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suspend the award or disallow the claim.

The Office of Management and Budget has approved the information collection requirements in this section under control numbers 2900-0101 and 2900-0624.)

Authority: Sec. 306(a)(2) and (b)(3), Pub. L. 5-588, 92 Stat. 2508-2509; 38 U.S.C. 1315(e))

63 FR 53595, Oct. 6, 1998, as amended at 66 FR 6614, Nov. 9, 2001]

3.257 Children; no surviving spouse entitled.

Where pension is not payable to a surviving spouse because his or her annual income exceeds the statutory limtation or because of his or her net worth, payments will be made to or for the child or children as if there were no surviving spouse.

62 FR 5529, Feb. 6, 1997]
$3.258-3.259 [Reserved]

3.260 Computation of income.

For entitlement to pension or dependency and indemnity compensation, ncome will be counted for the calendar year in which it is received.

Where

(a) Installments. Income will be deternined by the total amount received or anticipated during the calendar year. (b) Deferred determinations. there is doubt as to the amount of the anticipated income, pension or dependency and indemnity compensation will be allowed at the lowest appropriate rate or will be withheld, as may be in order, until the end of the calendar year when the total income received during the year may be determined.

(c) Proportionate income limitations; exess income. A proportionate income imitation will be established under the conditions set forth in paragraph d) of this section except where application of a proportionate income limitation would result in payment of a ower rate than would be payable on the basis of income for the full cal

endar year.

(d) Proportionate income limitations; computation. Income limitations will be computed proportionately for the purpose of determining initial entitlement, or for resuming payments on an award which was discontinued for a reason other than excess income or a

change in marital or dependency status. A proportionate income limitation will be established for the period from the date of entitlement to the end of that calendar year. The total amount of income received by the claimant during that period will govern the payment of benefits. Income received prior to the date of entitlement will be disregarded.

(e) Proportionate income limitations; spouse. In determining whether proportionate computation is applicable to a claim under Pub. L. 86-211 (73 Stat. 432), the total income for the calendar year of entitlement of both veteran and that of the spouse available for use of the veteran will be considered. If a proportionate income limitation is then applicable, it will be applied to both the veteran's and the spouse's income. The spouse's income will not be included, however, where his or her total income for the calendar year does not exceed $1,200.

(f) Rate changes. In years after that for which entitlement to pension or dependency and indemnity compensation has been established or reestablished as provided in paragraph (d) of this section, total income for the calendar year will govern the payment of benefits. Where there is a change in the conditions of entitlement because of a change in marital or dependency status, entitlement for each period will be determined separately. For the period when the claimant was married or had a dependent, the rate payable will be determined under the annual income limitation or increment applicable to a claimant who is married or has a dependent. For the period when the claimant was unmarried or without a dependent, the rate payable will be determined under the annual income limitation or increment applicable to a claimant who is not married or has no dependent. Since these determinations will be based on total income for the calendar year, it is not material whether such income was received before or after the change of status.

(g) Fractions of dollars. In computing a claimant's annual income a fraction of a dollar will be disregarded for the purpose of determining entitlement to

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Income

(33) The following programs administered by
the ACTION Agency:

Foster Grandparent Program and Older
Americans Community Service Pro-
grams payments (Pub. L. 93-29; 87
Stat. 55).

Volunteers in Service to America
(VISTA), University Year for ACTION
(UYA), Program for Local Services
(PLS), ACTION Cooperative Volunteers
(ACV). Foster Grandparent Program
(FGP), and Older American Community
Service Programs, Retired Senior Vol-
unteer Program (RSVP), Senior Com-
panion Program (Pub. L. 93-113; 87
Stat. 394).

(34) The Service Corps of Retired Executives (SCORE) and Active Corps of Executives (ACE) administered by the Small Business Administration. (Pub. L. 93-113; 87 Stat.

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1 The compensation received through a crime victim compensation program will be excluded from income computations u the total amount of assistance received from all federally funded programs is sufficient to fully compensate the claima losses suffered as a result of the crime.

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[28 FR 31, Jan. 1, 1963, as amended at 29 FR 15205, Nov. 11, 1964; 31 FR 15632, Dec. 13, 1966; 33 FR 15286, Oct. 15, 1968; 36 FR 8446, May 6, 1971; 37 FR 6677, Apr. 1, 1972; 37 FR 7092, Apr. 8, 1972; 37 FR 21436, Oct. 11, 1972; 38 FR 872, Jan. 5, 1973; 38 FR 26804, Sept. 26, 1973: 38 FR 28826, Oct. 17. 1973; 40 FR 13305, Mar. 26, 1975; 40 FR 57459, Dec. 10, 1975; 41 FR 17386, Apr. 26, 1976; 42 FR 43834, Aug. 31, 1977; 57 FR 59298, Dec. 15, 1992; 58 FR 12174. Mar. 3, 1993; 58 FR 31909, June 7, 1993; 58 FR 33766, June 21, 1993; 59 FR 37696, July 25, 1994; 60 FR 2522, Jan. 10, 1995; 60 FR 18355, Apr. 11, 1995; 62 FR 51278, Sept. 30, 1997; 67 FR 49586, July 31, 2002; 68 FR 60852, Oct. 24, 2003; 70 FR 15591, Mar. 28, 2005]

$3.262 Evaluation of income.

(a) Total income. All income from sources such as wages, salaries, earnings, bonuses from employers, income from a business or profession or from investments or rents as well as the fair value of personal services, goods or room and board received in lieu thereof will be included.

(1) Salary is not determined by "takehome" pay, but includes deductions made under a retirement act or plan and amounts withheld by virtue of income tax laws.

(2) The gross income from a business or profession may be reduced by the necessary operating expenses, such as cost of goods sold, or expenditures for rent, taxes, and upkeep. Depreciation is not a deductible expense. The cost of repairs or replacement may be deducted. The value of an increase in stock inventory of a business is not considered income.

(3) A loss sustained in operating a business, profession, or farm or from

investments may not be deducted from income derived from any other source. (b) Income of spouse. Income of the spouse will be determined under the rules applicable to income of the claimant.

(1) Parents. Where the mother and father, or remarried parent and spouse are living together, the total combined income will be considered in determining dependency, or in determining the rate of dependency and indemnity compensation payable to the parent. This rule is equally applicable where both parents have remarried and each is living with his or her spouse. If the remarriage of a parent has been terminated, or the parent is separated from his or her spouse, income of the spouse will be excluded.

(2) Veterans. The separate income of the spouse of a disabled veteran who is entitled to pension under laws in effect on June 30, 1960, will not be considered. Where pension is payable under section 306(a) of Pub. L. 95-588, to a veteran who is living with a spouse there will

208-138 D-8

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