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approximated the $33,391.85 in wage and salary income. The
difference of $8.15 was not explained at trial. Petitioners
calculated the tax on their return based on income of $33,400.
After allowing for deductions and exemptions, their tax liability
was $2,704. Petitioners had prepaid $140 through taxes withheld
on their wages, and, thus, their return showed a balance due of
$2,564. Petitioners paid this amount. Sometime thereafter,
petitioners received from respondent a check for the refund of
taxes in the amount of $2,426. At trial, counsel for respondent
advised the Court that the $2,426 refund was based on
respondent's erroneous reliance on the wage income amount of
$3,340 that was shown on line 7 of petitioners' return, and,
based on such income amount, petitioners had overpaid their
taxes, for which a refund for overpayment was made to
petitioners. Respondent thereafter issued the notice of
deficiency, upon which this case is based, to rectify the obvious
error by respondent and determined a deficiency based on
petitioners' correct wage income plus the interest and dividend
income petitioners failed to report on their return.2
2 The notice of deficiency is based on $31,253 in wage
income. Counsel for respondent at trial agreed that this amount
excludes wage income earned by petitioner Jennifer Gundry in the
amount of $2,138.67, which respondent inadvertently failed to
include in the notice of deficiency. Respondent did not file an
answer to assert an increased deficiency for this omitted income
and conceded that amount at trial.
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