Madden, Judge,
delivered the opinion of the court:
The plaintiffs, husband and wife, sue to recover amounts paid by them as income taxes for the years 1949, 1950, and 1951. They claim that the money paid the plaintiff George R. Goethals, hereinafter called the plaintiff, by the Government in those years, which was the supposed income upon which the taxes were based, was not taxable income, but was a series of non-taxable gifts to him by the Government-
[352]*352The plaintiff graduated from the United States Military-Academy in 1908 and was commissioned as a Second Lieutenant in the Regular Army. For five of tlie six years after receiving bis commission, he served in the Panama Canal Zone, doing supervisory work in connection with the construction of the canal. His service there ended on August 1,1914. He remained in the Army, however. He had been promoted to First Lieutenant before he left the Canal Zone. He was promoted to Captain in 1915, Major in 1917, Lieutenant Colonel (temporary) in 1918, and Colonel in 1918.
By the Act of March 4,1915, c. 167,88 Stat. 1190, Congress extended its thanks to certain named high officers of the Army, Navy and Public Health Service, who had participated in the construction of the canal, authorized the President to advance those named officers in rank to certain designated grades, provided for the advancement in rank one grade upon retirement of any officer who had served with the Isthmian Canal Commission for more than three years, and, in its section 6, provided as follows:
That at any time after the passage of this Act any officer of the Army or Navy to be benefited by the provisions of this Act may, on his own application, be retired by the President at seventy-five per centum of the pay of the rank upon which he is retired.
The plaintiff could, of course, have retired with 75 percent of his active duty pay immediately after the passage of the Act of March 4, 1915. However, he remained in the Army during World War I, as we have seen. On August 4, 1919, he retired, upon his own application. His permanent rank was Major, but, pursuant to the 1915 Act, he was placed on the retired list in the permanent grade of Lieutenant Colonel, and was paid 75% of the active duty pay of that grade. By the Act of June 21,1930, c. 563,46 Stat. 793, he was advanced to the courtesy grade of Colonel on the retired list. This action did not increase his retired pay.
The plaintiff was recalled to active duty in the grade of Major in 1940, was advanced to Lieutenant Colonel in 1942, and later in the same year to Colonel. He was relieved from active duty in 1946, reverting to his previous retired status with the courtesy grade of Colonel and 75% of the pay of a [353]*353Lieutenant Colonel. By the Act of June 29, 1948, c. 708, 62 Stat. 1081, he was advanced to the grade of temporary Colonel on the retired list. Although he should, from that time, have received 75% of the pay of a Colonel, he did not, due to an error, receive the increase in his retired pay until 1955, when the arrears were paid to him.
As we said at the outset, the plaintiff urges that his retired pay for the years in question, 1949,1950 and 1951, constituted gifts to him by the United States. He says that Congress was under no obligation to him, at the time it passed the Act of March 4, 1915. He had been paid the statutory pay for his services in the construction of the canal. But the privilege of earlier than normal retirement which the 1915 Act granted to the plaintiff and other officers, was closely related to the services which they had rendered, under difficult and dangerous conditions, to their employer the United States. If Congress had made an immediate grant of an additional year’s salary to these officers in 1915, the situation would have been the not unusual one of the award of a bonus to a valued executive upon his retirement after a successful administration. Generally, when such payments are made by the employer, they constitute taxable income; Nickelsburg v. Commissioner, 154 F. 2d 70; Fisher v. Commissioner, 59 F. 2d 192; Wilkie v. Commissioner, 127 F. 2d 953.
In Bogardus v. Commissioner, 302 U. S. 34, relied on by the plaintiffs, the payments were not made by the employer, but by a new corporation formed by the stockholders of the employer, who had sold their stock in the employer corporation at an enormous profit and were accordingly grateful to the employees of the former corporation for having made such a success of it. It would, of course, be difficult to regard one as having given compensation, or additional compensation, to one who had never been his employee, but to whom, as a result of collateral circumstances, he felt grateful. And in Bogardus, the Government and the taxpayer stipulated “that the disbursements were not made or intended to be made1 for any services rendered or to be rendered or for any consideration given or to be given” to the payor or any of its stockholders.
