Voluntary retirement compensation tax treatment: exemption limited by statutory ceiling formulas; excess is treated as taxable salary.

Computation of taxability of voluntary retirement compensation is governed by a statutory exemption limited by prescribed ceiling formulas and the principle that the exempt amount is the lesser of specified sums. In the example, compensation received of 700,000 gives an exempt amount of 500,000 under the statutory ceiling, leaving 200,000 as taxable salary under the governing exemption provision and associated rules.

---

---

---