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Background
The parties have stipulated all the relevant facts, which we
incorporate herein by this reference. When they petitioned the
Court, petitioners resided in Connecticut.
On line 9b of their 2005 Form 1040, U.S. Individual Income
Tax Return, petitioners reported $24,376 of qualified dividends.1
They did not, however, include this amount in the $265,408 which
they reported as taxable income and upon which they reported tax
of $68,809. Instead, they separately computed $3,656 of tax on
the qualified dividends (15 percent of $24,376), which they
designated by handwritten notation as a “Qualified Dividend Tax”
on line 45 of Form 1040, which calls for the amount of
“Alternative minimum tax”. Adding this amount to the $68,609 of
tax that they had computed on their reported taxable income, they
reported total tax of $72,266.
Respondent treated petitioners’ omission of their qualified
dividends from taxable income as a “math error”. After taking
into account this and other “math errors”, respondent determined
that petitioners’ taxable income was $315,532 rather than the
$265,408 that they had reported.2 Pursuant to section 6213(b),
1 Monetary amounts in this Opinion have been rounded to the
nearest dollar.
2 The other “math errors” related to petitioners’ Schedule
E, Supplemental Income and Loss, expenses and the calculation of
the taxable amount of their Social Security income. At trial,
(continued...)
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Last modified: March 27, 2008