- 2 -
Respondent determined a deficiency of $465 in petitioners’
1996 Federal income tax. After concessions,2 the sole issue is
whether petitioners must include in their 1996 gross income
Social Security payments of $2,711. Petitioners resided in
Waterford, New York, at the time the petition was filed.
The relevant facts may be summarized as follows. During
1996, petitioners were married and lived together. Petitioners
filed a joint return for the 1996 taxable year. Petitioners
received Social Security benefits of $10,483; they, however, did
not include in income any portion of the benefits received on
their 1996 Federal income tax return. For the 1996 taxable year
petitioners’ modified adjusted gross income was $32,179.
Respondent determined that $2,711 of petitioners’ Social Security
benefits are includable in gross income.
Section 86 governs the taxability of Social Security
benefits. That section provides in relevant part:
SEC. 86(a). In General.-–
(1) In general.-– * * * gross income for the
taxable year of any taxpayer described in subsection
(b) * * * includes social security benefits in an
amount equal to the lesser of-–
(A) one-half of the social security benefits
received during the taxable year, or
(B) one-half of the excess described in
subsection (b)(1).
2 Respondent concedes his original assertion that petitioners
understated their 1996 interest income by $476.
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