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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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Last modified: May 25, 2011