[354]*354Officers’ retired pay normally is taxable income, except in unusual circumstances in which Congress has expressly exempted it from taxation. By providing for retirement with pay the Government makes the military career attractive, it keeps a hold upon retired officers because they are subject to recall to active duty if needed, and it expresses its gratitude to officers for faithful service. If a retirement statute should provide that officers whose services were of the usual kind should have the privilege of retirement after 30 years service, and officers whose services were in a mosquito infected, disease ridden area should have the privilege after three years service, the retired pay of the two kinds of retirees would have the same status for tax purposes. But the plaintiff, in effect, says that if the three year privilege was not granted by Congress until after the requisite three years had been served, then the privilege is a gift. If that were the test, it would have important consequences. It would mean, for example, that if Congress should reduce the required period of service for retirement eligibility from 30 years to 25 years, all those officers who had already served 25 years and could immediately retire could treat their retired pay as non-taxable gifts. And if Congress made special provisions for retirement for those suffering battle casualties, or for those receiving awards for heroism, those who had qualified before the statute was passed would receive their retired pay as non-taxable gifts, and those who qualified later would receive their retired pay as compensation. The same distinction would be applicable to percentage or other additions to retired pay and to advancement in rank resulting in increases in pay under circumstances specified by Congress. The Career Compensation Act of 1949, c. 681, 63 Stat. 802, extending new privileges and options to officers already retired, would become a fruitful source of tax litigation.
The Government suggests an interesting application of section 22 (b) (8) of the Internal Revenue Code of 1939 which after providing that gifts should be excluded from gross income, says that the income derived from property acquired by gift shall not be excluded. The Government says that, assuming that the Act of March 4, 1915 made a gift to the plaintiff, the thing given was the privilege of retiring, but [355]
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Madden, Judge,
delivered the opinion of the court:
The plaintiffs, husband and wife, sue to recover amounts paid by them as income taxes for the years 1949, 1950, and 1951. They claim that the money paid the plaintiff George R. Goethals, hereinafter called the plaintiff, by the Government in those years, which was the supposed income upon which the taxes were based, was not taxable income, but was a series of non-taxable gifts to him by the Government-
[352]*352The plaintiff graduated from the United States Military-Academy in 1908 and was commissioned as a Second Lieutenant in the Regular Army. For five of tlie six years after receiving bis commission, he served in the Panama Canal Zone, doing supervisory work in connection with the construction of the canal. His service there ended on August 1,1914. He remained in the Army, however. He had been promoted to First Lieutenant before he left the Canal Zone. He was promoted to Captain in 1915, Major in 1917, Lieutenant Colonel (temporary) in 1918, and Colonel in 1918.
By the Act of March 4,1915, c. 167,88 Stat. 1190, Congress extended its thanks to certain named high officers of the Army, Navy and Public Health Service, who had participated in the construction of the canal, authorized the President to advance those named officers in rank to certain designated grades, provided for the advancement in rank one grade upon retirement of any officer who had served with the Isthmian Canal Commission for more than three years, and, in its section 6, provided as follows:
That at any time after the passage of this Act any officer of the Army or Navy to be benefited by the provisions of this Act may, on his own application, be retired by the President at seventy-five per centum of the pay of the rank upon which he is retired.
The plaintiff could, of course, have retired with 75 percent of his active duty pay immediately after the passage of the Act of March 4, 1915. However, he remained in the Army during World War I, as we have seen. On August 4, 1919, he retired, upon his own application. His permanent rank was Major, but, pursuant to the 1915 Act, he was placed on the retired list in the permanent grade of Lieutenant Colonel, and was paid 75% of the active duty pay of that grade. By the Act of June 21,1930, c. 563,46 Stat. 793, he was advanced to the courtesy grade of Colonel on the retired list. This action did not increase his retired pay.
