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In separate notices of deficiency, respondent determined
deficiencies of $1,552 and $1,515 in petitioners' Federal income
taxes for 1996 and 1997, respectively.
The sole issue for decision is whether certain payments by
insurance companies during the years at issue of indebtedness
owing by petitioners on credit cards constitute gross income
under section 61(a).2
Some of the facts were stipulated. Those facts and the
accompanying exhibits are so found and are incorporated herein by
reference. Petitioners' legal residence at the time the
petitions were filed was San Diego, California.
During the years at issue, petitioners had several credit
cards that had been issued by various banks. Petitioners availed
themselves of the opportunity to purchase credit card insurance
that provided for the payment of portions of indebtedness owing
on the credit cards in the event of death, disability, or
unemployment. All indebtedness on the credit cards provided for
the accrual of interest in the event amounts due on each card
were not paid timely. In addition, the premiums for the credit
card insurance were charged to each credit card.
2 Other adjustments were made to petitioners' Schedules
A, Itemized Deductions, some of which are computational and will
be resolved by the Court's holding on the matter at issue. All
other adjustments that are not computational were conceded by
petitioners.
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