John M. and Norma A. Mikalonis - Page 5




                                                - 5 -                                                  
            benefits exceeds $44,000 must include up to a maximum of 85                                
            percent of their Social Security benefits in their gross income.                           
            See sec. 86(a), (b), and (c).                                                              
                  Respondent determined that 85 percent of the Social Security                         
            benefits petitioner received for 1996 and 85 percent of the                                
            benefits he received for 1997 are includable in his gross income                           
            for each respective tax year.  Petitioners do not dispute that 85                          
            percent of the Social Security benefits petitioner received for                            
            each year is taxable, nor do they dispute that petitioner                                  
            received worker’s compensation benefits from a private insurer in                          
            the amounts by which his Social Security benefits were offset.                             
            Petitioners, however, argue that the Social Security                                       
            Administration never paid the benefits reported as worker’s                                
            compensation offset, and thus those amounts should not be                                  
            included in petitioners’ gross income.                                                     
                  Section 86(d)(3) clearly provides that such offsets are                              
            Social Security benefits for purposes of determining gross                                 
            income;                                                                                    
                  if * * * any social security benefit is reduced by                                   
                  reason of the receipt of a benefit under a workmen’s                                 
                  compensation act, the term “social security benefit”                                 
                  includes that portion of such benefit received under                                 
                  the workmen’s compensation act which equals such                                     
                  reduction.                                                                           
                  Section 86 was added to the Internal Revenue Code by the                             
            Social Security Amendments Act of 1983, Pub. L. 98-21, sec. 121,                           
            97 Stat. 80.  The House report states in relevant part:                                    





Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011