The plaintiff was recalled to active duty in the grade of Major in 1940, was advanced to Lieutenant Colonel in 1942, and later in the same year to Colonel. He was relieved from active duty in 1946, reverting to his previous retired status with the courtesy grade of Colonel and 75% of the pay of a [353]*353Lieutenant Colonel. By the Act of June 29, 1948, c. 708, 62 Stat. 1081, he was advanced to the grade of temporary Colonel on the retired list. Although he should, from that time, have received 75% of the pay of a Colonel, he did not, due to an error, receive the increase in his retired pay until 1955, when the arrears were paid to him.
As we said at the outset, the plaintiff urges that his retired pay for the years in question, 1949,1950 and 1951, constituted gifts to him by the United States. He says that Congress was under no obligation to him, at the time it passed the Act of March 4, 1915. He had been paid the statutory pay for his services in the construction of the canal. But the privilege of earlier than normal retirement which the 1915 Act granted to the plaintiff and other officers, was closely related to the services which they had rendered, under difficult and dangerous conditions, to their employer the United States. If Congress had made an immediate grant of an additional year’s salary to these officers in 1915, the situation would have been the not unusual one of the award of a bonus to a valued executive upon his retirement after a successful administration. Generally, when such payments are made by the employer, they constitute taxable income; Nickelsburg v. Commissioner, 154 F. 2d 70; Fisher v. Commissioner, 59 F. 2d 192; Wilkie v. Commissioner, 127 F. 2d 953.
In Bogardus v. Commissioner, 302 U. S. 34, relied on by the plaintiffs, the payments were not made by the employer, but by a new corporation formed by the stockholders of the employer, who had sold their stock in the employer corporation at an enormous profit and were accordingly grateful to the employees of the former corporation for having made such a success of it. It would, of course, be difficult to regard one as having given compensation, or additional compensation, to one who had never been his employee, but to whom, as a result of collateral circumstances, he felt grateful. And in Bogardus, the Government and the taxpayer stipulated “that the disbursements were not made or intended to be made1 for any services rendered or to be rendered or for any consideration given or to be given” to the payor or any of its stockholders.
[354]*354Officers’ retired pay normally is taxable income, except in unusual circumstances in which Congress has expressly exempted it from taxation. By providing for retirement with pay the Government makes the military career attractive, it keeps a hold upon retired officers because they are subject to recall to active duty if needed, and it expresses its gratitude to officers for faithful service. If a retirement statute should provide that officers whose services were of the usual kind should have the privilege of retirement after 30 years service, and officers whose services were in a mosquito infected, disease ridden area should have the privilege after three years service, the retired pay of the two kinds of retirees would have the same status for tax purposes. But the plaintiff, in effect, says that if the three year privilege was not granted by Congress until after the requisite three years had been served, then the privilege is a gift. If that were the test, it would have important consequences. It would mean, for example, that if Congress should reduce the required period of service for retirement eligibility from 30 years to 25 years, all those officers who had already served 25 years and could immediately retire could treat their retired pay as non-taxable gifts. And if Congress made special provisions for retirement for those suffering battle casualties, or for those receiving awards for heroism, those who had qualified before the statute was passed would receive their retired pay as non-taxable gifts, and those who qualified later would receive their retired pay as compensation. The same distinction would be applicable to percentage or other additions to retired pay and to advancement in rank resulting in increases in pay under circumstances specified by Congress. The Career Compensation Act of 1949, c. 681, 63 Stat. 802, extending new privileges and options to officers already retired, would become a fruitful source of tax litigation.
The Government suggests an interesting application of section 22 (b) (8) of the Internal Revenue Code of 1939 which after providing that gifts should be excluded from gross income, says that the income derived from property acquired by gift shall not be excluded. The Government says that, assuming that the Act of March 4, 1915 made a gift to the plaintiff, the thing given was the privilege of retiring, but [355]*355that the income which the plaintiff derived from the exercise of the privilege was taxable income.
