John Allen and Glenna A. Lyle - Page 5

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          and does not state that petitioners' 1995 income tax return has             
          been accepted as filed, nor does it address any of the specific             
          issues encompassed in the notice of deficiency.  Accordingly,               
          respondent is not estopped from determining a deficiency in                 
          petitioners' 1995 income tax.                                               
          II.  Social Security Benefits                                               
                                  FINDINGS OF FACT                                    
               Petitioners reported receiving Social Security benefits of             
          $8,993 on their 1995 income tax return.  Petitioners did not,               
          however, compute the taxable portion of their Social Security               
          benefits to be included in their gross income.  Respondent                  
          treated their failure to enter the taxable portion as a                     
          computational adjustment and determined that the taxable portion            
          of the benefits was $7,643.                                                 
               Section 86 governs the taxability of Social Security                   
          benefits.  Applying that section, respondent determined that the            
          taxable portion of the benefits was $7,643.  Petitioners do not             
          dispute the accuracy of respondent's calculation.  Rather,                  
          petitioners argue that the taxation of Social Security benefits             
          is an ex post facto law in violation of Article I of the                    
          Constitution.  Their position has no merit.  The prohibition                
          against ex post facto laws applies only to penal legislation that           
          imposes or increases criminal punishment for conduct predating              

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