Larry G. and Helen M. Horst - Page 5




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          payments consist of 14.49 percent of the total amount received.             
          Applying this percentage to the amounts received by petitioner in           
          1996, we conclude petitioner received $4,976 in Tier II payments            
          ($34,341 x 14.49% = $4,976).  Subtracting from this amount $782             
          for contributions made by petitioner, we conclude petitioner                
          received $4,194 in taxable Tier II benefits in 1996, and                    
          respondent is sustained on this issue to the extent of $4,194.              
          II.  Dividend and Interest Income                                           
               The next issue for decision is whether petitioners were                
          required to include in income dividends and interest received in            
          1996.  Gross income includes all income from whatever source                
          derived, including interest and dividends.  See sec. 61(a)(4),              
          (7).  It is not entirely clear from this record whether                     
          petitioners dispute the omitted dividend and interest income                
          issue.  Since no evidence was presented by petitioners, we                  
          sustain respondent on this issue.  See Rule 142(a).                         
               To reflect the foregoing,                                              


                                                  Decision will be entered            
                                             under Rule 155.                          













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