T.C. Memo. 2006-50

UNITED STATES TAX COURT

ANTHONY LaCARTER DORSEY AND ANNETTE LaVERNE DORSEY, Petitioners

v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20632-04. Filed March 22, 2006.

Anthony LaCarter Dorsey and Annette LaVerne Dorsey, pro se.

Natasha V. Chevalier, for respondent.

MEMORANDUM OPINION

WELLS, Judge: Respondent determined a deficiency of $2,092

in petitioners’ Federal income tax for 2002. The issue to be

decided is whether petitioners may exclude from gross income a

portion of payments that Anthony LaCarter Dorsey (petitioner)

received in his capacity as a Junior Reserve Officers’ Training

Corps (JROTC) instructor. Unless otherwise noted, all section
- 2 -

1Ch. 4-3 of Army Regulations 145-2 provides as follows:

“Equitable procedures. Military retirees employed as Junior ROTC

instructors are members of the Armed Forces not on active duty.”

references are to the Internal Revenue Code, as amended. Some of

the facts have been stipulated and are so found.

Background

Petitioners are husband and wife. At the time of the filing

of the petition, petitioners resided in Arlington, Texas.

Petitioner retired from the United States Army in 1995, and 

petitioner was not on active duty for any part of 2002. During

2002, the Dallas Independent School District (the school

district) employed petitioner as a JROTC instructor, and

petitioner received wages of $44,347 from the school district.

Discussion

Although petitioners concede that petitioner was not an

“active duty member” of the Armed Forces during 2002, petitioners

contend that JROTC instructors are “active members” of the Armed

Forces pursuant to Army Regulations 145-2, Junior Reserve

Officers’ Training Corps Program.1 Relying on IRS Publication 3,

Armed Forces’ Tax Guide (Publication 3), petitioners contend that

petitioner’s status as an active member of the Armed Forces

allows petitioners to exclude from gross income allowances for

subsistence, housing, and uniforms in the aggregate amount of

$13,968.21. In support of the exclusion, petitioners testified 

at trial that the school district received payments from the
- 3 -

Federal Government with respect to the school district’s

employment of petitioner as a JROTC instructor and that

petitioner received from the school district monthly statements

itemizing the aforementioned allowances. Additionally,

petitioners testified that during respondent’s audit with respect

to a prior tax year an IRS employee instructed them to exclude

from gross income allowances for subsistence, housing, and

uniforms.

Respondent contends that only active duty members of the

Armed Forces are entitled to exclude the allowances in issue. 

Because petitioner was not an active duty member of the Armed

Forces during 2002, respondent contends that petitioners are not

entitled to exclude from gross income allowances for subsistence,

housing, and uniforms. Rather, respondent contends that payments

petitioner received with respect to his employment as a JROTC

instructor constitute compensation from the school district for

services rendered that must be included in petitioners’ gross

income for 2002.

We first address petitioners’ reliance on Publication 3. 

The authoritative sources of Federal tax law are statutes,

regulations, and judicial decisions. Miller v. Commissioner, 114

T.C. 184, 195 (2000), affd. sub nom. Lovejoy v. Commissioner, 293

F.3d 1208 (10th Cir. 2002). Administrative guidance set forth in

an informal IRS publication is not an authoritative source of
- 4 -

2Publication 3 states that the “publication covers the

special tax situations of active members of the U.S. Armed

Forces” and separately lists basic allowances for housing, basic

allowances for subsistence, and uniform allowances as “excluded

items”. As discussed below, however, retired officers do not

receive nontaxable allowances from the Federal Government with

respect to their employment as JROTC instructors. Consequently,

we note that Publication 3 does not support petitioners’

contentions.

3SEC. 134. CERTAIN MILITARY BENEFITS.

 (a) General Rule.--Gross income shall not include any 

 qualified military benefit.

 (b) Qualified Military Benefit.--For purposes of this 

 section--

 (1) In general.--The term “qualified military 

 benefit” means any allowance or in-kind benefit (other 

(continued...)

Federal tax law and does not bind the Government. Id. Taxpayers

rely on such publications at their own peril. Id. Consequently,

we will not address petitioners’ contentions regarding

Publication 3 with respect to the availability of the allowances

in issue to JROTC instructors.2

Turning to the applicable statutes, regulations, and

judicial decisions, section 61(a) provides that gross income

includes all income from whatever source derived except as

otherwise provided. Section 1.61-2(b), Income Tax Regs.,

provides that subsistence allowances, uniform allowances, and

other amounts received as commutation of quarters are excluded

from gross income. Furthermore, section 134(a) provides that

gross income shall not include any qualified military benefit.3
- 5 -

3(...continued)

 than personal use of a vehicle) which--

 (A) is received by any member or former 

 member of the uniformed services of the United 

 States or any dependent of such member by reason 

 of such member’s status or service as a member of 

 such uniformed services, and

 (B) was excludable from gross income on 

 September 9, 1986, under any provision of law, 

 regulation, or administrative practice which was 

 in effect on such date (other than a provision 

 of this title).

