§ 122. Certain reduced uniformed services retirement pay
(b)
Special rule
(1)
Amount excluded from gross income
In the case of any individual referred to in subsection (a), all amounts received after December 31, 1965, as retired or retainer pay shall be excluded from gross income until there has been so excluded an amount equal to the consideration for the contract. The preceding sentence shall apply only to the extent that the amounts received would, but for such sentence, be includible in gross income.
(2)
Consideration for the contract
For purposes of paragraph (1) and section
72
(n), the term “consideration for the contract” means, in respect of any individual, the sum of—