If the plaintiff had used the privilege in 1915, his retired pay would have been that of a Captain. In fact he used it in 1919 after he had been promoted to Major, and hence his retired pay was that of a Lieutenant Colonel. Congress from time to time made increases in the retired pay of all officers, quite certainly with no intention of making additional gifts to the plaintiff. His recall to active service and the enactment of the Act of June 29, 1948, again increased his retired pay, with no intent on the part of the Army or Congress to make a special donation to the plaintiff.
The Government’s suggestion is interesting, but it is not necessary for us to decide whether it is valid, since regardless of its validity, we have concluded that the retired pay in question was not a non-taxable gift, but was taxable income.
This Court’s decision in Dewling v. United States, 121 C. Cls. 635, that annuities granted by Congress to civilian employees of the Panama Canal project in 1945, thirty years after their work at the canal was ended, and, no doubt in some cases, that long or almost that long after they had left Government service, were non-taxable gifts, may be distinguishable on the ground of the remoteness of the payment, in point of time, from the service. The statute there in question, the Act of May 29, 1944, 58 Stat. 257, did not put the former civilian employees into a classification which included numerous other Government employees whose retired pay was undoubtedly taxable income. It did not make their annuities dependent upon future general legislation having nothing to do with the Panama Canal employment, but affecting all or many retired civilian employees of the Government. The Dewling decision neither compels nor persuades us to decide that the plaintiff’s retired pay was a gift.
The plaintiff’s petition will be dismissed.
It is so ordered.
Laramore, Judge; Whitaker, Judge; Littleton, Judge; and Jones, Chief Judge, concur.
[356]*356FINDINGS OF FACT
Tbe court, having considered the evidence, the stipulation of facts entered into between the parties, and the briefs and argument of counsel, makes findings of fact as follows:
1. The plaintiffs are citizens of the United States and residents of Las Cruces, New Mexico.
2. On March 9,1950, plaintiffs filed a joint federal income tax return for the calendar year 1949 with the Collector of Internal Eevenue for the District of Massachusetts computing thereon a tax liability of $2,486.30. The return disclosed taxes paid by withholding during 1949 in the amount of $669.40 and payments made on 1949 declaration of estimated tax in the amount of $2,000, a total of $2,669.40. Included in gross income in said return was an amount of $3,780.36 received by George Eodman Goethals during 1949 from the Washington Finance Office, United States Army, Washington, D. C. Under date of April 11,1950, plaintiffs received a refund of excess withholding and estimated tax payments in the amount of $183.10.
3. On March 9,1951, plaintiffs filed a joint federal income tax return for the calendar year 1950 with the Collector of Internal Eevenue for the District of Massachusetts computing thereon a tax liability of $2,589.72. The return disclosed taxes paid by withholding during 1950 in the amount of $672.30 and payments made on 1950 declaration of estimated tax in the amount of $1,662.64, a total of $2,334.94. Included in gross income in said return was an amount of $3,860.28 received by George Eodman Goethals during 1950 from the Washington Finance Office, United States Army, Washington, D. C. On March 21, 1951, plaintiffs remitted to said Collector of Internal Eevenue the balance of $254.78 due on their 1950 tax liability.
4. On March 15,1952, plaintiffs filed a joint federal income tax return for the calendar year 1951 with the Collector of Internal Eevenue for the District of Massachusetts computing thereon a tax liability of $2,452.14. The return disclosed taxes paid by withholding during 1951 in the amount of $726.20 and payments made on 1951 declaration of estimated tax in the amount of $2,000, a total of $2,726.20. In-[357]*357eluded in gross income in said return was an amount of $3,720.86 received by George Eodman Goethals during 1951 from the Washington Finance Office, United States Army, Washington, D. C. Under date of April 23, 1952, plaintiffs received a refund of excess withholding and estimated tax payments in the amount of $274.06.
5.The plaintiffs, on November 10, 1952, filed with the Collector of Internal Eevenue for the District of Massachusetts timely claims for refund (Form 843) of income taxes paid for the calendar years 1949, 1950 and 1951 in the following amounts:
Year Amount
1949-$888.72
1950- 933.40
1951- 959.84
The Commissioner of Internal Eevenue has not rendered any final decision on said claims for refund and more than six months have elapsed since the filing thereof.
