Evert E. and Eva F. Berglund - Page 14

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            income from the State of Illinois.  The amounts reported on the                             
            1986 and 1987 returns are the same as those listed on the Forms                             
            W-2p attached to the returns.  The amount reported on the 1988                              
            return is listed as $3,482.29, not the $3,651.97 listed in the                              
            attached Form W-2p.  No amounts are listed as taxable pension                               
            income on the returns despite the statement in block 10 of the                              
            Forms W-2p that all of the pension income for each year is                                  
            taxable.                                                                                    
                  Petitioner bears the burden of proof on this issue.                                   
            Petitioner has failed to establish that petitioner's spouse did                             
            not receive taxable pension income for 1986, 1987, and 1988, as                             
            determined by respondent.  Accordingly, we sustain respondent's                             
            determination with respect to this issue.                                                   
            Issue 3.  Social Security Benefits                                                          
                  There is no dispute between petitioner and respondent that                            
            petitioner and his spouse received $8,190 of Social Security                                
            benefits in 1986.  The only dispute is whether any of the                                   
            benefits received by petitioner and his spouse are taxable.  The                            
            taxability of Social Security benefits is statutorily derived                               
            based upon the amount of gross income, as modified by section                               
            86(b)(2), petitioner and his spouse received in 1986.  Sec.                                 











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