* Interests   | luded | luded | U.S.C.    |
| of individual Indians in trust or       |       |       | 1408      |
| restricted lands and up to \$2,000 per  |       |       | ](http:// |
| year of income received by individual   |       |       | strayligh |
| Indians that is derived from such       |       |       | t.law.cor |
| interests.                              |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 25/usc_se |
|                                         |       |       | c_25_0000 |
|                                         |       |       | 1408----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Submarginal land.* Income derived from | Exc   | Exc   | [25       |
| certain submarginal land of the United  | luded | luded | U.S.C.    |
| States that is held in trust for        |       |       | 459e      |
| certain Indian tribes.                  |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 25/usc_se |
|                                         |       |       | c_25_0000 |
|                                         |       |       | 0459---e0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Old Age Assistance Claims Settlement   | Exc   | Exc   | [25       |
| Act.* Up to \$2,000 of per capita       | luded | luded | U.S.C.    |
| distributions under the Old Age         |       |       | 459e      |
| Assistance Claims Settlement Act.       |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 25/usc_se |
|                                         |       |       | c_25_0000 |
|                                         |       |       | 0459---e0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+

Continued on next page

66\. Exhibits 1 and 2: Payments Excluded by Federal Statutes in
Calculating Income and/or Net Worth, Continued

  -----------------------------------------------------------------------
  a\. Exhibit 1: Payments Excluded for All Income-Based Benefits
  (continued)

  -----------------------------------------------------------------------

+-----------------------------------------+-------+-------+-----------+
| Program or Payment                      | I     | Net   | Authority |
|                                         | ncome | Worth |           |
+-----------------------------------------+-------+-------+-----------+
| *Alaska Native Claims Settlement Act.*  | Exc   | Exc   | [43       |
| Any of the following, if received from  | luded | luded | U.S.C.    |
| a Native Corporation, under the Alaska  |       |       | 1626(c)   |
| Native Claims Settlement Act:           |       |       | ](http:// |
|                                         |       |       | strayligh |
| -   cash, including cash dividends on   |       |       | t.law.cor |
|     stocks and bonds, up to a maximum   |       |       | nell.edu/ |
|     of \$2,000 per year                 |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
| -   stock, including stock issued as a  |       |       | 43/usc_se |
|     dividend or distribution            |       |       | c_43_0000 |
|                                         |       |       | 1626----0 |
| -   bonds that are subject to the       |       |       | 00-.html) |
|     protection under 43 U.S.C. 1606(h)  |       |       |           |
|     until voluntarily and expressly     |       |       |           |
|     sold or pledged by the shareholder  |       |       |           |
|     after the date of distribution      |       |       |           |
|                                         |       |       |           |
| -   a partnership interest              |       |       |           |
|                                         |       |       |           |
| -   land or an interest in land,        |       |       |           |
|     including land received as a        |       |       |           |
|     dividend or distribution on stock,  |       |       |           |
|     or                                  |       |       |           |
|                                         |       |       |           |
| -   an interest in a settlement trust.  |       |       |           |
+-----------------------------------------+-------+-------+-----------+
| *Maine Indian Claims Settlement Act.*   | Exc   | Exc   | [25       |
| Payments received under the Maine       | luded | luded | U.S.C.    |
| Indian Claims Settlement Act of 1980.   |       |       | 1728      |
|                                         |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 25/usc_se |
|                                         |       |       | c_25_0000 |
|                                         |       |       | 1728---e0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| **Work-Related Payments**               |       |       |           |
+-----------------------------------------+-------+-------+-----------+
| *Workforce investment.* Allowances,     | Exc   | Inc   | [29       |
| earnings, and payments to individuals   | luded | luded | U.S.C.    |
| participating in programs under the     |       |       | 2         |
| Workforce Investment Act of 1998 (29    |       |       | 931(a)(2) |
| U.S.C. Chapter 30).                     |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 29/usc_se |
|                                         |       |       | c_29_0000 |
|                                         |       |       | 2931----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *AmeriCorps participants.* Allowances,  | Exc   | Inc   | [42       |
| earnings, and payments to AmeriCorps    | luded | luded | U.S.C.    |
| participants under the National and     |       |       | 12637(d)  |
| Community Service Act of 1990.          |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0001 |
|                                         |       |       | 2637----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Volunteer work.* Compensation or       | Exc   | Exc   | [42       |
| reimbursement to volunteers involved in | luded | luded | U.S.C.    |
| programs administered by the            |       |       | 5044(f)   |
| Corporation for National and Community  |       |       | ](http:// |
| Service, unless the payments are equal  |       |       | strayligh |
| to or greater than the minimum wage.    |       |       | t.law.cor |
| The minimum wage is either under the    |       |       | nell.edu/ |
| Fair Labor Standards Act of 1938 (29    |       |       | uscode/ht |
| U.S.C. 201 et. seq.) or under the law   |       |       | ml/uscode |
| of the State where the volunteers are   |       |       | 42/usc_se |
| serving, whichever is greater.          |       |       | c_42_0000 |
|                                         |       |       | 5044----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+

