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being examined, petitioners filed an amended 1992 return omitting
the SSB payment from income. The amended return was treated as a
claim for refund and was denied by respondent. Petitioners do
not dispute the adjustments to the wage and interest income.
They do, however, contest the disallowance of the IRA
contributions deduction and contend that the SSB payment is
nontaxable, and, accordingly, they are entitled to an
overpayment. The parties agree that, if the SSB payment is
nontaxable, petitioners' adjusted gross income is $46,277.2
The issues raised both depend on the taxability of the SSB
payment. With regard to the IRA issue, under section 219(a) an
individual is allowed a deduction for qualified retirement
contributions. Section 219(g)(1), however, limits the deduction
where an individual or the individual's spouse is an "active
participant" for any part of the taxable year of certain pension
plans. An active participant includes a participant in "a plan
established for its employees by the United States". Sec.
219(g)(5)(A)(iii). Petitioner was an "active participant" during
1992. In the case of married individuals filing a joint return,
the deduction when one individual is an "active participant" is
reduced using a ratio determined by dividing the amount of the
taxpayers' adjusted gross income in excess of $40,000 by $10,000.
2 Adjusted gross income as reported ($112,111) plus
adjustments to income ($236) plus disallowed IRA contributions
deduction ($4,000) minus the SSB payment ($70,070).
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