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from gross income pursuant to section 105(c)(2). Accordingly, we
need not decide whether they satisfy section 105(c)(1).
Respondent is sustained on this issue.
Social Security Disability Benefits
Section 86(a) provides that if the sum of the modified
adjusted gross income of a taxpayer plus one-half of the Social
Security benefits received exceeds the base amount, then the
taxpayer’s gross income includes Social Security benefits in the
amount equal to the lesser of: (1) One-half of the Social
Security benefits received during the year; or (2) one-half of
the excess of the sum of (a) modified adjusted gross income, plus
(b) one-half of the Social Security benefits received over the
base amount. The base amount for taxpayers filing a joint return
in 1996 is $32,000. See sec. 86(c)(1)(B). Petitioner reported
the following income on his 1996 joint Federal income tax return:
Wages $27,657
Taxable interest 1,139
Rental real estate, etc. 2,600
Total $31,396
For 1996, petitioner’s modified adjusted gross income equals his
adjusted gross income of $31,396 plus the unreported pension
benefits of $6,995. See sec. 86(b)(2). Because petitioner’s
modified adjusted gross income plus one-half of the Social
Security benefits received for the year is more than the base
amount of section 86(c)(1)(B), petitioner’s gross income includes
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