Blaney H. Howle III and Polly T. Howle - Page 7




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          protect the revenue.  See United States v. Powell, 379 U.S. 48,             
          54-56 (1964); Collins v. Commissioner, supra.  It is not to be              
          read so liberally as to defeat the powers granted to the IRS to             
          examine the correctness of taxpayers’ returns.  See De Masters v.           
          Arend, 313 F.2d 79, 86-87 (9th Cir. 1963).                                  
               Petitioners did not include any of their Tier 2 railroad               
          retirement benefits in the gross income reported on their 1997              
          return, and they incorrectly included all of their Tier 1                   
          benefits.  They now acknowledge that 85 percent of their Tier 1             
          benefits are includable in gross income, and they do not dispute            
          that their Tier 2 benefits are taxable in the same manner as                
          pension benefits.  Petitioners do not suggest that the IRS                  
          properly accounted for these items in its previous adjustments to           
          their return.  Therefore, respondent did not subject petitioners            
          to an unnecessary examination.                                              
               Further, nothing in the record suggests that respondent ever           
          examined or inspected petitioners’ books of account.  The IRS               
          first corrected a mathematical error made by petitioners on their           
          return.  In response to petitioners’ request for assistance, the            
          IRS then attempted to provide petitioners with a completed Form             
          1040 calculating their income tax liability.  It appears that the           
          IRS realized that the return it had completed was incorrect when            
          it matched petitioners’ return with information returns received            
          from the Railroad Retirement Board.  Based on this review, the              






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