We must decide whether payments that petitioner received in his

capacity as a JROTC instructor represent taxable compensation for

services rendered to the school district or are instead

nontaxable allowances. 

Retired commissioned or noncommissioned officers may serve

as instructors in JROTC units pursuant to the following

provisions of 10 U.S.C. sec. 2031(d) (2000):

(d) Instead of, or in addition to, detailing

officers and noncommissioned officers on active duty *

* * the Secretary of the military department concerned

may authorize qualified institutions to employ, as

administrators and instructors in the program, retired

officers and noncommissioned officers * * * whose

qualifications are approved by the Secretary and the

institution concerned and who request such employment,

subject to the following:

(1) A retired member so employed is entitled to 

receive the member’s retired or retainer pay without 

reduction by reason of any additional amount paid to 

the member by the institution concerned. In the case 

of payment of any such additional amount by the 

institution concerned, the Secretary of the military 

department concerned shall pay to that institution the 

amount equal to one-half of the amount paid to the 
- 6 -

retired member by the institution for any period, up to

a maximum of one-half of the difference between the 

member’s retired or retainer pay for that period and 

the active duty pay and allowances which the member 

would have received for that period if on active duty. 

Notwithstanding the limitation in the preceding 

sentence, the Secretary concerned may pay to the 

institution more than one-half of the additional amount

paid to the retired member by the institution if (as 

determined by the Secretary) the institution is in an 

educationally and economically deprived area and the 

Secretary determines that such action is in the 

national interest. Payments by the Secretary concerned

under this paragraph shall be made from funds 

appropriated for that purpose.

(2) Notwithstanding any other provision of law,

such a retired member is not, while so employed,

considered to be on active duty or inactive duty

training for any purpose.

It has been held that no part of the amount received from a

school district by a retired military officer for services as a

JROTC instructor is excludable from gross income as a housing or

subsistence allowance. Lyle v. Commissioner, 76 T.C. 668, 674-

678 (1981), affd. without published opinion 673 F.2d 1326 (5th

Cir. 1982); Bynam v. Commissioner, T.C. Memo. 2001-142; Tucker v.

Commissioner, T.C. Memo. 1999-373. JROTC instructors are

employed by the educational institutions in which they teach and

not by the Federal Government. 10 U.S.C. sec. 2031(d); Lyle v.

Commissioner, supra at 674; Bynam v. Commissioner, supra; Tucker

v. Commissioner, supra. Accordingly, a JROTC instructor receives

income from the school as compensation for services rendered and

not by reason of that instructor’s status as a member or former

member of the Armed Forces. Lyle v. Commissioner, supra at 674. 
- 7 -

Consequently, we conclude that payments petitioner received with

respect to his employment as a JROTC instructor constitute

compensation for services rendered to the school district. 

Petitioner’s status as a member or former member of the Armed

Forces therefore has no effect on the inclusion of such payments

in gross income.

As stated in Lyle v. Commissioner, supra at 674: “we think

that Congress never intended to pay any nontaxable ‘allowances’

to retired officers serving as Junior ROTC instructors.” The

provisions of 10 U.S.C. sec. 2031(d)(1) do not authorize the

Federal Government to pay nontaxable allowances to retired

military personnel serving as JROTC instructors but merely

provide a formula for computing the minimum “additional amount”

of compensation that such retired instructors may receive from

the employing school and the maximum portion of such an

additional amount that will be reimbursed by the Federal

Government. Lyle v. Commissioner, supra at 675. Consequently,

monthly statements petitioner received from the school district

itemizing allowances represented the amount of reimbursement

available to the school district from the Federal Government

pursuant to 10 U.S.C. sec. 2031(d)(1) rather than actual

allowances excludable from petitioners’ gross income. 
- 8 -

4We note that respondent, if he permitted these allowances

to be excluded from petitioners’ income for any prior tax year,

would not be bound thereby to do the same for the year in suit. 

See Coors v. Commissioner, 60 T.C. 368, 406 (1973), affd. 519

F.2d 1280 (10th Cir. 1975); Union Equity Coop. Exch. v.

Commissioner, 58 T.C. 397, 408 (1972), affd. 481 F.2d 812 (10th

Cir. 1973); Leubert v. Commissioner, T.C. Memo. 1983-457.

For the foregoing reasons, we conclude that petitioner

received compensation from the school district and received no

qualified military benefit for purposes of section 134(b) with

respect to his services as a JROTC instructor. No portion of

petitioner’s income from the school district is excludable from

petitioners’ 2002 gross income.4

To reflect the foregoing,

 Decision will be entered for

 respondent.