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After concessions by the parties,1 the sole issue for
decision is whether payments under the Federal Employees
Retirement System (FERS) received during the 1995 tax year are
excludable from gross income under section 104(a)(1).
Adjustments to Social Security income are computational and will
be resolved by the Court’s holding on the issue in this case.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time of filing the
petition, petitioners resided in Tacoma, Washington. Petitioners
are husband and wife. References to petitioner in the singular
are to James E. Norris.
Petitioner has a 4-year degree in social sciences from
Central Washington University with a minor in aviation studies.
He also holds a master’s degree in criminal justice
administration and has completed 1 year of law school.
Petitioner served for approximately 8 years in the United States
Air Force and left at a rank of Captain in 1980. After a few
1 Petitioners concede that they failed to report interest
income of $141 received by Ruth L. Norris from Peoples Bank and
Trust in 1995. Petitioners further concede that they failed to
report gambling winnings of $798 earned by petitioner in 1995.
Because petitioner incurred gambling losses in excess of his
gambling income, $798 will be deductible on Schedule A, Itemized
Deductions.
Respondent concedes an accuracy-related penalty under sec.
6662(a) and (d) of $1,326, as determined in the notice of
deficiency.
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