Continued on next page

66\. Exhibits 1 and 2: Payments Excluded by Federal Statutes in
Calculating Income and/or Net Worth, Continued

  -----------------------------------------------------------------------
  a\. Exhibit 1: Payments Excluded for All Income-Based Benefits
  (continued)

  -----------------------------------------------------------------------

+-----------------------------------------+-------+-------+-----------+
| Program or Payment                      | I     | Net   | Authority |
|                                         | ncome | Worth |           |
+-----------------------------------------+-------+-------+-----------+
| **Miscellaneous Payments**              |       |       |           |
+-----------------------------------------+-------+-------+-----------+
| *Food stamps.* Value of the allotment   | Exc   | Exc   | [7 U.S.C. |
| provided to an eligible household under | luded | luded | 2017(b)   |
| the Food Stamp Program.                 |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 07/usc_se |
|                                         |       |       | c_07_0000 |
|                                         |       |       | 2017----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Food for children.* Value of free or   | Exc   | Exc   | [42       |
| reduced price for food under the Child  | luded | luded | U.S.C.    |
| Nutrition Act of 1966.                  |       |       | 1780(b)   |
|                                         |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 1780----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Child care.* Value of any child care   | Exc   | Exc   | [42       |
| provided or arranged (or any amount     | luded | luded | U.S.C.    |
| received as payment for such care or    |       |       | 9858q     |
| reimbursement for costs incurred for    |       |       | ](http:// |
| such care) under the Child Care         |       |       | strayligh |
| Development Block Grant Act of 1990.    |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 9858---q0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Services for housing recipients.*      | Exc   | Exc   | [42       |
| Value of services, but not wages,       | luded | luded | U.S.C.    |
| provided to a resident of an eligible   |       |       | 8         |
| housing under a congregate services     |       |       | 011(j)(2) |
| program under the Cranston-Gonzalez     |       |       | ](http:// |
| National Affordable Housing Act.        |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 8011----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Home energy assistance.* The amount of | Exc   | Exc   | [42       |
| any home energy assistance payments or  | luded | luded | U.S.C.    |
| allowances provided directly to, or     |       |       | 8624(f)   |
| indirectly for the benefit of, an       |       |       | ](http:// |
| eligible household under the Low-Income |       |       | strayligh |
| Home Energy Assistance Act.             |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 8624----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Programs for older Americans.*         | Exc   | Inc   | [42       |
| Payments, other than wages or salaries, | luded | luded | U.S.C.    |
| received from programs funded under the |       |       | 3020a(b)  |
| Older Americans Act of 1965 (42 U.S.C.  |       |       | ](http:// |
| Chapter 35).                            |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 42/usc_se |
|                                         |       |       | c_42_0000 |
|                                         |       |       | 3020---a0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Student financial aid.* Amounts of     | Exc   | Exc   | -   [20   |
| student financial assistance received   | luded | luded |           |
| under Title IV of the Higher Education  |       |       |    U.S.C. |
| Act of 1965, including Federal          |       |       |           |
| work-study programs or under Bureau of  |       |       |    1087uu |
| Indian Affairs student assistance       |       |       | ](http:// |
| programs, or vocational training under  |       |       | strayligh |
| the Carl D. Perkins Vocational and      |       |       | t.law.cor |
| Technical Education Act of 1998.        |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 20/usc_se |
|                                         |       |       | c_20_0000 |
|                                         |       |       | 1087--uu0 |
|                                         |       |       | 00-.html) |
|                                         |       |       |           |
|                                         |       |       | -   [20   |
|                                         |       |       |           |
|                                         |       |       |    U.S.C. |
|                                         |       |       |           |
|                                         |       |       |   2415(a) |
|                                         |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 20/usc_se |
|                                         |       |       | c_20_0000 |
|                                         |       |       | 2415----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+
| *Retired Serviceman's Family Protection | Exc   | Inc   | [10       |
| Plan annuities.* Annuities received     | luded | luded | U.S.C.    |
| under subchapter 1 of the Retired       |       |       | 1441      |
| Serviceman's Family Protection Plan.    |       |       | ](http:// |
|                                         |       |       | strayligh |
|                                         |       |       | t.law.cor |
|                                         |       |       | nell.edu/ |
|                                         |       |       | uscode/ht |
|                                         |       |       | ml/uscode |
|                                         |       |       | 10/usc_se |
|                                         |       |       | c_10_0000 |
|                                         |       |       | 1441----0 |
|                                         |       |       | 00-.html) |
+-----------------------------------------+-------+-------+-----------+

