**Dependency, Income, and Estate**

***Regulations Applicable to the Improved Pension Program which became
Effective January 1, 1979***

**Source:** Sections 3.271 to 3.277 appear at 44 FR 45936, Aug. 6, 1979,

unless otherwise noted.

3.271 Computation of income 3.271-1

3.272 Exclusions from income 3.272-1

3.273 Rate computation 3.273-1

3.274 Relationship of net worth to pension entitlement 3.274-1

3.275 Criteria for evaluating net worth 3.275-1

3.276 Certain transfers or waivers disregarded 3.276-1

3.277 Eligibility reporting requirements 3.277-1

**§3.271 Computation of income.**

\(a\) *General*. Payments of any kind from any source shall be counted
as income during the 12-month annualization period in which received
unless specifically excluded under §3.272. (Authority: 38 U.S.C. 501(a))

\(1\) *Recurring income*. Recurring income means income which is
received or anticipated in equal amounts and at regular intervals (e.g.,
weekly, monthly, quarterly, etc.), and which will continue throughout an
entire 12-month annualization period. The amount of recurring income for
pension purposes will be the amount received or anticipated during a
12-month annualization period. Recurring income which terminates prior
to being counted for at least one full 12-month annualization period
will be treated as nonrecurring income for computation purposes.

\(2\) *Irregular income*. Irregular income means income which is
received or anticipated during a 12-month annualization period, but
which is received in unequal amounts or at irregular intervals. The
amount of irregular income for pension purposes will be the amount
received or anticipated during a 12-month annualization period following
initial receipt of such income.

\(3\) *Nonrecurring income*. Nonrecurring income means income received
or anticipated on a one-time basis during a 12-month annualization
period (e.g., an inheritance). Pension computations of income will
include nonrecurring income for a full 12-month annualization period
following receipt of the income.

\(b\) *Salary*. Salary means the gross amount of a person's earnings or
wages before any deductions are made for such things as taxes,
insurance, retirement plans, social security, etc.

\(c\) *Business, farm or professional income*.

\(1\) This includes gross income from a business, farm or profession as
reduced by the necessary operating expenses such as cost of goods sold,
or expenditures for rent, taxes, and upkeep, or costs of repairs or
replacements. The value of an increase in stock inventory of a business
is not considered income.

\(2\) Depreciation is not a deductible expense.

\(3\) A loss sustained in operating a business, profession, farm, or
from investments, may not be deducted from income derived from any other
source.

\(d\) *Income from property*. Income from real or personal property is
countable as income of the property's owner. The terms of a recorded
deed or other evidence of title shall constitute evidence of ownership.
This includes property acquired through purchase, gift, devise, or
descent. If property is owned jointly, income of the various owners
shall be determined in proportion to shares of ownership of the
property. The owner's shares of income held in partnership shall be
determined on the basis of the facts found.

\(e\) *Installments*. Income shall be determined by the total amount
received or anticipated during a 12-month annualization period.
(Authority: 38 U.S.C. 501(a))

\(f\) *Deferred determinations*.

\(1\) When an individual is unable to predict with certainty the amount
of countable annual income, the annual rate of improved pension shall be
reduced by the greatest amount of anticipated countable income until the
end of the 12-month annualization period, when total income received
during that period will be determined and adjustments in pension payable
made accordingly. (Authority: 38 U.S.C. 501(a))

\(2\) When a claimed dependent is shown to have income which exceeds the
additional amount of benefits payable based on the claimed dependency,
but evidence requirements of §3.204, §3.205, §3.209, or §3.210 have not
been met, the maximum annual rate of improved pension shall be
determined without consideration of the claimed dependency. This amount
shall be reduced by an amount which includes the income of the
unestablished dependent. Adjustments in computation of the maximum
annual rate of improved pension shall occur following receipt of
evidence necessary to establish the dependency. (Authority: 38 U.S.C.
501(a))

\(g\) *Compensation (civilian) for injury or death*. Compensation paid
by the United States Department of Labor, Office of Workers'
Compensation Programs, Social Security Administration, or the Railroad
Retirement Board, or pursuant to any worker's compensation or employer's
liability statute, or damages collected because of personal injury or
death, will be considered income as received. However, medical, legal or
other expenses incident to the injury or death, or incident to the
collection or recovery of the amount of the award or settlement, may be
deducted. The criteria in §3.272(g) apply as to all medical expenditures
after the award or settlement. (Authority: 38 U.S.C. 501(a))

\(h\) *Fractions of dollars*. Fractions of dollars will be disregarded
in computing annual income.

\[44 FR 45936, Aug. 6, 1979, as amended at 53 FR 23235, June 21, 1988;
57 FR 59299, Dec. 15, 1992\]

**Supplement *Highlights* reference**: 6(2).