Richard S. and Benice F. Roberts - Page 4

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          The latter method requires taxpayers to maintain adequate records           
          substantiating their investment in the retirement plan and the              
          amounts previously excluded from income.  Apparently, because               
          Social Security covers a substantially larger population,                   
          Congress eliminated this record-keeping requirement, simplifying            
          the task of reporting for the vast majority of taxpayers.  Thus,            
          except as provided in section 86(f), there is no provision in               
          section 86 for treating Social Security benefits as an annuity or           
          pension subject to section 72.2                                             
               In essence, petitioners question the fairness of section 86.           
          However, this is not the proper forum to question the policy                
          considerations that impelled the enactment of this legislation.             
          “Normally, a legislative classification will not be set aside if            
          any state of facts rationally justifying it is demonstrated to or           
          perceived by the courts.”  United States v. Maryland Savings-               
          Share Ins. Corp., 400 U.S. 4, 6 (1970).  The legislative history            
          of section 86, as enacted in 1983, demonstrates that Congress had           
          a valid and rational basis for the distinctions made in the                 
                    By taxing only a portion of social security and                   
               railroad retirement benefits (that is, up to one-half                  

               2  Sec. 86(f) provides the Social Security benefits may be             
          treated for Federal tax purposes as a pension or annuity only for           
          purposes of sec. 22(c)(3)(A), relating to the credit for the                
          elderly and the permanently and totally disabled; sec. 32(c)(2),            
          relating to the earned income credit; sec. 219(f)(1), relating to           
          the deduction for retirement savings; and sec. 911(b)(1),                   
          relating to the foreign earned income exclusion.                            

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