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Boise address and slept inside the house located at the Boise
address. Petitioner and Mrs. McAdams maintained separate
bedrooms at the Boise address.
During 1998, petitioner’s main source of income was his
military retirement pay. During 1998, petitioner also received
Social Security income in the amount of $11,181.60. Petitioner
received a Form SSA-1099, Social Security Benefit Statement, for
1998 reporting “Benefits Paid in 1998” and “Net Benefits for
1998” in the amount of $11,181.60.
Petitioner filed his 1998 Federal individual income tax
return claiming “Married filing separately” status. When he
prepared his 1998 tax return, petitioner filled out the Social
Security Benefits Worksheet. Petitioner listed $25,000 as his
“base amount” because he believed that he lived apart from his
spouse for the entire year. On his return, petitioner reported
$11,181.60 of Social Security benefits and zero as the taxable
amount of his Social Security benefits.
In the notice of deficiency, respondent increased
petitioner’s interest income by $52 and reduced petitioner’s
“base amount” to zero, thereby increasing the taxable amount of
petitioner’s Social Security benefits to $9,218.
OPINION
Section 86 provides for the taxability of Social Security
benefits pursuant to a statutory formula. If a taxpayer’s
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