Continued on next page

66\. Exhibits 1 and 2: Payments Excluded by Federal Statutes in
Calculating Income and/or Net Worth, Continued

+------------+---------------------------------------------------------+
| ##### b. E | > The table below shows the payments that are excluded  |
| xhibit 2:  | > by Federal statutes in calculating income and/or net  |
| Payments E | > worth for Improved Pension and Parents' Dependency    |
| xcluded fo | > and Indemnity Compensation (DIC) only.                |
| r Improved |                                                         |
|  Pension a |                                                         |
| nd Parents |                                                         |
| ' DIC Only |                                                         |
+------------+---------------------------------------------------------+

+--------------------------------------------------+-------------------+
| Program or Payment                               | Authority         |
+--------------------------------------------------+-------------------+
| *Survivor benefit annuity.* Payments made by the | [10 U.S.C. 1448   |
| Department of Defense to qualified surviving     | note](http        |
| spouses of veterans who died before November 1,  | ://straylight.law |
| 1953.                                            | .cornell.edu/usco |
|                                                  | de/html/uscode10/ |
| ***Note***: This does not include SBP annuity    | usc_sec_10_000014 |
| payments or SBP Minimum Income Widow(er)s        | 48----000-.html); |
| Annuity Plan payments, which count as income.    | Section 653(d),   |
|                                                  | Pub. L. 100-456,  |
|                                                  | 102 Stat 1991)    |
+--------------------------------------------------+-------------------+
| *Ricky Ray Hemophilia Relief Fund payments.*     | [42 U.S.C.        |
| Payments made under section 103(a) of the Ricky  | 300c-22           |
| Ray Hemophilia Relief Fund Act of 1998.          | (note)](htt       |
|                                                  | p://straylight.la |
|                                                  | w.cornell.edu/usc |
|                                                  | ode/html/uscode42 |
|                                                  | /usc_sec_42_00000 |
|                                                  | 300---c000-.html) |
+--------------------------------------------------+-------------------+
| *Energy Employees Occupational Illness           | [42 U.S.C         |
| Compensation Program payments.* Payments made    | 7385e(2)](htt     |
| under the Energy Employees Occupational Illness  | p://straylight.la |
| Compensation Program.                            | w.cornell.edu/usc |
|                                                  | ode/html/uscode42 |
|                                                  | /usc_sec_42_00007 |
|                                                  | 385---e000-.html) |
+--------------------------------------------------+-------------------+
| *Payments to Aleuts.* Payments made to certain   | [50 U.S.C. Appx.  |
| Japanese-Americans or Aleuts under 50 U.S.C      | 1989b-4(f)(2),    |
| Appx. 1989b-4 or 1989c-5.                        | 1989c-5           |
|                                                  | (d)(2)](http://st |
|                                                  | raylight.law.corn |
|                                                  | ell.edu/uscode/ht |
|                                                  | ml/uscode50a/usc_ |
|                                                  | sup_05_50_10_sq7_ |
|                                                  | 20_sq1_30_I.html) |
+--------------------------------------------------+-------------------+