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were allocated as follows:
Date Tier I Tier II Total
1994 $10,710 $1,851 $12,561
1995 13,212 2,241 15,453
1996 13,560 2,259 15,819
Total $37,482 $6,351 $43,833
The RRB submitted Forms 1099-SSA and 1099-R to the Internal
Revenue Service (IRS) reporting that RRB paid Tier I and Tier II
benefits to petitioner in 1996 in the amounts of $37,482 and
$6,351, respectively. CSX submitted a Form 1099-DIV to the IRS
reporting that CSX paid $44 in dividends to petitioners in 1996,
and Hagerstown Trust submitted a Form 1099-INT to the IRS
reporting that Hagerstown Trust paid $21 in interest to
petitioners in 1996.
Petitioners did not report any of the above amounts on their
1996 Federal income tax return. In the notice of deficiency,
respondent determined that petitioners were required to report
(1) Tier I benefits in the amount of $1,572 and Tier II benefits
of $6,351 received from the RRB, and (2) dividend and interest
income, as noted above, received from CSX and Hagerstown Trust.
Discussion
I. RRB Payments
The first issue for decision is whether petitioners were
required to include in income $1,572 in Tier I benefits and
$6,351 in Tier II benefits received from the RRB in 1996. At
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Last modified: May 25, 2011