6. Plaintiff George E. Goethals graduated from the United States Military Academy and was appointed Second Lieutenant, Corps of Engineers, Eegular Army, on February 14, 1908. His subsequent military career includes service in the Panama Canal Zone from May 14, 1908 to June 30, 1908; from July 1, 1908 to July 30, 1909; and from November 7, 1910 to August 1, 1914. During these periods of service in the Panama Canal Zone, he was engaged in duties entailing supervisory responsibilities in the construction of the Panama Canal.
7. George E. Goethals, upon his own application, retired from active Army service on August 4, 1919, pursuant to the Act of March 4, 1915, Chap. 167, 38 Stat. 1190.
8. At the time of his retirement, George E. Goethals was 33 years of age and had attained the rank of Major, Eegular Army. Upon his application and pursuant to the provisions of the aforesaid Act of Congress, he was simultaneously advanced to the rank of Lieutenant Colonel and placed upon retirement in such rank on August 4,1919. By reason thereof he became entitled to and did, in fact, begin to receive in 1919 an amount equal to 75% of the pay of the rank of Lieutenant Colonel.
[358]*3589. George E. Goethals was advanced to the courtesy grade of Colonel on the Eetired List of the Army on August 16, 1930, effective from June 21,1930, pursuant to the provisions of the Act of June 21,1930, Chap. 563,46 Stat. 793.
The adoption of the aforesaid Act did not affect in any maimer the amounts then being received by the taxpayer under the provisions of the Act of March 4,1915.
10. George E. Goethals was recalled to active duty in the grade of Major on October 14, 1940, was subsequently appointed Lieutenant Colonel effective February 1, 1942, and later promoted to Colonel on August 26,1942. His commission as Colonel was terminated and he was relieved from further active duty on March 18,1946, reverting to the retired list as a Colonel, the rank to which he had been advanced under the provisions of the Act of June 21, 1930. The rate of payments applicable to him prior to his recall to active service on March 14,1940, i. e., 75% of the pay of the rank of a Lieutenant Colonel, again became applicable to him commencing on March 18, 1946, the date of his separation from active duty.
11. On August 13, 1948, and pursuant to the provisions of Section 203 (a) of the Act of June 29,1948, Chap. 708, 62 Stat. 1081, George E. Goethals was advanced to the grade of Colonel on the United States Army Eetired List effective from June 29, 1948.
12. Although George E. Goethals, by the enactment of the aforesaid Act of June 29, 1948, became entitled to and, in fact, has since received payments computed on the basis of 75% of the pay of the rank of a Colonel in the United States Army, such increase in payments was not received by him until the year 1955. As evidenced by letter dated January 17, 1956, from the Eetired Pay Division, Finance Center, United States Army, he was paid and did receive in June and September, 1955, amounts totalling $3,121.58, a sum equal to the difference between payments computed on the basis of 75% of the pay of the rank of a Lieutenant Colonel and 75% of the pay of the rank of a Colonel, for the period from June 29,1948, to May 31,1955. The aforesaid payments made to him in June and September, 1955, were in addition to amounts received by him during 1955 for the period from January 1, [359]*3591955, to May 31, 1955, such amounts based upon 75% of the pay of the rank of a Lieutenant Colonel and in addition to amounts received by him during 1955 for the period from June 1, 1955, to December 31,1955, such amounts based upon 75 % of the pay of the rank of a Colonel.
13. The amounts of $3,780.36, $3,860.28 and $3,720.86 received by George E. Goethals from the Washington Finance Office, United States Army, Washington, D. C., during the calendar years 1949, 1950 and 1951, respectively, and included by him in his federal income tax returns for each of .those years were computed on the basis of 75% of the pay of the rank of a Lieutenant Colonel in the United States Army.
14. George E. Goethals has been receiving since June 1, 1955, and is presently receiving, payments computed on the basis of 75% of the pay of the rank of a Colonel in the United States Army.
CONCLUSION OP LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiffs are not entitled to recover, and the petition is therefore dismissed.